NEW YORK — Real estate development firm Gordon Group has agreed to make an investment in Taubman Centers Inc., a move that could result in Taubman managing The Forum Shops at Caesars in Las Vegas, which is owned by its archrival, Simon Property Group.
Simon and Taubman are embroiled in a bitter battle in which Simon has made a $1.5 billion hostile takeover bid for Taubman, as reported.
Gordon said Monday that it has exercised a “buy/sell” provision in its partnership agreement with Simon over The Forum Shops, one of the most productive shopping centers in the country. Gordon said it is willing either to buy Simon’s 58 percent stake or sell its own 42 percent stake. Gordon places the gross-valuation of Simon’s 58 percent stake at $590 million.
The Forum Shops houses such tenants as Louis Vuitton, Gucci, Escada and Bulgari. It has sales per square foot that exceed $1,100, as well as potential for development and enhancement.
Under the terms of the buy/sell provision, Simon has 30 days from Monday to decide whether to buy Gordon’s stake or sell its own in the Forum Shops, with the closing of the transaction either way to occur within 120 days of Simon’s decision.
If Gordon ends up selling its stake to Simon, it will invest $50 million of the cash proceeds in Taubman in exchange for 2.08 million units of Taubman operating partnership units at $24 a unit.
Should Gordon acquire Simon’s stake in the Forum Shops, Gordon would own the whole center and would give a one-third interest in the property to Taubman in exchange for 2.42 million Taubman operating units. The two would become joint venture partners, with Taubman managing the property.
Gordon has received a firm $385 million nonrecourse mortgage financing commitment. Taubman is contributing an additional $72 million in financing. The parties anticipate that a portion of the funding will be used to expand the property to include an additional 175,000-plus square feet of prime retail space directly on the Las Vegas Strip.
Regarding the hostile takeover bid, a spokesman for Simon said in a statement: “Today’s announcement regarding the Forum Shops has no impact on [Simon’s] desire and ability to complete our all-cash premium tender offer for all of [Taubman’s] outstanding common shares. Our management team and board of directors will review [Simon’s] options with respect to this asset, which is one of our 243 properties, and make any necessary decision that is in the best interests of our shareholders.”