A. Alfred Taubman takes REIT plunge.

Developer A. Alfred Taubman has become the latest real estate mogul to take a plunge into the capital markets and form a real estate-investment trust. The REIT -- as these entities are known -- will consist of 19 enclosed malls representing 21.23 million square feet of space in 11 states across the country.

The public offering for Taubman Centers Inc. will raise between $335 million and $388 million depending on its share price which will be between $12.50 and $14.50 per share. The 26.8 million shares, 4 million of which will be marketed overseas, are expected to begin trading on the New York Stock Exchange in the next few months after approval is received from the Securities and Exchange Commission. Sources said the SEC may request more information and delay the offering. An additional 13.288 million shares of the REIT will be owned by pension funds, which will also have limited partnership interests in the Taubman Realty Group.

Bernard Winograd, executive vice president and chief financial officer of The Taubman Company, said there were strategic benefits allowed by the REIT structure.

"Having access to public sources of capital, and a publicly traded instrument whose value is readily determinable and is relatively liquid, will make it possible to raise both equity and debt in today's market."

Those pension funds -- two General Motors funds and the AT&T Master Pension Trust -- will retain a 52 percent stake in the Realty Group.

The complicated restructuring involved creating Taubman Centers -- the REIT -- which will own a 32.5 percent interest in and act as managing general partner of The Taubman Realty Group Limited Partnership (TRG). The GM trust will own 41.5 percent of TRG directly and the Taubman Group will own 26 percent. The GM and AT&T pension trusts will also own additional 13.288 million shares of Taubman Centers directly, resulting in 40,333,930 shares outstanding after the offering.

The REIT will be owned as follows: GM will own 19.8 percent, AT&T will own 13.1 percent, the public will own 66.5 percent, while .6 percent will be owned by current partners of the Realty Group including Taubman. Under REIT organization, no five individuals or fewer can own 50 percent or more of the REIT.

REIT analyst, Michael Giliberto of Salomon Brothers, after a brief look, deemed the prospectus and the deal "very complex because there is not a whole lot of property specific information and the transaction will require significant analysis."

Mark O. Decker, president of the National Association of Real Estate Investment Trusts, said, "We're really excited to see this REIT come into the market. It's a very good development for the industry because of the visibility of Mr. Taubman and his reputation and a good signal to institutional investors that a REIT can be an alternative investment. They need to see that in order to bring dollars into our side of the industry."

"There are certainly other well known developers looking at the REIT and this is a good signal to them to take the step," Decker added. "This helps existing REITS to raise capital and will continue to send a positive signal to other investors that not all real estate investments are bad."

Winograd said the Taubman Group became interested in forming a REIT as a result of discussions with Morgan Stanley, in 1991 with the lead underwriters

"The idea evolved from there," he said.