Commercial Real Estate and Simon Property Group and Charities and Mel Simon and Law and Philanthropy and Real Estate & Retail

Mel Simon estate quietly showering charities with millions

June 29, 2013

Six months after Simon family members reached a confidential settlement resolving the bitter legal battle over Mel Simon’s multibillion-dollar estate, we now know something important: The local charities that were angling for millions of dollars in bequests got their wishes.

Parties that negotiated the deal released to IBJ a list of all contributions planned by the estate that are at least $1 million. The list, which didn’t reveal the specific dollar amounts of the gifts, includes nine names, from Butler University and the Indiana University Foundation to The Children’s Museum of Indianapolis, the United Way of Central Indiana, and the James Whitcomb Riley Memorial Association.

Those gifts have been made or soon will be, and hundreds of millions of dollars in additional contributions will be distributed to charities over the next decade, according to a written statement from the parties.

Attorneys released the information in return for IBJ’s withdrawing a motion to unseal the December settlement between Mel Simon’s three surviving children from his first marriage—Deborah Simon, Cynthia Simon-Skjodt and David Simon, the CEO of Simon Property Group Inc.—and their stepmother, Mel’s widow Bren. A hearing on the motion had been scheduled before Hamilton Superior Court Judge William Hughes on June 21.
 

Simon Simon

The Simon siblings had argued that Mel didn’t know what he was doing and was suffering from dementia when he signed a new estate plan in February 2009, seven months before his death at age 82.

That plan sharply increased the share of his fortune going to Bren and wiped out a portion earmarked for the siblings. Importantly, that version also reworked language related to charitable gifts, with contributions mandated under the prior plan—signed in January 2008—left instead to Bren’s discretion.

Two organizations listed in the 2008 plan—the Jewish Federation of Greater Indianapolis and Congregation Beth-El Zedeck—confirmed to IBJ they received the amounts listed in the 2008 plan this spring. The Jewish Federation received $10 million, and Beth-El Zedeck $2 million.

Assuming the settlement used the 2008 plan as the template for charitable giving, the estate has or soon will distribute a total of $20 million to 12 organizations, eight of them local. The biggest out-of-state gifts were earmarked for the Urban Land Institute and the International Council of Shopping Centers Inc., each of which was due $1 million.

The latest giving represents just a sliver of the philanthropic firepower that Mel, co-founder of Simon Property Group, unleashed in the final years of his life. Mel gave away more than $150 million while he was alive, with perhaps the largest gift, $50 million, going to create the Indiana University Melvin & Bren Simon Cancer Center in 2006.

His estate was made up primarily of Simon Property shares, which have performed spectacularly since the company went public in 1993. In December, when the parties reached their settlement, the estimated value of Mel’s estate was $2.5 billion to $2.9 billion, according to the statement released to IBJ.

The fact the estate intends to make hundreds of millions of dollars in additional gifts suggests the parties adopted at least the spirit of the 2008 plan. It had earmarked one-third of his fortune for charitable trusts that were to donate tens of millions of dollars a year to local and national charities.

Attorneys for Bren had argued that Mel increased the share of his fortune going to her to compensate for the negative effect of the financial crisis, which had shrunk the value of Simon Property shares and caused the company’s board to sharply reduce the cash dividend.

The battle exposed deep divisions between the children and Bren, now 70, who was married to Mel for 37 years. In an email quoted in court, Bren said of the three siblings: “I hope they rot in hell.”

In another email, sent at the height of the financial crisis, David told Bren he was tired of her incessant second-guessing about how he was running Simon Property Group, calling it “constant crap.”

A stunning surge in the value of Simon shares after the crisis ultimately created so much additional wealth that the two sides were able to set aside their animosity and negotiate a deal. Simon shares have increased sixfold from their low during that crisis and now fetch about $155 apiece.

In the final year of Mel’s life, Forbes had pegged Mel’s net worth at $1.9 billion—at least $600 million less than the estate’s value as of the December settlement.•
 

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