In yet another example of the Church’s lack of prophetic foresight, one of the Church’s flagship spending sprees (1...2...3...let’s go shopping) has hit a problem. The owners of Taubman (the Mall’s operator on behalf of the Church) have been trying get someone to buy them out, and thought they had found someone....
Termination of a $3.6 billion deal involving the operator of Salt Lake’s sprawling City Creek Center was announced Wednesday, sending shares of Taubman Centers Inc. down over 20% amid a brick-and-mortar retail market that’s been devastated by the COVID-19 pandemic.
Taubman has operated the retail portion of the property, owned by The Church of Jesus Christ of Latter-day Saints, since the $1.5 billion mixed-use development opened for business in downtown Salt Lake City in 2012.
In a posting on its website, Taubman said the company received notice Wednesday that the Simon Property Group, a mammoth commercial real estate investor and U.S.-based mall and shopping center operator, had terminated an agreement announced in February to acquire Taubman and its holdings.
The church owns the property, but outsources the property management, as far as I am aware. Therefore, what exactly would EPA need to rescue? The "rescue" is ensured by the underlying capital structure. I believe that was entirely the point, that by owning the property, operation and maintenance would be assured, even (especially?) through economic downturns, thereby avoiding neighborhood deterioration near temple square that might otherwise occur if a leveraged mall owner faced liquidity issues.
So, in 2020, residents and visitors will have to walk 1 more block away from temple square to find the neighborhood deterioration they seek.
The church owns the property, but outsources the property management, as far as I am aware. Therefore, what exactly would EPA need to rescue? The "rescue" is ensured by the underlying capital structure. I believe that was entirely the point, that by owning the property, operation and maintenance would be assured, even (especially?) through economic downturns, thereby avoiding neighborhood deterioration near temple square that might otherwise occur if a leveraged mall owner faced liquidity issues.
Operation and maintenance are only assured via an engaged operating company. The owners of Taubman want out and SPG have got cold feet. I can envisage a scenario where the Church ends up acquiring Taubman just to keep up the operation and maintenance of City Creek.
Operation and maintenance are only assured via an engaged operating company. The owners of Taubman want out and SPG have got cold feet. I can envisage a scenario where the Church ends up acquiring Taubman just to keep up the operation and maintenance of City Creek.
Much easier and far cheaper just to turn the operation of the Mall over to Deseret Property Management. That way the City Creek Mall can open each sales day with a prayer.
Sounds like Taubman is on the brink, and there's no information in the article necessarily tying their financial health to City Creek. Simon was going to purchase Taubman and its holdings, but has apparently backed out. So now we're with a failing company without anyone coming to the rescue. If Taubman can't honor the terms of its contract, I suspect City Creek will just contract with someone else, perhaps even Simon.
The real threat to City Creek and other malls is not the financial stability of their operations contractors, but rather the changing nature of retail and whether they adapt to fill that or other needs. If only the Church had someone at its helm who could have foreseen, 20 to 25 years ago, the changing nature of retail.