Taubman says tight credit stalls Macau financing

New York (Reuters) – Tighter credit conditions have delayed financing for a massive casino, hotel and retail project planned for the Chinese territory of Macau, the head of project partner Taubman Centers said on Friday.

The USD 1.3 billion in financing was to have been completed by now. „Given the current capital market conditions, it has taken much longer,“ Taubman Chairman and CEO Robert Taubman said.

„The credit markets are just terrible,“ he said in a conference call with analysts a day after the upscale mall owner and operator reported a fall in second-quarter earnings.

Taubman also cut its forecast for the full year, in part because of costs related to the project in Macau.

The company, based in Bloomfield Hills, Michigan, has partnered with Hong Kong-based eSun Holdings Ltd for the retail portion of Macao Studio City, a casino, hotel, retail and entertainment center.

Plans call for Taubman to acquire a 25 percent interest in The Mall at Studio City and ultimately invest USD 200 million.

The venture also involves Hong Kong’s Lai Sun Development and Singapore’s CapitaLand.

„All parties are participating in a 24/7 effort to complete the financing and move forward on the project,“ Taubman said.

Given the tough conditions, the partners may have to put more equity into the deal, he said.

„Meanwhile, leasing is progressing extremely well,“ Taubman said. „Over half of the center is committed in one form or another and the majority of tenants have posted deposits.“

The company’s funds from operations, a performance measure for real estate investment trusts, fell 3.8 percent in the second quarter, mainly because of higher predevelopment costs, including those related to the Macau project.

When the joint venture agreement was struck in February, Taubman put down a USD 54 million deposit, which is held in escrow until the financing has been completed.

That forced Taubman to expense the interest, which trimmed its bottom line.