CONTACT:
Barbara Baker Joele Frank/Matthew Sherman
Taubman Centers, Inc. Joele Frank, Wilkinson Brimmer Katcher
(248) 258-7367 (212) 355-4449
www.taubman.com
FOR IMMEDIATE RELEASE
GORDON GROUP HOLDINGS ANNOUNCES AGREEMENT WITH TAUBMAN RELATING TO GORDON'S
OWNERSHIP OF THE FORUM SHOPS AT CAESARS
SIMON PROPERTY GROUP MUST ELECT TO BUY OR SELL IN 30 DAYS
GREENWICH, Conn. and BLOOMFIELD HILLS, Mich., January 13, 2003 - Sheldon
M. Gordon, along with his affiliates in the ownership of The Forum Shops at
Caesars, and Taubman Centers Inc. (NYSE:TCO) today announced that Gordon has
agreed to make an investment in Taubman and that the two developers have come to
an agreement relating to Gordon's potential acquisition of Simon Property
Group's (NYSE:SPG) interest in The Forum Shops. The property, adjacent to
Caesars Palace in Las Vegas, is currently owned by Gordon and Simon and is one
of the most productive retail venues in the nation.
Gordon - the original visionary and designer of the Forum Shops - is
currently a 42% limited partner in the property with Simon, a 58% general
partner. The current partnership agreement between Simon and Gordon contains a
"buy/sell" provision. Gordon initiated the buy/sell mechanism, effective
January 13, 2003, by indicating that it is willing to either buy Simon's
stake or sell its own stake in the Forum Shops at a gross valuation of $590
million. The buy/sell provision requires Simon to either buy Gordon's share of
the property at the valuation set forth by Gordon, or sell its share of the
property to Gordon at that valuation.
Because the property is currently subject to $175 million of property-
level debt, this gross valuation corresponds with $415 million of equity value
($241 million for the Simon stake, and $174 million for the Gordon stake). Under
the terms of the existing partnership agreement: Simon has 30 days
to decide whether to buy or sell the Forum Shops at the specified valuation;
absent an affirmative election, Simon will be deemed to have agreed to sell; and
closing of the transaction is to occur within 120 days of Simon's decision.
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Gordon has agreed to make a significant investment in Taubman at $24 per
operating partnership unit under either the buy or the sell scenario. This
transaction will increase Taubman's equity base under either scenario through
the issuance of equity at a premium to the current market price of Taubman
Centers stock.
If Simon decides to sell its stake in the Forum Shops, Gordon will acquire
the Simon interests and become the sole owner of the Forum Shops. Gordon will
then contribute a 33.3% interest in the Forum Shops to Taubman in exchange for
2.42 million Taubman operating partnership units at $24 per unit. Gordon and
Taubman would become joint venture partners in the ownership of the Forum Shops
with The Taubman Company as the manager of the asset. Gordon's operating
partnership units would have the same attributes as ordinary units except that
they would have no voting rights and Gordon would have very limited rights to
sell these units for 2 years, and thereafter on a phased basis over a 3-year
period. Taubman anticipates that this transaction would be approximately $0.06
accretive to FFO per share during the first full year.
As part of initiating this buy/sell, Gordon has received a firm commitment
for a $385 million non-recourse mortgage financing. Taubman will provide $72
million in additional financing consisting of $44 million for the remaining cash
required for Gordon's purchase of Simon's interest and $28 million for the
anticipated Phase III expansion at the Forum Shops - a project currently
contemplated to add over 175,000 square feet of prime retail space directly on
the Las Vegas Strip. The Taubman financing would be converted after the purchase
into preferred equity to be provided to the new joint venture that would have a
12% return (current pay) and is anticipated to be repaid with refinancing
proceeds after the completion of Phase III.
If Simon decides to buy, Gordon will sell its interest in the Forum Shops
and invest $50 million of its cash proceeds in Taubman in exchange for 2.08
million Taubman operating partnership units at $24 per unit, with voting and
sale restrictions as described above.
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Sheldon M. Gordon, Chairman of Gordon Group, stated, "We have known
Taubman for many years and developed Beverly Center together, which opened in
1982. We find Taubman to be a terrific partner because of their leasing
strengths and focus on high-quality assets. We approached Taubman with this
opportunity because we believe that a partnership with Taubman will help ensure
that the Forum Shops will realize its fullest potential as a marquis property.
Taubman has an unparalleled collection of high-quality assets, and I look
forward to participating in the long-term value of the company. At my
insistance, the agreement with Taubman contains provisions ensuring that, in any
event, my relationship with Simon is ended permanently."
Robert S. Taubman, Chairman, President and Chief Executive Officer of
Taubman Centers, stated, "The Forum Shops is one of the most attractive retail
assets in the country - a perfect fit with the other premium-quality malls in
the Taubman portfolio. With high-end tenants like Louis Vuitton, GUCCI, Escada
and Bvlgari, the Forum Shops is one of the most productive retail venues in the
country, with sales per square foot in excess of $1,100 and significant upside
potential that Taubman has the expertise and experience to develop and enhance.
Sheldon Gordon is the original visionary and designer of the Forum Shops, and we
are excited to have this unique opportunity to work together with him. This is a
win-win situation for Gordon and for Taubman. In either the buy or sell
scenario, we look forward to having a savvy real estate investor like Gordon as
a major investor in Taubman."
A flowchart showing transaction steps following Gordon's trigger of the
buy/sell provision of the current partnership agreement with Simon is available
on Taubman Center's website at www.taubman.com, or, for a fax copy, please call
Matthew Sherman at Joele Frank, Wilkinson Brimmer Katcher (212-355-4449 ext.
165). In addition, a full presentation regarding the transaction is available on
Taubman's website.
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Gordon Group Holdings, LLC, recognized as a pioneer of the "Entertainment
Retail" concept in the United States, is an award-winning developer of dynamic
destination retail projects. A privately-held firm, Gordon Group projects
include San Francisco Center, Bridgemarket in New York City, Pearlridge and
Kahala Mall in Honolulu, and the current redevelopment of the Ocean One Pier in
Atlantic City, NJ. The company is headquarterd in Greenwich, Conn.
Taubman Centers, a real estate investment trust, owns, develops, acquires
and operates regional shopping centers nationally. Taubman Centers currently
owns and/or manages 30 urban and suburban regional and super regional shopping
centers in 13 states. The company is headquartered in Bloomfield Hills, Mich.
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AS AMENDED. THESE STATEMENTS REFLECT MANAGEMENT'S CURRENT
VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE. ACTUAL RESULTS
MAY DIFFER MATERIALLY FROM THOSE EXPECTED BECAUSE OF VARIOUS RISKS AND
UNCERTAINTIES, INCLUDING, BUT NOT LIMITED TO CHANGES IN GENERAL ECONOMIC AND
REAL ESTATE CONDITIONS INCLUDING FURTHER DETERIORATION IN CONSUMER CONFIDENCE,
CHANGES IN THE INTEREST RATE ENVIRONMENT AND AVAILABILITY OF FINANCING, AND
ADVERSE CHANGES IN THE RETAIL INDUSTRY. OTHER RISKS AND UNCERTAINTIES ARE
DISCUSSED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION
INCLUDING ITS MOST RECENT ANNUAL REPORT ON FORM 10-K.
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