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Taubman Takes Writedowns on The Pier and Regency Square

Taubman Centers Inc. (NYSE: TCO) this week announced the write down of the book values of 282,000-square-foot The Pier Shops at Caesars in Atlantic City, N.J., and the 820,000-square-foot Regency Square in Richmond, Va. The writedowns will result in a reduction in Taubman's earnings of $161 to $169 million, representing earnings and funds from operations of $1.95 to $2.05 per share.

"It's disappointing to announce these impairment charges," Chairman, president and CEO Robert S. Taubman said in a statement. "We've invested a significant amount of time and capital in these two properties. Unfortunately, the current economic environment has worked against our best efforts."

The company said that NOI generated from The Pier Shops at Caesars is insufficient to cover the debt service on the asset's $135 million non-recourse mortgage. Furthermore, given the dim long term prospects on the property, Taubman's board of directors has decided that the firm should "discontinue its financial support of the center." The company intends to immediately begin discussions with the lender, Centerline Capital, and, subject to the lender's future decisions, will continue management and leasing of the center.

Taubman is writing down the book value of the Pier by $106 to $111 million down to approximately $52 million. The company's entire cash investment to date in the property has been approximately $35 million. The property opened in 2006 and sits at the midpoint of the Atlantic City Boardwalk on a pier over the Atlantic Ocean.

The firm has also concluded that the investment in Regency Square is impaired based on current estimates of future cash flows for the property. As a result, the book value of the asset will be written down by $55 to $58 million to approximately $30 million. At the current level of NOI, Regency Square intends to continue to service its $74.5 million non-recourse mortgage loan.

Other Notable Deals

Glimcher Realty Trust ( NYSE: GRT) completed a public offering of 30,666,667 common shares at a price of $3.75 per share, including 4,000,000 common shares issued and sold upon the full exercise of the underwriters' option to purchase additional shares. It resulted in net proceeds for the firm of $109 million. Goldman, Sachs & Co. acted as sole bookrunning manager of the offering and KeyBanc Capital Markets Inc. acted as joint-lead manager of the offering…. Hanley Investment Group Real Estate Advisors represented the buyer and seller in the sale of a the 76,364-square-foot Hillcrest Marketplace in Mobile, Ala. The sale price could not be disclosed. The buyer was a private investor from Atlanta. The seller was Lamar Cos.…. The Indianapolis and San Diego offices of Holliday Fenoglio Fowler, L.P. (HFF) arranged a $4.1 million recapitalization of the Harborview Mixed-Use Development in National City, Calif. HFF placed a three-year construction loan with Embarcadero Bank for Pedcor Commercial DevelopmentMarcus & Millichap Capital Corp. arranged a $6 million, 10-year fixed-rate loan to refinance the 45,402-square-foot Auburn Center in Auburn, Wash. The refinancing package was provided by a local bank…. WP Realty acquired the approximately 70,000-square-foot Devon Village shopping center in Devon, Pa. for an undisclosed price.
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