ATLANTIC CITY-The Gordon Group has a new partner in its $175-million under-construction Pier at Caesars redevelopment project on this city's oceanfront. Taubman Centers has agreed to buy into the 320,000-sf shopping complex in a three-stage investment that will leave it with a 30% share and a significant role in its development and operation.

The Pier at Caesars is Gordon's radical makeover of the former Ocean One Mall, across the boardwalk from both Caesars Atlantic City and the Bally's/Wild Wild West Casinos. The failed Ocean One Mall itself was the first retail incarnation of the historic old Million Dollar Pier. The new complex will be connected with Caesars by skywalk. "We believe that our two companies have complementary skill sets," says Sheldon M. Gordon, chairman of the Greenwich, CT-based Gordon Group, whose company had a hand in the development of the highly successful Forum Shops at Caesars Palace in Las Vegas, and similar projects in New York, California and Hawaii.

Under the terms of the agreement announced late yesterday, Taubman's total capital contribution will be calculated at a 7% cap rate based on the project's 2007 stabilized NOI. That contribution will be made in three stages, beginning with an initial $4 million at closing. A second payment of 70% of the projected total investment will be made within six months of the project's opening, currently scheduled for early next year. The final payment will come after completion of the project's stabilization year of 2007, based on actual NOI and debt levels.

Gordon will continue to take the development lead during the development phase, although Taubman will provide leasing and development administration services. After it opens, Gordon will continue to manage and lease it, with Taubman continuing to provide administrative services.

The center's 100 retail stores and nine restaurants on four floors are already 75% committed, according to Gordon. Some of the brands that have signed on include Gucci, Louis Vuitton, Burberry, Tourneau, Hugo Boss and Philadelphia restaurateur Stephen Starr.

Besides the Pier at Atlantic City, the two firms have also signed a joint-venture agreement that will have them developing similar casino-oriented, entertainment-related retail projects. The agreement, which calls for equal ownership of any projects that evolve from the partnership, carries an initial term of five years with options. "Gordon has been a leading innovator in retail developments," says Robert S. Taubman, chairman/president/CEO of the Bloomfield Hills, MI-based company.

Related to the deal, Taubman has agreed to Gordon's request to life restrictions on the conversion and sale of the former's Series E TRG partnership units. The restrictions had been put in place in early 2003 relating the sale of ownership interests in the Forum Shops in Las Vegas and the subsequent attempted hostile takeover of Taubman Centers by Simon Property Group. "The circumstances under which these restrictions were deemed appropriate are no longer in place, and under normal circumstances these restrictions would not be required," Taubman says.