A. Alfred Taubman, the new owner of Woodward & Lothrop Inc., mortgaged almost all of the real estate owned by the department store chain to secure the $229.5 million loan he obtained to buy the company, recently filed real estate documents reveal.
Under a credit agreement with Manufacturers Hanover Trust Co. and a group of other banks, the company has pledged all of its assets, including accounts receivable, to its creditors.
The security agreement was signed on Sept. 18, the same day Taubman completed the purchase of the 16-store chain for $227.5 million. The Michigan real estate magnate bought the store after a highly contested battle with dissident shareholders who had argued that the company's real estate was so valuable that Taubman should have paid a higher price. Taubman ended up spending $7.5 million more for the company than the $220 million he initially offered. "I've never seen a $229.5 million mortgage before for the District of Columbia," said Rufus Lusk III, who publishes a weekly report of local real estate transactions. "This is the biggest figure I've ever seen."
According to Woodies' proxy statement issued to its former stockholders in support of the Taubman merger, the buildings Woodies owned that were secured as collateral for the loan were worth between $102.7 million and $127.2 million.