Banks are lending the Taubman Realty Group Limited Partnership $150 million to buy and expand a New Jersey mall.
The tenders are Union Bank of Switzerland, Morgan Guaranty Trust Co., and Bayerische Hypotheken- und Wechsel-Bank, a German bank commonly known as Hypobank. UBS is administrative agent.
The Taubman Realty Group will use $140 million of the proceeds to buy Prudential Insurance Company of America's 50% stake in the shopping center, called The Mall at Short Hills.
Developer Becomes Full Owner
This will give the group 100% ownership of the 1.1-million-square-foot mall.
The loan is Morgan's first for the shopping center development and management company. but Hypobank and UBS have provided other financing, said Bernard Winograd, Taubman's chief financial officer.
Late last year, UBS led two $80 million financings for Taubman-controlled entities.
Officials at Morgan, Hypobank, and UBS declined to comment or could not be reached.
No Turnaround in Lending Seen
The mall is adding 400,000 square feet to house new Nordstrom, Saks Fifth Avenue, and Neiman-Marcus stores. An additional 100,000 square feet will house other tenants. Construction is to be completed in 1995.
While the Taubman loan is one of the largest commercial real estate credits in recent years, it does not signal a turnaround in banks' readiness to provide new funds, Mr. Winograd said.
"I don't think we anticipate banks as being a principal source of debt financing," he said.
"It is our perception that there are a few banks interested in doing this business on a very selective basis, only for the best properties and most successful developers."
Term Loan and Revolving Credit
The Taubman Realty Group develops, owns, and operates regional shopping centers. Last year, Taubman Center Inc., the managing general partner of Taubman Realty Group, raised $338 million in equity through an initial public offering of stock.
Taubman Realty earned $63 million on $435 million of revenues last year.
While the Short Hills loan is secured by the property, there is full recourse to Taubman Realty Group. a banker said.
The five-year credit comprises a $45 million term loan and a $105 million revolving credit, most of which was drawn when the transaction was completed last week.
The loan will be syndicated later in the summer to other banks, a banker said.
Seeking a Debt Rating
Mr. Winograd said the borrowing rate is based on the company's credit rating and the performance of the mall. He declined to elaborate.
The company is talking with a credit rating agency to receive a debt rating, said Mr. Winograd.
The realty group's ratio of debt to equity was 2.5 at yearend, a spokesman said.