Ending a seven-year partnership, Mills will purchase shares of joint venture for $430 million.
No longer relying on its bigger partner's clout to move forward, The Mills Corp. has agreed to purchase Simon Property Group's interests in five jointly owned retail properties. The $430 million deal, expected to close next month, ends a seven-year partnership between the REITs.
“In the past, Simon's market position and balance sheet helped to ensure that we obtained the most favorable terms in the marketplace,” said Larry Siegel, chairman and CEO of Mills, in a statement. “Today, our balance sheet is one of the strongest in the sector. Accordingly, it makes sense to part ways.”
The transaction includes some of Mills' most productive properties. The Arlington, Va.-based REIT will acquire from Indianapolis-based Simon a 25% interest in Ontario Mills in Los Angeles; a 37.5% interest in Grapevine Mills in Dallas; a 13.2% interest in Arizona Mills in Phoenix; a 37.5% interest in Concord Mills in Charlotte, N.C.; and a 37.5% interest in Arundel Mills in Baltimore.
The deal will net Simon a profit of approximately $100 million, more than tripling its initial investment.
“The sale of our interests in these projects allows us to further our strategy of owning market-dominant, traditional regional malls, and is consistent with our strategy of aggressively recycling capital,” David Simon, CEO of Simon, said in a statement.
Simon, along with Westfield America and the Rouse Co., in January also announced plans to acquire the North American mall portfolio of Dutch real estate giant Rodamco.