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PO Box 1212 Tampa, FL 33601 Pinellas Updated November 2024
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RETURN TO NEWS INDEX Real estate giant backs out of $3.6B deal to buy the owner of International Plaza and other Florida luxury malls, citing Covid-19 fallout Simon (NYSE: SPG) on Wednesday said it has terminated its Feb. 9 merger agreement with Taubman (NYSE: TCO). Simon also said it has filed a court action in Michigan seeking a declaration of two events: first, that Taubman suffered a material adverse event under the merger agreement and secondly, that Taubman has breached the parts of the merger agreement that govern its business operations.
"The Covid-19 pandemic has had a uniquely material and disproportionate effect on Taubman compared with other participants in the retail real estate industry," Indianapolis-based Simon said in a news release.
Many of Taubman's retail properties are enclosed malls in dense metropolitan areas — and many are dependent on tourists. Of Taubman's 26 properties, seven are in Florida. Besides Tampa's International Plaza, Taubman also owns the following malls:
Simon also alleges that "Taubman has failed to take steps to mitigate the impact of the pandemic as others in the industry have, including by not making essential cuts in operating expenses and capital expenditures."
Later Wednesday, Taubman said in a statement that Simon's termination of the merger agreement is "is invalid and without merit, and that Simon continues to be bound to the transaction in all respects."
"Taubman intends to hold Simon to its obligations under the Merger Agreement and the agreed transaction, and to vigorously contest Simon’s purported termination and legal claims," Taubman said. "Taubman intends to pursue its remedies to enforce its contractual rights under the Merger Agreement, including, among other things, the right to specific performance and the right to monetary damages, including damages based on the deal price."
When Simon and Taubman announced their merger, Simon CEO David Simon billed the deal as a way to "invest in innovative retail environments that create exciting shopping and entertainment experiences for consumers, immersive opportunities for retailers."
Covid-19, however, has sent malls and retail real estate into a tailspin. Even with traditional retail sales declining, malls and other retail landlords were able to drive consumers to their properties with restaurant rows filled with bar and entertainment concepts. But in the face of the pandemic, those concepts that are built on in-person experiences are suffering the most.
In 2019, International Plaza signed deals with Pinstripes, a bowling alley, bocce court and bistro concept, as well as a dine-in movie theater by CMX Cinemas. CMX has filed for Chapter 11 bankruptcy, and it isn't known if that location will still move forward.
Simon is already exposed to the downturn in Florida tourism. It has 22 properties in the Sunshine State, many of which are outlet malls strategically positioned in tourist corridors near beaches and theme parks. In Tampa Bay, its portfolio includes Tyrone Square Mall, Ellenton Outlets and Tampa Premium Outlets.
Last week, the company filed a lawsuit against Gap Inc., alleging it is owed $66 million in unpaid rent and other charges. |
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