Photo by Shutterstock

Simon Property Group and Taubman Centers have struck an agreement under which Simon will acquire an 80% ownership interest in The Taubman Realty Group Limited Partnership in what has been reported in Marketwatch to be an all-cash deal valued at about $3.6 billion.

Simon will acquire all of Taubman common stock for $52.50 per share in cash and the Taubman family will sell approximately one-third of its ownership interest at the transaction price and remain a 20% partner.

The purchase price represents a 6.2% underwritten capitalization rate.

Taubman owns, manages and/or leases 26 super-regional shopping centers in the US and Asia, for a total of 25 million square feet.

The two REITs have been holding on-and-off-again merger discussions since late last year, according to sources quoted by Bloomberg. Also, this is not the first time Simon has tried to acquire Taubman: in 2002 it attempted a tie up with the REIT. Simon has also tried to use its formidable balance sheet to acquire Macerich and more recently, Forever 21.

Taubman, like many retail landlords, has been struggling with a changing environment that has seen numerous retail bankruptcies and store closures, such as Macy's recent announcement.

Partly as a response, it has sold off other pieces of its holdings recently. Last December it completed the sale of 50% of its interest in CityOn.Zhengzhou in Zhengzhou, China to the Blackstone Group for $89 million, retaining a 24.5% ownership interest in the center. The REIT received net proceeds of $47.5 million. The company also expects to complete the sale of its 50% interest in CityOn.Xi'an, in Xi'an, China to Blackstone in the first quarter of 2020. The sale price is $91 million and net proceeds are expected to be about $50 million.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM Digital Member, you’ll receive:

  • Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Erika Morphy

Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.