Taubman Writes Down Asset Values

Taubman Centers Inc. (TCO - Analyst Report) recently said it would record impairment charges of $161 million to $169 million in the third quarter. The real estate investment trust is writing down book values of its The Pier Shops at Caesars asset in New Jersey and Regency Square in Virginia to fair values due to the continued economic downturn.

The Pier Shops at Caesars is a 282,000 square feet shopping center in which Taubman owns a 77.5% stake. The company considers net operating income from the property to be insufficient to repay its $135 million non-recourse mortgage debt. Thus, it will write down book value of the asset by $106 million to $111 million, out of which Taubman has a share of about $100 million to $105 million.

Regency Square is an 820,000 square feet shopping center housing leading fashion retailers like Macy’s Inc. (M - Analyst Report), J. C. Penney Co. Inc. (JCP - Analyst Report) and Sears Holding Corp. (SHLD - Analyst Report). Taubman anticipates cash flow from the property to be hurt by the decline in its net operating income and necessary capital expenditures. It is accordingly writing down book value of the asset by $55 million to $58 million to approximately $30 million.

Taubman owns, develops, acquires and operates regional and super-regional shopping centers throughout the U.S. and Asia. Retail shopping centers spanning over 400,000 square feet of gross leaseable area (GLA) are generally referred to as regional shopping centers, while those with GLA in excess of 800,000 square feet are called super-regional shopping centers. A large number of these shopping centers are strategically located in major metropolitan areas, including Los Angeles, San Francisco, Denver, Detroit, Phoenix, Miami, Dallas, Tampa, Orlando and Washington DC.

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