In tune with the efforts to restructure its portfolio, Taubman Centers Inc. (TCO) recently disclosed two sale transactions. First of all, the company announced the sale of a land parcel as well as stake in a retail property and secondly the offloading of stake in a Florida-based shopping mall.
Sale to Simon Property
In particular, Taubman disclosed the sale of a Syosset, New York-based 39 acre land parcel and the divestiture of 50% stake in a Tempe-based indoor outlet mall – Arizona Mills – to Simon Property Group, Inc. (SPG).
Taubman received $60 million in cash and 555,150 partnership units at $154.91 per unit in Simon Property Group Limited Partnership from the divestiture. Moreover, with the disposition, Taubman was eased of its share worth $84 million of the current mortgage loan on Arizona Mills worth $167 million. This brought the deal’s total value to $230 million.
The sold land, consisting of 39 acres and situated near the Long Island Expressway and Robbins Lane in Syosset, was previously held by Taubman for building The Mall at Oyster Bay, which was not completed. On the other hand, Arizona Mills was previously constructed by Taubman in partnership with Simon Property and The Mills Corporation. With the sale deal, Simon now fully owns Arizona Mills.
Sale to TIAA-CREF and APG
In another deal, Taubman concluded the sale of its 49.9% stake in Tampa, Florida-based retail property – International Plaza – to a joint venture owned by TIAA-CREF and APG. The $499 million deal price included cash consideration of $337 million and beneficial interest in debt of about $162 million.
Taubman has plans to use the proceeds for repaying loan on Richmond, Virginia-based Stony Point Fashion Park and for meeting other corporate needs. As a matter of fact, International Plaza is a 1,202,000 square foot center situated nearby Tampa International Airport. The property has retailers such as Dillard's Inc. (DDS) and Nordstrom Inc. (JWN) as tenants.
Our Viewpoint
Although the divestitures weigh on Taubman’s near-term top-line growth, the usage of proceeds for paying off debts and financing the development pipeline depicts Taubman’s effective capital reallocation efforts.
Taubman is scheduled to report its fourth-quarter 2013 results on Feb 12, after the closing bell. The Zacks Consensus Estimate for fourth-quarter FFO per share is currently pegged at $1.07.
The company’s Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at -0.94%. This along with the Zacks Rank #3 (Hold) makes us skeptical about a positive earnings beat.
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