GREENWICH, CT—Starwood Capital Group has completed its acquisition of seven regional shopping malls from Taubman Centers. In June the two companies announced the $1.4 billion transaction.
The properties total more than seven million square feet of retail and are now part of Starwood Retail Partners' growing portfolio.
The seven retail centers are MacArthur Center in Norfolk, VA; Stony Point Fashion Park in Richmond, VA; Northlake Mall in Charlotte, NC; The Mall at Wellington Green in Wellington, FL; The Shops at Willow Bend in Plano, TX; The Mall at Partridge Creek in Clinton Township, MI and Fairlane Town Center in Dearborn, MI.
The sale of the properties totaled $1.403 billion, excluding transaction costs. Net cash proceeds totaled $736 million after retiring $623 million in debt and accrued interest and $44 million in transaction costs.
Taubman's share of the net cash proceeds was $716 million.
The REIT said that a portion of the funds are held by qualified intermediaries to be used to fund a tax deferred like-kind exchange. However if an asset is not identified for the Section 1031 exchange, a special dividend of up to $5.00 per share will be declared. The remaining net proceeds will be used for general corporate purposes and to reduce outstanding borrowings under its revolving lines of credit.
The deal tells two equally viable stories underpinning commercial real estate: One is the trend of REITs such as Taubman to trim their portfolios of non-strategic assets in order to reposition their holdings. Indeed CEO and president Robert Taubman called the deal "transformative."
"The sale of these assets leaves our remaining portfolio significantly enhanced, with higher sales productivity and faster net operating income growth," he said in a prepared statement. "It also allows management to focus on the company's most strategic assets and development and redevelopment pipelines, where the greatest net asset value can be created."
For the Starwood Retail Partner platform, these properties are core assets. Barry Sternlicht, chairman of Starwood Capital Group launched the group in the Summer of 2012, aided by Scott Wolstein, former Chairman of DDR. Their acquisitions have included Blue Back Square in West Hartford, CT and seven regional malls in the US from the Westfield Group on November 18, 2013.
The addition of the Taubman assets expands its square footage by approximately 38%.
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