Activist asks Simon Property competitor to consider sale

October 19, 2016

Shares in Taubman Centers Inc. surged Wednesday, one day after Jonathan Litt, an activist investor known for targeting real estate companies, pushed for the mall owner to cut costs or consider a sale of the company.

Shares in Bloomfield Hills, Michigan-based Taubman rose as much as 11 percent, to $76.37 each, in morning trading, their biggest intraday increase since May 2009.

Taubman rejected a high-profile hostile takeover bid worth about $4.3 billion from Indianapolis-based Simon Property Group Inc. in 2003. The drawn-out takeover attempt was called off after Michigan's governor signed a bill that changed the state's takeover laws, following heavy lobbying by the Taubmans.

Taubman, founded in 1950, has 24 malls across the United States, including high-end destinations such as the Mall at Short Hills in New Jersey and Beverly Center in Los Angeles.

Litt wants the company to narrow what he sees as a gap between its share price and the value of its malls, the Wall Street Journal reported Tuesday, citing people with knowledge of the matter. He plans to take his campaign public after privately meeting with Chairman and CEO Robert S. Taubman over the summer, the newspaper said.

“Maximizing sustained ‘shareholder value’ should always be a top priority and we believe hindsight clearly illustrates the stay-independent strategy of 2003 has not maximized value,” Litt wrote in letter to Taubman’s board, referring to Simon’s takeover attempt. “Whether it is a management-led privatization or a sale of the company to a third party, all options should be evaluated.”

A spokesman for Litt’s investment firm, Land & Buildings Investment Management, declined to comment. His firm owns about a 1 percent stake in Taubman Centers, the Journal reported.

Taubman Centers “welcomes open and constructive dialogue toward the goal of enhancing long-term value,” the company said in an emailed statement. The company “is successfully executing on a clear strategic plan to own, manage, develop and acquire high-quality retail properties.”

Taubman’s stock had fallen 7.2 percent this year through Tuesday, the worst performance in a Bloomberg index of regional mall owners.

Litt is currently involved in activist campaigns at MGM Resorts International and NorthStar Asset Management Group Inc. He last year sought changes to the board of mall owner Macerich Co., which later agreed to add independent directors and end a stockholder rights plan.

That came after Macerich rejected a $16.8 billion takeover bid by Simon.

Litt cited the Taubman’s “dubious distinction” of having the worst corporate governance score among all real estate investment trusts as ranked by Green Street Advisors LLC, a REIT research firm. Litt recommended de-staggering the election of board members, reducing the tenure from 14 years to less than seven and separating the chairman and chief executives including Scot Sellers, former CEO of apartment landlord Archstone-Smith Trust, to replace a director who recently resigned.



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