A top mall operator in the United States, Taubman Center, is now facing another activist investor in its earlier case. Elliot Management, which is a hedge fund owned by Paul Singer, has built a position at Taubman. There is even a possibility of pursuing available options which include taking it private. This was after consultations between the real-estate investment management and the activist firm. However, the next steps for the activist’s remain unclear. Elliot from New York has taken less than the minimum threshold of 5% needed. 5% is the minimum stake required to disclose a firm’s position to regulators. It was not possible, however, to determine the exact size of the stake.
On Tuesday morning news, Taubman shares were on the rise by more than 5%. Meanwhile, Land & Buildings Investment Management, a firm owned by activist Jonathan Litt, has attacked Taubman. The activist is pushing the mall owners to set the company up for sale among other demands. Shopping centers in the United States are among Taubman’s main portfolio. However, REIT has a small investment in South Korea and China. Taubman’s stocks have inflated by over 25% in 2017 alone despite the fact that most retailers are struggling to do business. Short sellers are targeting the firm’s shares in addition to those of General Growth Properties, REIT Rivals Heritage, Macerich and Simon Property Group.
The news comes at a time when the REIT industry is under massive pressure, and especially the landlords who have retail exposure. Dan Loeb, Third Point hedge fund manager, said last week that the mall operator had built a position in Macerich. According to other reports, Loeb is likely to push for the potential sale of the firm over time. Also one of the most significant public traded companies in US mall ownership, GGP, has received a bid worth $15 billion. The proposal was by Brookfield Property Partners to acquire The REIT shares that it currently doesn’t own. GGP and Brookfield have held preliminary deliberations about taking the firm private.
Taubman has taken some steps to defend itself. The measures include the appointment of two directors to the REIT’s board and making enhancements in its governance. Litt told Taubman in a letter that it was time for them and the independent members of its board, to hold the company’s management accountable for every dime. In the letter, Litt continued to say that Taubman should evaluate the company’s current leadership and ineffective fire managers.