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Shopping Centers Today -> February 2004
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SIMON CLOSES ON ITALIAN MALLS
BY IAN RITTER
Simon Property Group has closed on a $227.3 million (182 million euro) deal through which it will own and develop malls in Italy.
The agreement gives Simon a 49 percent interest in the 38-mall portfolio of Italian developer Rinascente Group, which totals about 6 million square feet. Simon will hold a similar stake in future developments through the venture, which is called Gallerie Commerciali Italia. Over the next five years, those new developments could total another 6 million square feet, the companies say.
“This transaction significantly increases our presence in Europe and aligns us with Europe’s retailers,” Simon CEO David Simon said in a news release. “We are very excited about the long-term growth prospects for GCI and look forward to working with Rinascente.”
The centers, which range in size from 35,564 square feet to 547,840 square feet, are in various Italian cities, including the metropolitan areas of Milan, Rome and Torino, and are mostly anchored by the French hypermarket chain, Auchan. Rinascente is controlled by a joint venture of Auchan and The Agnelli Group, an Italian investment firm.
Simon’s equity investment was funded with a three-year, unsecured term loan at LIBOR plus 60 basis points provided by Bank of America, Citicorp, J.P. Morgan and UBS. Simon is the largest U.S. mall owner, with 245 retail properties in the United States. It also has holdings in nine Canadian, French and Polish centers.
Simon has no immediate plans to expand elsewhere in Europe, says company CFO Stephen E. Sterrett, but the firm isn’t ruling it out for the future.
“We have our hands full in making sure the Rinascente deal works out,” he said. “But would it surprise me if we have a larger presence in Europe in three to five years? No. We’ll just have to wait and see.”
Simon is not the only U.S. developer to make a foray into Europe of late. The Mills Corp. opened the 1.4 million-square-foot Madrid (Spain) Xanadú in May. Mills is looking for development opportunities also in Italy; the company has said it is exploring sites in Florence, Milan and Rome.
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