Commercial Real Estate and Shopping Centers and Simon Property Group and Real Estate Investment Trust and Real estate deals and Retail and Real Estate & Retail

Simon, partner selling European malls for $981M

February 5, 2010

Unibail-Rodamco SE, Europe’s biggest shopping-center owner, has agreed to pay Indianapolis-based Simon Property Group and Ivanhoe Cambridge Inc. $981 million for stakes in seven malls in France and Poland.

The assets are owned by Simon Ivanhoe, a venture between the largest U.S. shopping-center owner and a unit of Canada’s biggest pension fund manager, the Paris-based Unibail-Rodamco said in a statement Friday morning. Unibail-Rodamco will also develop five other projects across France in which Simon and Ivanhoe will jointly retain a 50-percent stake.

Simon expects to book a gain of about $300 million on the deal, further growing the company’s cash war chest, which stood at $4.3 billion at the end of 2009. The company has another $3.1 billion available on a credit line.

This would be the largest acquisition by the French company since Unibail Holding SA acquired Rodamco Europe NV to create the world’s second-largest real estate investment trust in 2007. Chief Executive Officer Guillaume Poitrinal said a year ago that the company had enough financial leeway to make “opportunistic” acquisitions.

“We regard this transaction as highly positive,” said Harm Meijer, an analyst at JPMorgan Chase & Co. in London. Maijer plans to increase his projected valuation of Unibail- Rodamco shares by 3 percent. His rating is “overweight.”

The transaction will give Unibail-Rodamco stakes in the Arkadia mall north of Warsaw and the smaller Wilenska Station center. Arkadia opened in 2004 and has 1.1 million square feet of retail space.

“Poland is the cutting edge of the deal,” said Stephan van Weeren, an analyst at Amsterdam-based Petercam with a “hold” recommendation on the shares. Unibail-Rodamco already has two malls in the Warsaw region.

In France, Unibail-Rodamco will gain stakes in the Bay 1 and Bay 2 shopping centers in Parisian suburb of Torcy. Together, they have nearly a million square feet of space. The deal will also give the company smaller malls at Corbeil and Bagnolet near Paris and in a suburb of Lille in northern France.

The five French development sites are in Toulouse, the Paris suburb of Poissy, Saint Geours de Maremne in southwest France and Cannes.

Ivanhoe Cambridge is a unit of Caisse de Depot et Placement du Quebec.

Simon will own a 25 percent interest in the five-property pipeline it plans to develop with Unibail-Rodamco, the company said in its earnings report.

 
 

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