Barbara Baker, vice president of investor relations for the Bloomfield Hills, MI-based mall owner, tells GlobeSt.com that the capital will pay off a $180-million financing against the mall and pump another $20 million to $30 million of equity into the 150-store, five-anchor property in Plano. Baker says the five-year loan has baited a "very attractive" floating interest rate.
Baker is quick to point out that Saks Inc.'s fall construction on a 122,900-sf store will be a solid step toward the mall's stabilization. The store will open in September 2004 and make the mall one of just 17 properties nationwide that counts Saks Fifth Avenue and Neiman Marcus as anchor neighbors. Other Willow Bend anchors are Lord & Taylor, Foley's and Dillard's.
Baker says Taubman's weeded the lender's list, but she isn't saying who's made the final cut. Word of the refinance first surfaced in the REIT's May 9 earnings call. In addition to the $150-million refinance, a $12-million land loan will be placed as well with the financing vehicle.
Baker, in the interview and in the earnings call, says the extra five years gives the North Texas market time to absorb the retail space. At the 2002 close, the mall was 72% leased, she reports. That's just a 2% gain from its August 2001 opening store count. But, as Texas knows, the mall is locked in a stiff battle for market share with Chicago-based General Growth Properties' 1.6-million-sf Stonebriar Centre in Frisco and the Dallas matriarch of upscale retail, the 1.8-million-sf Galleria, now owned by UBS Realty Investors of Chicago.
The floating-rate capital is a popular product for borrowers with properties that are not stabilized or in transition. In a published column with a financial weekly, John B. Levy, president of the John B. Levy & Co. said the driver for the deals is "there are virtually no prepayment penalties to limit them from refinancing when either the markets firm or their property has reached stabilization."
Taubman has been working through a refinancing strategy for 75% of its debt. In the first quarter, the REIT secured a 10-year refinance with a 5.5% rate for the Mall of Millenia in Orlando, a stabilized asset that won a fixed interest rate and a deal delivery within six months of its opening.
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