(WXYZ) — Malls around metro Detroit are slowly starting to re-open, but the financial strain of the pandemic is far from over.
Many area malls were losing anchor stores even before COVID-19.
Prof. Erik Gordon with University of Michigan's Ross School of Business said regional malls need to stand out in order to attract shoppers. The enclosed indoor mall and traditional food court are no longer attracting the numbers they once did, he said; and the pandemic has further strained malls.
Twelve Oaks in Novi and Great Lakes Crossing in Auburn Hills Gordon said, have likely fared better than other local malls from the pandemic because in addition to larger big name stores, they offer unique stores most malls don't. Both are owned by Taubman Centers, Inc. based in Bloomfield Hills, and are in the midst of a battle with their intended buyer, Simon Property Group.
Prior to the pandemic hitting Michigan, Simon was slated to purchase them through a merger agreement with Taubman.
But last week, Simon announced its plans to pull out of the deal.
"Simon's termination of the Merger Agreement is based on two separate and independent grounds. First, the COVID-19 pandemic has had a uniquely material and disproportionate effect on Taubman compared with other participants in the retail real estate industry. Second, in the wake of the pandemic, Taubman has breached its obligations, which are conditions to closing, relating to the operation of its business. In particular, Taubman has failed to take steps to mitigate the impact of the pandemic as others in the industry have, including by not making essential cuts in operating expenses and capital expenditures," Simon said in a June 10 press release.
"I think Simon probably wants a lower price. The pandemic has hurt malls, but the pandemic has hurt the Taubman malls less than most malls," Gordon told 7 Action News.
Still though, he said the mall-going experience, losing popularity even before the pandemic, is going to take another hit.
"The mall experience is going to be spooky. I think we’re going to go into malls and they’re going to be quieter than ever," he said.
In Clinton Township, Partridge Creek, an outdoor mall, has lost two major anchor stores in recent years. First Carsons and then Nordstrom last fall.
They re-opened June 4, with about 70 percent of stores back online.
“We’re not immune to the global impact the pandemic has created," said general manager Melissa Morang.
Partridge Creek's outdoor setting has helped, Morang said; not only for social distancing, but also for hosting different types of events.
The mall's owner Starwood Capital Partners still owes $681.6 million on a mortgage loan according to Real Estate Research firm Trepp, LLC; this includes three out of state malls.
As for the stores at Partridge Creek that remain closed?
“We do expect them to open, they’re just opening a little bit more slowly.”
She said visitors should expect noticeable changes at Partridge Creek, including shortened hours and limited capacity in stores. She suggested people visit the mall's website before their visit.
Morang pointed out Partridge Creek did welcome a new store recently, Evereve, and also added three new restaurants prior to the pandemic. The mall's movie theatre remains closed.
As for the Taubman-Simon deal, Taubman said in a press release it plans to fight the termination.
"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. 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 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.
Taubman has also announced that its Special Meeting of Shareholders, at which Taubman shareholders will be asked to approve the Merger Agreement, remains scheduled for June 25, 2020 at 10:00 A.M. at Taubman’s headquarters in Bloomfield Hills, Michigan," the release said.
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