Taubman Centers Inc. TCO has announced the raising of its ownership stake to 95% in The Mall of San Juan, Puerto Rico. This retail real estate investment trust (“REIT”), which previously enjoyed 80% stake in the Mall, has now added another 15% at cost. The remaining 5% is retained by New Century Development, Inc.
The move comes as a strategic fit for Taubman, given the solid value of the property. Opened on Mar 26 this year, The Mall of San Juan is an upscale shopping destination in Puerto Rico, and the first location for Nordstrom Inc. JWN and Saks Fifth Avenue in the Caribbean.
Situated at the south end of the Teodoro Moscoso Bridge and close to the Luis Munoz Marin International Airport, this 650,000-square-feet shopping center is expected to be the preferred go-to place for the island residents as well as tourists.
In fact, San Juan, the capital and densely inhabited municipality of Puerto Rico, is the manufacturing, financial, tourism and cultural hub of the island. The first hotel by Hilton Corp. in San Juan, started in 1949, saw the emergence of Puerto Rico’s tourism industry. Since then, Puerto Rico has been regarded as the premier tourist destination of the Caribbean.
Going forward, we believe that with a strong tenant base and strategic investments in high-end markets, Taubman has scope to ride on the growth curve. Yet, stiff competition, growing online sales and an anticipated rise in interest rates remain our concerns. Moreover, in the prior reported quarter, the company’s electronics group continued to face pressure, while softness in the South American tourism affected its results.
Taubman currently carries a Zacks Rank #4 (Sell). Investors interested in the retail REIT industry may consider better-ranked stocks like Acadia Realty Trust AKR and National Retail Properties, Inc. NNN. Both these stocks hold a Zacks Rank #2 (Buy).
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