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Taubman (TCO) Opens Overhauled International Market Place

Zacks Equity Research

Retail real estate investment trust (“REIT”), Taubman Centers Inc. TCO, announced the grand opening of the revamped International Market Place in Waikiki on Aug 25. This move marks the company’s strategic efforts to overhaul well-positioned properties and leverage on market strength.

Spanning 345,000-square-foot, this open-air shopping center boasts of a decent lineup of world-class retail, restaurants and amenities. It is anchored by Saks Fifth Avenue, the sole luxury department store in Waikiki, along with the Grand Lanai that will offer al fresco dining at nine chef-driven and unique restaurants. Retail and restaurant lineup includes ABC Stores, Abercrombie & Fitch and Banana Republic among several others.

The revamp of this retail property is a strategic fit for Taubman, given that International Market Place is positioned on the 50-yard line of the Waikiki tourist district, having direct access and frontage on Kalakaua Avenue and Kuhio Avenue and daily foot traffic of 52,000 – 80,000 people. Also, 50% of the island’s population is located within 10 miles of the property.

Residential demographics are encouraging with the Honolulu metro area having one million people and around 106,000 households earning more than $100K. Growth of households earning over $100K is also expanding rapidly.

Finally, for Oahu, 2015 was the fourth consecutive year of increased visitors. In fact, the center is positioned in the heart of Waikiki and receives more than 5 million tourists – with 2.5 million from the U.S. and 1.5 million from Japan – who spend over $7 billion annually, per the company. This raises expectation for decent contribution to the top line by this property.

Taubman’s dominant retail malls located in posh regions, presence of high-quality retailers and its portfolio restructuring activities are likely to boost its top-line growth. However, stiff competition and growing online sales adversely affect the demand for space at the company’s properties.

Taubman currently has a Zacks Rank #3 (Hold).

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Investors interested in the retail REIT industry may consider stocks like Acadia Realty Trust AKR, Tanger Factory Outlet Centers Inc. SKT and Weingarten Realty Investors WRI. Each of these stocks holds a Zacks Rank #2 (Buy).

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