SALT LAKE CITY — 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.
“Taubman believes that Simon’s purported termination of the merger agreement is invalid and without merit, and that Simon continues to be bound to the transaction in all respects,” the statement read. “Taubman intends to hold Simon to its obligations under the merger agreement and the agreed transaction, and to vigorously contest Simon’s purported termination and legal claims.”
Taubman also noted it intends to seek legal remedies, including damages, in response to the termination notice.
“Taubman intends to pursue its remedies to enforce its contractual rights under the merger agreement, including, among other things, the right to specific performance and the right to monetary damages, including damages based on the deal price,” the posting says.
Simon bills itself as the largest retail property operator in the U.S. with over 300 locations under management. Taubman operates about two dozen shopping centers, mostly in the U.S. with a few international venues.
Taubman stock tumbled over 20% by the end of regular trading Wednesday while Simon Group’s stock saw a 4% decline.
City Creek Center reopened its doors in early May after being closed for almost two months after officials abruptly closed the downtown mall on March 12. The closure was decreed after operators learned that a patron who had been shopping there just days earlier had tested positive for COVID-19.
As of Wednesday, about half of City Creek Center’s 90-plus retail and restaurant tenants were open for business with many operating under limited hours, according to the shopping center’s website.
Retail chains have been negotiating with landlords in Utah and around the country for rent relief to help mitigate the pandemic-induced downturn. A recent report from Datex Property Solutions found 21% of national retail chains are paying either reduced rent, or no rent at all, to their retail location owner/operators. The same report noted in April, only 58% of billed rents were paid by national retailers.