IBJNews

CEO of Simon spinoff to run company from D.C. perch

Back to TopCommentsE-mailPrintBookmark and Share
Greg Andrews

We’re fortunate to have Simon Property Group Inc. headquartered here, a heavyweight in the global real estate industry with a downtown work force topping 1,000.

When the company announced in December that it was spinning off its strip centers and smaller malls into a new Indianapolis-based public company, it sounded like another big shot in the arm for the city.

That might prove to be the case, but the initial boost might not be particularly noticeable. A March 24 filing with the Securities and Exchange Commission said the new firm, dubbed Washington Prime Group, is starting with only about 40 employees. And a copy of the employment contract for the newly appointed CEO, Mark Ordan, said he will work out of an office in the Washington, D.C., area, where he lives with his family.

Indianapolis is no Podunk town, of course, but Ordan isn’t the first executive affiliated with the Simon empire opting to spend much of his time elsewhere.

Simon Property CEO David Simon has been more scarce in Indianapolis since buying a $25 million residence on Park Avenue in Manhattan in 2011. And the company’s president, Richard Sokolov, commutes here from Youngstown, Ohio.

Simon Property’s decision to name the new business Washington Prime—announced in the same press release as Ordan’s appointment—had fueled speculation the company would end up based in the D.C. area. However, that apparently is not the case, since SEC filings list the “principal executive office” of Washington Prime as 225 W. Washington St., Simon’s Indianapolis headquarters tower.

Simon officials wouldn’t elaborate on how they came up with the name—which, of course, could be a reference to Washington Street or Washington, D.C., or might just have sounded good to those making the decision. In a Jan. 31 analyst call, David Simon had lamented that “the hardest thing” about the spinoff “is coming up with the appropriate name.”

Washington Prime out of the gate will be a substantial company, with more than $620 million in revenue and ownership of 44 enclosed malls and 54 strip centers.

But at least early on, it will rely on Simon Property employees to do some of the heavy lifting. While Simon Property’s entire strip center team will join Washington Prime, the new company will rely on Simon personnel to handle mall management for at least two years.

Simon workers also will supply support services, such as accounting and IT, for up to two years. One of the risks of the spinoff is that Simon employees providing such services “will face competing demands on their time,” an SEC filing says.

Kite’s Inland-buying odyssey

A new SEC filing provides a blow-by-blow account of the negotiations that led to the Feb. 10 announcement that locally based Kite Realty Group Inc. was buying Illinois-based Inland Diversified Real Estate Trust Inc. for $1.2 billion in stock.

The 13-page description leaves two big takeaways: Kite brass exercised enormous patience during the sale process, which dragged out more than a year, and considerable restraint when dangling offers.

Inland’s board at one point late last year was so close to sealing a deal with another buyer—described only as Party A—that it entered exclusive negotiations, only to backtrack after the prospective buyer insisted on tying the deal’s closing to a favorable outcome of an unspecified, pending “due diligence matter.”

At one point, six firms submitted “non-binding indications of interest.” By early January, three remained in the running, with Kite’s offer valued at $10.50 per share, Party C’s valued at $10.75, and Party D’s at $10.80.

Even though Party D had the highest stated offer, Inland decided to end talks with the firm because of difficulty in valuing preferred stock that was part of its bid.

That would have left two suitors, but soon Party A was back in the fray with an offer that, like Party C’s, topped Kite’s.

Inland went with Kite’s, anyway, because of concern that Party C was offering a fixed price, wiping out the potential benefit from a run-up in Party C’s shares from announcement of a deal. In addition, its past dealings with Party A “created substantial uncertainty as to the speed with which Party A could complete due diligence and finalize a definitive agreement, if at all.”

Further, Inland worried that if a deal with Party A unraveled, Kite “would likely be unwilling to recommence negotiations.”

So Inland entered exclusive talks with Kite, paving the way for a deal that will swell Kite’s property count from 74 to 131.

On an analyst call after announcing the deal, CEO John Kite called the purchase “transformational.” He said “this is just a very, very unique opportunity for us to buy extremely high-quality real estate at a great price.”•

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Only half a million TV Viewers? And thats an increase? I knew Indycar was struggling but I didn't know it was that bad. Hell, if NASCAR hits 5 Million viewers everyone starts freaking out saying its going down hill. It has a long way to before Indycar even hits NASCAR's bad days.

  2. IU has been talking that line for years with no real progress even with the last Dean, Dr. Brater. Why will an outsider, Dr. Hess, make a difference? With no proof of additional resources (cash in the bank), and a concrete plan to move an academic model that has been outdated for decades with a faculty complacent with tenure and inertia, I can count on IU to remain the same during the tenure of Dr. Hess. One ought to look to Purdue and Notre Dame for change and innovation. It is just too bad that both of those schools do not have their own medical school. Competition might wake up IU. My guess is, that even with those additions to our State, IU will remain in its own little world squandering our State's tax dollars. Why would any donor want to contribute to IU with its track record? What is its strategy to deal with the physician shortage for our State? New leadership will not be enough for us to expect any change.

  3. How do you think the Bridges got approved? I spent a couple days researching PAC's and individual contributions to some city council members during that time. My printouts were inches thick on the two I concentrated on. Finally gave up. Was disgusted with all the donations, and who they were from. Would have taken me days and days to compile a complete list. Tried to give it to the Star reporter, but he thought it was all just fine. (and apparently he was treated well himself) He ended up being laid off or fired though. And then of course, there was land donated to the dad's club, or city, as a partial payoff. All done in the shining example of "charity." No, none of these contributions are a coincidence.

  4. I agree what kind of help or if any will be there for Dr. Ley's patients. I was a patient myself.

  5. What about the hundreds of patients who sought this doctor for the right reasons, to quit drugs. what option do these patients now have, experience horrible withdrawl or return to heroin?? those are the choices. what about the children of these former addicts who's parent(s) WILL not b able to maintain their job, for @ least 2 weeks.. There needs to b an emergency clinic opened for these patients.

ADVERTISEMENT