As Malls Multiply, Developers Fight Fiercely for Turf
RICHMOND, Va. -- In November 2000, a lawyer for developer Taubman Centers Inc. met with three suburban taxpayers here to pose a sensitive question. Would they be interested in challenging a rival developer's plan to build a $160 million shopping mall just five miles away from a Taubman mall?
"I told them I knew some people who might be interested in helping them," recalls the lawyer, Steven W. Pearson.
The three suburbanites took him up on his offer -- and soon filed a legal challenge against a bond issue related to the proposed mall. The action derailed the rival mall for a critical year and continues to frustrate the mall's developer, Forest City Enterprises Inc. The plaintiffs say they don't know who is picking up their legal tab, but Taubman acknowledges that it is.
Forest City executives are furious. "It's not the way the game is played," says James Ratner, an executive vice president at the Cleveland-based company.
But the mall game is changing quickly these days as the nation gets increasingly malled up....
Forget Spotted Owls, Clear-Cutting in South Is Latest Forestry Flap
PARSONS, Tenn. -- Herbert Volner, who has lived all his 70 years here near the Tennessee River, walks a craggy ridge that until last month held a forest of oak trees. Now, it is a lunar landscape of stumps, dead branches and carved-out logging roads.
"It looks terrible," he grumbles, spitting tobacco juice into the red dust. "The way they're destroying our hardwood, there'll be not much left."
Mr. Volner is hardly an environmentalist. Actually, he has logged timber himself for nearly 50 years and runs a 14-employee sawmill company, R.L. Volner & Son, that makes hardwood railroad ties. But Mr. Volner has joined a wave of unlikely Southerners who say logging in the region is out of control.
Remember the spotted-owl flap in the Northwest? The battle over industrial logging isn't over. It just moved....
Sears Tower Deal Mark Return of the Mogul
A KEY PLAYER in the deal to buy one of the best-known U.S. landmarks is a little-known French-speaking, Moroccan-born New Yorker who represents the return of the old-style real-estate mogul to an industry increasingly dominated by institutional investors.
In competing for the Sears Tower in March, the group including Joseph Chetrit nabbed the building with an $840 million bid -- a price that has caused jaws to drop among Chicago real-estate professionals. To help land the deal, he offered a team of rival bidders a minority portion of the deal -- or cash -- in return for backing away, people familiar with the matter say. He also offered a nonrefundable down payment of $30 million, and postclosing capital improvements that would drive the total price over $925 million.
The Chetrit-led buying group would "very likely" change the name of the 30-year-old landmark, according to one person. But it won't be Chetrit Tower; selling naming rights is one way to haul in revenue.
The deal marks something of a personal vindication for Mr. Chetrit, who 14 years ago pleaded guilty to a felony count of violating federal customs law, when he was working in his business, importing and exporting fabric. He was sentenced to three months' probation, according to records in U.S. District Court in Manhattan....
Mall Brawl: Bid Marks REIT Turning Point
FOR MORE THAN two years, David Simon, chief executive of the nation's biggest mall owner, Simon Property Group Inc., wanted to buy rival Taubman Centers Inc. -- but his overtures were rebuffed. Finally, last November amid the Art Deco designs and dim lights of the Redwood Lounge in San Francisco's chic Clift Hotel, he leaned toward Robert Taubman, his counterpart, and uttered these words: hostile takeover.
In a "belligerent," expletive-laced diatribe, he told Mr. Taubman that resistance was a bad idea, Mr. Taubman recalled in sworn testimony. Mr. Simon reminded him that his father, A. Alfred Taubman, was "in jail," Mr. Taubman maintains, asking him: "How was it going to look?" in a takeover battle.
Mr. Simon disputes being belligerent at the hotel meeting and says he didn't threaten to use the elder Taubman's incarceration as ammunition in a takeover fight. "I told him that I didn't want that to be a matter, or a subject matter," and that "really had no bearing on our focus on this," Mr. Simon said in his own sworn testimony.
This much is certain: An extraordinary battle between shopping-mall empires is deep under way. It represents the first hostile bid among major companies in the normally cloistered real-estate-investment-trust business. It also is a turning point for a $150 billion publicly traded industry that has labored to shake a reputation that insiders have the upper hand.
The Taubman family's resistance to the $1.68 billion offer from Simon Property and co-bidder Westfield America Inc. has industry leaders worrying openly that a failed takeover will reinforce REITs' image as a group of marginal companies dominated by moguls. A Simon win, meanwhile, would indicate that REITs, despite their complicated structures, can be susceptible to hostile bids -- just like other public companies....
Office Vacancies Are Sky-High; So Why No Crisis?
MALVERN, Pa. -- In the late 1980s, Rouse & Associates was a real-estate gunslinger. Led by its charismatic founder Willard G. Rouse III, the developer -- famous for Philadelphia's soaring Liberty Place -- threw up dozens of shiny buildings without tenants. It amassed mountains of debt and ran an organization that had no titles and no committees, and frequently conducted job interviews in bars.
Mr. Rouse's rules: "Make money, have fun." Then in the early 1990s real estate crashed, and the fun stopped for Rouse and the rest of the industry. The national vacancy rate edged toward 19%, and hundreds of developers went bust, as did more than 1,400 federally insured thrifts and banks. Rouse defaulted on $117 million in mortgages, saw its prized developments auctioned on courthouse steps and fought off lawsuits.
Now Rouse is back, and its revival shows just how much the real-estate business has changed in a decade....