Simon Property Group’s Acquisition Growth Strategy
Simon Property has a strong track record of aggressive acquisitions. Since its IPO in 1993, the company has completed acquisitions worth $40 billion.
Sept. 18 2015, Updated 9:08 a.m. ET
Acquired properties worth $40 billion
Simon Property Group (SPG) has a strong track record of aggressive acquisitions that enrich the quality of its portfolio. Since its IPO (initial public offering) in 1993, the company has completed numerous acquisitions worth $40 billion to date. We’ll discuss some of Simon Property’s acquisitions in this section.
Aggressive acquisition strategy
Simon acquired many high-profile shopping center properties like:
- Rodamco North America
- Dadeland Mall
- Fashion Valley Mall
- Copley Place
- Fashion Centre at Pentagon City
- Stanford Shopping Center
- Chelsea Premium Outlets
The prolific acquisitions of properties and companies continued unabated over the next decade, except in the financial turbulence of late 2008 and 2009, when Simon Property made no acquisitions.
Acquired stake in Paris-based Klépierre
In 2012, Simon Property acquired Paragon Outlets Grand Prairie, Texas, and Paragon Outlets Livermore Valley, California. In addition, Simon Property acquired 28.7% equity stake in the Paris-based property investor Klépierre for approximately $2 billion. Klépierre owns around 270 retail properties in France, Belgium, Scandinavia, and elsewhere in Europe.
Simon Property’s acquisitions in 2013 included interests in the companies of McArthurGlen, as well as interests in five designer outlet properties and an outlet center near Portland, Oregon, for $146.7 million.
In 2014, Simon Property invested more than $360 million in acquisitions, which included acquiring the remaining interests in Arizona Mills, a development site in Oyster Bay, New York, a portfolio of ten properties that included King of Prussia, and a designer outlet in Europe.
Simon Property also acquired Jersey Gardens, New Jersey, and University Park Village, Texas, for $1.09 billion.
Exit strategy
While Simon Property always looks for new opportunities, it also exits some of the properties, often at a profit. In 2012, the company sold its 49% stake in Gallerie Commerciali Italia to joint venture partner Auchan for $378 million. In 2013, Simon Property sold some of the properties acquired during the downturn, for a combined gain of $80 million.
Investors looking for exposure in commercial real estate can invest in REIT ETFs. Simon Property Group and Public Storage (PSA) make up 8.16% and 4.06% of the Vanguard REIT ETF (VNQ) respectively. Equity Residential (EQR) comprised 6.70% of the iShares Cohen & Steers REIT ETF (ICF).
In the next part of this series, we’ll look more deeply into Simon Property’s strategy to increase shareholders returns.