Starwood Capital Group agrees to pay $1.4B for seven malls

Starwood Capital Group, a Greenwich-based private investment firm, recently entered into an agreement with Taubman Centers Inc., a regional mall owner, to purchase seven Taubman malls in the southern U.S. and Michigan for about $1.4 billion. Starwood’s share of cash and property-level debt are expected to be $785 million and $620 million.

“This acquisition is highly strategic for Starwood and its retail operating platform, Starwood Retail Partners,” said Barry Sternlicht, chairman and CEO of Starwood Capital Group, in a statement. “These assets will expand SRP’s retail portfolio 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.”

SRP, a Chicago-based division of Starwood, was formed to manage, lease and develop retail real estate assets in regional mall sectors.

Taubman said in a press release the sale is part of the company’s ongoing strategy to recycle capital, maximize its net operating income growth rate and create net asset value for investors over time. Taubman’s share of cash and property-level debt are expected to be $765 million and $595 million. The company was represented by Eastdil Secured L.L.C.

Taubman Centers’ board of directors approved the transaction, and the deal is expected to close in the fourth quarter this year.

“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,” said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers, in a statement. “As a result of these sale transactions, the company’s development and redevelopment pipeline will have an even greater impact on our growth.”

Taubman Centers owns, leases or manages 27 retail properties in 15 states and South Korea.

These are the seven malls included in the Starwood-Taubman transaction:

● MacArthur Center (Norfolk, Va.)
● Stony Point Fashion Park (Richmond, Va.)
● Northlake Mall (Charlotte, N.C.)
● The Mall at Wellington Green (Wellington, Fla.)
● The Shops at Willow Bend (Plano, Tex.)
● The Mall at Partridge Creek (Clinton Township, Mich.)
● Fairlane Town Center (Dearborn, Mich.)