Taubman Centers Inc. is selling seven of its malls — including Fairlane Town Center in Dearborn and The Mall at Partridge Creek in Clinton Township — to Greenwich, Conn.-based Starwood Capital Group for $1.4 billion. The closing is expected to occur in the fourth quarter.
The sale is part of Taubman’s ongoing strategy to recycle capital, maximize its net operating income growth rate, and create net asset value for investors over time, says Robert S. Taubman, chairman, president, and CEO of Bloomfield Hill-based Taubman Centers.
“Given today’s investor interest in high quality regional malls, we have taken advantage of the opportunity to further enhance our growth and valuation, while increasing our industry leading productivity and modestly reducing the size of our base,” Taubman says. “As a result of these sale transactions, the company’s development and redevelopment pipeline will have an even greater impact on our growth.”
In addition to the Michigan malls, the transaction included MacArthur Center in Norfolk, Va.; Northlake Mall in Charlotte, N.C.; Stony Point Fashion Park in Richmond, Va.; The Mall at Wellington Green in Wellington, Fla.; and The Shops at Willow Bend in Plano, Texas.
The company, founded by A. Alfred Taubman in 1950, currently owns, leases, and/or manages 27 retail properties in 15 states and South Korea. Collectively, the company reported mall tenant sales per square foot of $721 in 2013. Once the sale is complete, the company expects its mall tenant sales to increase by more than $100 per square foot.
The sale expands the portfolio of Chicago-based Starwood Retail Partners — formed by Starwood to manage, lease, and redevelop retail real estate assets — to 28 properties totaling 26.8 million square feet across 15 states. “The Taubman portfolio broadens our relationships with higher end department stores and in line tenants and gives us an excellent opportunity to continue to produce attractive returns for our investors,” says Barry Sternlicht, chairman and CEO of Starwood Capital Group.
The transaction, which has been approved by Taubman Centers’ board of directors, is subject to normal closing conditions.
In related news, Taubman is set to open new properties in Sarasota, Fla.; San Juan, Puerto Rico; and Honolulu, Hawaii; as well as in China and South Korea by the end of 2016. The company has also invested about $265 million in redevelopment projects at existing Taubman centers in Los Angeles, Denver, Nashville, Miami, and the San Francisco Bay area.