Simon Property Group Inc., Woodmont Outlets and EWB Development LLC signed a letter of intent to create a joint venture agreement for the development, construction, leasing and management of St. Louis Premium Outlets, a new upscale outlet center in Chesterfield, Mo. Simon will own a 60 percent share of the project.
The new outlet center, which was announced last month as the Spirit of St. Louis Outlets, will be comprised of 55 acres and will anchor Chesterfield Blue Valley, a mixed-use development to include office space, hotel, restaurants and entertainment venues. A first phase of approximately 350,000 square feet is projected to open fall 2013. The project has ample room for future expansion.
"We are pleased to be a part of this exciting project and look forward to working with Woodmont Outlets and EWB Development," John R. Klein, president of Simon's Premium Outlets platform, said in a statement.
"We are thrilled that Simon Property Group has chosen to work with our company on bringing high-quality outlet shopping to the area," Stephen Coslik, chairman and CEO of Woodmont Outlets, an affiliate of The Woodmont Company, said in a statement. "We have an ideal site which we are confident will appeal to shoppers. We have received strong feedback from the merchant community.
Itâ€™s just the latest outlet play for Simon. In August, it announced plans to expand four of its existing properties. In July, the company teamed with Tanger Factory Outlet centers and formed a joint venture to develop a property in Houston. And in the spring, the company announced a joint venture through which it will develop outlets in Canada.
The outlet sector continues to perform strongly. In its third quarter results, announced in late October, Tanger Factory Outlet Centers reported that funds from operations (FFO) available to common shareholders increased 22 percent for the three months ended Sept. 30, 2011, compared with the same period a year ago. Overall, its FFO came in at $37.9 million compared with $31.1 million a year ago. For the first nine months of the year, its FFO was $97.1 million, up 18.1 percent from $82.2 million during the first nine months of 2010.
The firm also reported a 5.0 percent rise in same-center net operating income for the quarter and a 4.9 percent increase for 2011 through the first nine months compared with the same periods last year. In addition, Tanger saw a 24.6 percent increase in average base rents on renewals and re-leased space (compared with 14.6 percent in 2010) while its occupancy rate rose to 98.3 percent, compared with 98.1 percent last year. Lastly, tenant sales are up 3.5 percent for the rolling 12 months ended September 30 to $362 per square foot.
As a result, outlets have remained a popular play for traditional regional mall owners. In addition to Simon, which has invested in the sector for years, CBL & Associates Properties, Taubman Centers and Macerich have all become more active in the space.