Simon's Takeover Of Upscale Mall Operator Leads To 105 Layoffs
More than 100 workers in the Detroit suburbs are being laid off as part of retail REIT Simon’s acquisition of Taubman Realty Group.
Taubman disclosed it was closing its headquarters in the suburbs of Detroit and eliminating 105 jobs in a Worker Adjustment and Retraining Notification Act post in mid-November after Simon Property Group announced the purchase of the 12% of Taubman shares it didn’t already own.
The layoffs are expected to begin Jan. 9, although the WARN notice, required by federal regulations, doesn’t say whether operations at the property in Bloomfield Hills, Michigan, will be wound down or abruptly ended.
Taubman declined a request for comment, and a representative for Simon didn’t respond to an email or phone call Friday morning.
Simon announced on Nov. 3 that it had completed the purchase of Taubman through the exchange of 5,060,000 limited partnership units. In contrast to stock deals, limited partnership stakes are typically mostly passive investments with little to no voting power over corporate strategy.
“With full ownership of TRG, we are well-positioned to capitalize on new growth opportunities, increase net operating income and deliver long-term returns to our shareholders,” Simon CEO David Simon said in a statement.
The REIT purchased an 80% stake in Taubman as the pandemic dragged down retail valuations. It spent $2.65B to acquire the stake in December 2020, down from a $3.6B offer Simon had made in February, before lockdowns upset consumer patterns, CoStar reported.
Indianapolis-based Simon Property Group, the dominant mall REIT, with a nearly $70B market capitalization, spent $200M for another 4% of Taubman’s shares in December 2023 and another $265M for 4% more of the firm in December 2024, according to a note from Piper Sandler after the most recent transaction.
The latest deal is valued at roughly $900M, based on where Simon’s stock was trading, the Piper Sandler analysts said.
Taubman owned or managed two luxury malls in China and more than a dozen properties in the U.S., including Beverly Center in Los Angeles, The Mall at Short Hills in New Jersey and The Gardens Mall in Palm Beach Gardens.
“I want to thank everyone at Taubman, present and past, for their contributions to our success over the 75 years since our founding by my father Alfred,” Taubman CEO Robert Taubman said in a statement.
Simon’s stock was battered during the pandemic, but it has since bounced back and was trading around $181 per share Friday, not far off its 52-week high of $190. The stock is up more than 4% this year and more than 120% over the last five years.
Simon generated $1.3B in funds from operations in the third quarter, up from $1.1B during the same period a year earlier, and its malls were 96.2% occupied, the REIT disclosed in third-quarter results at the same time the Taubman acquisition was announced.
