On Monday, retail REIT Simon Property Group agreed to buy outlet mall REIT Chelsea Property Group for roughly $3.5 billion in cash and stock. That’s a 13% premium based on Chelsea’s closing price of $58.24 per share last Friday.

Indianapolis-based Simon has agreed to pay $66 a share for each of Chelsea's shares and units outstanding. Simon also will take on roughly $1.3 billion of Chelsea's existing debt and preferred stock.

Chelsea owns 35 outlet malls in the U.S. and Japan. In 2003, its earnings of $101.5 million more than doubled from $45.1 million in 2002. Chelsea will keep its headquarters in New Jersey with its existing management team. However, the combined company will be operated as a unit of Simon.

Simon has interests in a total of 247 malls and shopping centers throughout North America. The company earned $481.7 million last year, which represented a 14% decrease from its 2002 net income of $561.6 million.