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Simon loses $26M on Arizona housing project

December 7, 2007
Troubles in the residential mortgage market have ensnared local mall giant Simon Property Group Inc.

Simon said today it plans a fourth-quarter write-off of $26 million, the entire value of its equity investment in a master-planned community proposed for a suburb of Phoenix. The loss is expected to reduce the company's diluted net income by 11 cents per share.

Simon's joint-venture partner on the Phoenix project, luxury homebuilder Toll Brothers Inc., announced its own impairment charge for the project yesterday. The Horsham, Penn.-based company reported its first quarterly loss in 21 years.

The partners, along with a Scottsdale, Ariz., home builder, Meritage Homes Corp., acquired 5,485 acres from automaker Daimler Chrysler Corp. in early 2006 for $312 million. The property had been a vehicle endurance test site.

Toll Brothers was the managing member of the group.

Simon shares are down 38 cents this morning, to $99.26.
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