Archive | Simon

World property M24Mar14 – Westfield repositions, Simon chases innovation

Westfield sells 3 UK malls

The Westfield Group said on 20 March it had entered into conditional agreements to sell its interests in 3 UK malls – Merry Hill, Derby & Sprucefield – to Intu Properties plc for £597 million, in line with book value.

Westfield co-chief executive Steven Lowy said the announcement “continues the strategic repositioning of the international portfolio, in line with our focus on investing & operating iconic retail destinations in major world cities.”

After these sales, expected to close mid-year, Westfield’s portfolio in the UK & Europe will comprise 3 London assets – Westfield London, Stratford & Croydon – and Milan, Italy.

Mr Lowy said Westfield expected the divestments to reduce gearing by 2.1%, dilute group funds from operations by A2c/security, and have a similar financial impact on the proposed Westfield Corp. He said the transaction wouldn’t impact on the proposed Scentre Group.

Simon to invest in retail innovation

Simon Property Group Inc launched a new business to invest in retail innovation last Thursday, called Simon Venture Group.

Simon Property chief marketing officer Mikael Thygesen said: “Simon Venture Group will be investing from early-stage to high-growth technology companies, making seed to series C+ investments and focusing on both direct & indirect strategic investment opportunities. We believe we have only scratched the surface on applying technology to the retail environment in innovative, interesting ways.”

The new group will be led by Skyler Fernandes, previously a partner at multi-stage venture capital fund Centripetal Capital Partners and founder of One Match Ventures, a seed fund focused on consumer internet & high-tech companies.

Simon owns or has an interest in more than 325 retail properties in North America, Asia & Europe.

Attribution: Westfield, Simon

Regular leads: Europe Real Estate, Mingtiandi, Planetizen, World Property Channel

Continue Reading

World property M3Feb14 – Prologis back in black, Simon stronger all-up

Asset disposals lift Prologis into black
Simon improves performance across board

Asset disposals lift Prologis into black

San Francisco-based international industrial real estate owner, operator & developer Prologis Inc said on Thursday it turned its earnings around on the back of asset disposal gains.

The company leased a record 43.7 million ft² (4.1 million m²) in the fourth quarter and 152 million ft² (14.1 million m²) in 2013, and it increased occupancy over the quarter to 95.1% (93.9%). It estimated value creation at $US426 million, with an estimated margin of 30.4% from 2013 stabilisations.

Net earnings attributable to common stockholders were $US59.1 million (a $US228.7 million loss) for the quarter, $US315.4 million (a $US81 million loss) for the year. Revenue fell for both periods, $US436.8 million ($US506.1 million) for the quarter, $US1.75 billion ($US1.96 billion) for the year.

Net earnings/fully diluted share were US12c (a net loss of US50c) for the quarter, US64c (a US18c loss) for the year. Core funds from operations/fully diluted share were US43c (US42c) for the quarter, $US1.65 ($US1.74) for the year.

Chairman & chief executive Hamid Moghadam said: “We significantly increased occupancy with solid rent growth, exceeded our value creation objectives with above-average development margins and substantially grew our investment management business.

“As we look forward, the combination of rental growth, the profitable build-out of our land bank and improvements in efficiencies resulting from our global scale sets us up well for an extended period of robust earnings growth.”

At 31 December 2013, Prologis owned or had investments in, on a consolidated basis or through unconsolidated joint ventures, industrial properties & development projects expected to total 52.9 million m² in 21 countries.

Simon improves performance across board

US mall owner Simon Property Group Inc said on Friday it increased funds from operations by 7.9% on a diluted share basis in the December quarter, and by 10.9% for the year.

The company reported funds from operations of $US895 million for the quarter ($US827 million for the December 2012 quarter), or $US2.47 ($US2.29)/share. Net income attributable to common stockholders was $US382 million ($US315.4 million), or $US1.23/diluted share ($US1.01).

For the year, funds from operations were $US3.2 billion ($US2.9 billion), or $US8.85 $US7.98)/diluted share. Net income attributable to common stockholders was $US1.3 billion ($US1.4 billion), or $US4.24 ($US4.72)/diluted share. The 2012 results included $US1.41/diluted share of primarily non-cash net gains from acquisitions & disposals.

Chairman & chief executive David Simon, celebrating Simon Property’s 20th anniversary as a public company, said same-store net operating income for its US malls & Premium Outlets grew 5.5% in the fourth quarter. “We also completed our acquisition of ownership interests in the European designer outlet business of McArthurGlen and opened significant redevelopments & expansions at several of our properties.”

The company’s operating statistics for its US malls & Premium Outlets at 31 December were:

  • Occupancy 96.1% (95.3% in 2012)
  • Total sales/ft² $US582 ($US568), up 2.5%
  • Base minimum rent/ft² $US42.34 ($US40.73), up 4%
  • Releasing spread/ft² $US8.94 ($US5.21), up $US3.73
  • Releasing spread percentage change 16.8% (10.8%), up 600 basis points.

The total sales figures are trailing 12-month sales for mall stores less than 10,000ft² in malls and all owned square footage in Premium Outlets. The releasing spread is a same-space measure that compares opening and closing rates on individual spaces leased during a trailing 12-month period.

Simon Property owns or has an interest in 325 malls in North America, Asia & Europe comprising 23 million m².

Attribution: Prologis, Simon

Regular leads: Europe Real Estate, Mingtiandi, Planetizen, World Property Channel

Continue Reading

Simon vies with Brookfield for troubled Mills

Published 6 February 2007

Listed US mall owner & developer Simon Property Group has been joined by a hedge fund to challenge Canadian property investor Brookfield Asset Management Inc to acquire mall owner The Mills Corp on its deathbed.

Mills was active & seemingly strong until 2004, 12 years into its era as a listed reit. In February 2005 it said it was restating its accounts back to 2002, and last November it said it would report writeoffs equal to its entire capital account. It faced delisting from the New York Stock Exchange for not getting the restatements done (but released a report on them on 7 January) and it was facing bankruptcy until Brookfield, as part of its 17 January takeover proposal, acquired the $US1 billion of debt held by the Goldman Sachs Mortgage Co.

The day before Mills’ annual meeting, held on 29 December, Goldman Sachs renewed the remaining $US1 billion of its senior debt facility until 31 March, but on tough terms. These included bumping up the interest rate by ½% to 2.75% over one-month libor, signing a refinancing of some other debts by 15 January, and a draft asset sales programme to be drawn up by 15 February.

In December, Mills was contemplating selling enough assets to pay off the Goldman Sachs loan, selling the whole company or recapitalising. In August it had agreed the $US981 million sale of 3 non-US assets – in Canada, Scotland & the Madrid Xanadu in Spain – to its 50% partner in the first 2 of those, Ivanhoe Cambridge Inc, for a net $US500 million gain, but still faced bankruptcy.

Mills led the US entry to European mall development with its Xanadu project in 2003 and it also had a long-term European partner in US properties, leading German private syndicator the Kan Am Group, which began investing in the US with Mills’ predecessor, Western Development, in 1984 and was the largest shareholder when Mills listed in 1994. Kan Am paid out many of its Mills syndicate investors in 2003-04 and sold out of a major investment, Ontario Mills, in 2004.

The Brookfield agreement has been Mills’ saviour. Apart from the increasingly onerous Goldman Sachs loan conditions, the SEC (Securities & Exchange Commission) detail on the November refinancing of Mills’ Meadowland Xanadu project in New Jersey showed other lenders also saw the opportunity to feed on injured prey: For some releases & indemnities, Mills issued $US175 million of subordinated notes to Colony Capital Acquisitions LLC & some Kan Am syndicates for $US150 million.

The offers

Brookfield offered $US1.35 billion (plus acceptance of $US6 billion of debt) at $US21/share for Mills, which the Mills board has accepted. Simon & its partner, Farallon Capital Management LLC, offered $US1.56 billion cash (also plus the debt) at $US24/share yesterday, and said they would make a tender offer to speed things up. By comparison, the requirement for shareholder meetings on the Brookfield deal could take up to 6 months because of the delays in presenting accounts.

Mills’ shares closed at $US25.87 yesterday, up $US3.70 on the day.

The Simon deal has another advantage through its partner, Farallon, a San Francisco hedge fund which holds 10.9% of Mills, making it the largest shareholder.

The players

Everybody’s big in this exercise.

Mills, despite its asset sales, is still a large player in US retail. It still owns 38 US retail properties containing 4.4 million m².

Simon, the biggest US mall owner, has an interest in 286 US properties totalling 18.7 million m² and has expanded into Europe & Asia, with an interest in 53 European centres & 5 in Japan. Its market capitalisation is $US25.8 billion. Simon announced net annual profit on 2 February of $US486 million, up 21%, funds from operations up 8.9% to $1.54 billion.

Farallon manages $US26 billion of investments for institutional investors such as university endowments, foundations & pension plans, typically buying assets at a significant discount to replacement cost or for development to a higher use. It invests in restructuring companies undergoing significant changes such as spin-offs, recapitalising, litigation or strategic realignment, or that undervalued & expected to appreciate.

Brookfield has $US50 billion of assets under management, including the former O&Y portfolio of commercial property, mostly in New York, Toronto & Canary Wharf, London. Its other assets are in the hydro-electric generation & infrastructure sectors and timberlands. Brookfield is also now bidding for control of Australian property group Multiplex.

Earlier stories:

23 October 2005: Brookfield completes O&Y takeover

2 August 2005: Simon & Morgan Stanley join Shenzhen investment arm to develop Chinese malls

18 October 2004: Taubman loses management contracts on 9 centres while buyer Mills looks at productivity gains

9 October 2003: Taubman defeats Simon/Westfield takeover bid


Websites: Brookfield


Simon Property Group

Farallon Capital Management

Kan Am Group


Want to comment? Click on The new BD Central Forum or email [email protected].


Attribution: Mills, Brookfield, Simon, Farallon, Kan Am, SEC, story written by Bob Dey for this website.

Continue Reading

Simon earnings/share up 8.3% as it opens up malls

Published: 1 May 2005

US mall owner Simon Property Group Inc increased first-quarter net income 18% to $US57.1 million and diluted earnings/share by 8.3% to US26c/share. It increased diluted funds from operations by 31.3% to $333.8 million, or 16.7% to $US1.12/share.

Occupancy increased in Simon’s regional malls by 40 basis points to 91.5%, Premium Outlet Centres (a discount brands chain) 100 points to 99%, community & lifestyle centres by 160 points to 91.6%.

Same-store sales at regional malls rose 6.3% to $US437/ft² (which, at today’s exchange rate, works out to $NZ6426/m²) Premium Outlet Centres 7.4% to $US423, community & lifestyle centres 0.9% to $US215.

Average rent at regional malls rose 3.5% to $US33.90/ft² ($NZ498.33/m²), Premium Outlet Centres 8% to $US22.95, community & lifestyle centres $US11.17/m community & lifestyle centres $US11.17.

Development trends

Chief executive David Simon called the result exceptional. More important, though, for both Simon’s results and for the mall industry, are the trends evident in Simon’s development pipeline.

“Our development pipeline is as robust as it has ever been, and all of our new projects are world-class, innovative designs in growing markets. Each project has an exciting tenant lineup with most including residential, office &/or hotel components.”

Simon bought discount brand specialist the Chelsea Property Group in December and, in March, it opened the 16,500m² first stage of the Toki Premium Outlets Centre in Nagoya, Japan, with 85 US & international outlets, 6 cafés & a foodcourt for a gross 4US44 million.

In Jacksonville, Florida, in March, a Simon joint venture opened the $US158 million (gross) first stage of the 80ha St Johns Town Centre, a 140,000m² open-air retail stage which has a town centre with a mainstreet design and a community centre.

Mr Simon said 39 of the retailers – one-third – made their initial Jacksonville appearance at this project.

The new centre will also have a hotel & 3 multi-family residential developments containing at least 450 units, due to open next year.

In Georgetown, near the Texan capital of Austin, Simon will open a $US98 million 62,000m² open-air mixed-use shopping centre in July.

In Garland, Texas, it will open a $US132 million 73,000m² open-air regional shopping centre, Firewheel, in October.

At Bonita Springs, on the Gulf of Mexico side of Florida, Simon will open a $US242 million 195ha joint-venture master-planned centre in September 2006. The Coconut Pt centre will have a 111,500m² open-air, mixed-use mainstreet regional shopping centre, 4200m² of office units & 305 residential units. Its retail outlets will be divided between the fashion-dominated Village, the Community Centre & the more open Lakefront.

If you want to comment on this story, write to the BD Central Discussion forum or send an email to [email protected].

Continue Reading

Simon earnings rise 12.6% in quarter

US mall owner Simon Property Group Inc said it increased diluted funds from operations in the September (3rd) quarter by 12.6% to $US277.7 million, 11.8% to $US1.04/share.

Comparable retail sales/ft² rose 5.8% to $US421/ft² and total sales/ft² also rose by 5.8%, to $US417/ft².

Website: Simon Property Group’s 3rd quarter result

Continue Reading