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Taubman, Macerich Team Up to Buy Country Club Plaza for $660 Million

Highwoods Selling Famous Kansas City Shopping Destination Totaling 1.27M SF
January 5, 2016
Raleigh, NC-based Highwoods Properties is poised to sell the iconic Country Club Plaza mixed-use property in Kansas City to a joint venture between Taubman Centers and The Macerich Co. for $660 million, or $518 per square foot.

The two buyers will each hold a 50% stake in the nearly fully-leased complex following the sale closing, which is expected on February 1. The joint venture is an unusual arrangement for the rival retail property owners, and marks the first time the pair have purchased a property together.

"Taubman and Macerich are bringing our collective expertise together to continue to ensure the long-term growth and success of the iconic Country Club Plaza," said Taubman chairman and CEO Robert S. Taubman in a statement announcing the agreement. "This purchase is consistent with our strategy to own high quality, dominant assets in great markets."

The acquisition also fits into Macerich’s plans to recycle capital out of some of its slower-growth malls and into shopping centers with stronger growth prospects, according to Arthur Coppola, chairman and chief executive officer of Macerich.

"Together with Taubman, we see opportunities to expand the market reach of the Plaza as well as the potential for further retail densification of this timeless asset," Coppola added.

The high profile property encompasses 18 buildings totaling 1.272 million square feet, including 804,000 square feet of retail space and 468,000 square feet of office space. Located approximately four miles south of downtown Kansas City near the intersection of Ward Parkway and JC Nichols Parkway, Country Club Plaza opened in 1922 and was among the first planned suburban shopping developments designed to cater to car-driving shoppers.

The Plaza has many popular tenants such as Apple, H&M, The Cheesecake Factory and The Capital Grille.

A spokesperson for Taubman said the partnership with Macerich offers advantages over a typical capital partner by enabling both to leverage collective relationships and operations experience, resulting in providing both a capital partner and added value player.

Highwoods plans to use part of the sale proceeds to repay $415 million in debt incurred from several recently acquisitions. As part of its strategy to shed retail-focused property in favor of office properties in central business districts, Highwoods recently acquired Monarch Tower and Monarch Plaza in Atlanta's Buckhead district and SunTrust Financial Centre in Tampa.

"With this sale, we will return our leverage ratio to the low end of our comfort zone, simplify our business model and garner G&A savings," noted Highwoods' president and CEO Ed Fritsch. "Plus, with $220 million of additional proceeds held in escrow, we will have ample dry powder to reinvest in additional office assets consistent with our BBD (better business district) strategy and/or use for other general corporate purposes."

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