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Simon Buys Outlet Malls for $4.9 Billion

By Jun 22, 2004

Simon Property Group will buy Chelsea Property Group in a transaction valued at $4.9 billion, adding 35 Premium Outlet malls in the U.S. and Japan. Simon owns or has an interest in 247 premium malls in North America.

The deal is expected to close by early November, pending SEC approval.

Plans aren’t set, but Chelsea’s 31 U.S. outlet malls likely will get promos and events similar to those in Simon malls, through marketing arm Simon Brand Ventures. Simon’s marketing programs bring in about $100 million a year through deals with Coca-Cola, MCI and Visa as well as events including Simon DTour Live concerts for teens; the summer Simon Super Chefs Live! Tour; and Kidgits Club. Chelsea makes only about $3 million a year with its own marketing deals.

Simon and Chelsea have collaborated on outlet malls in Aurora, IL; Las Vegas; and Orlando, and have “pursued identical strategies over the past decade, each leading the consolidation in our respective sectors,” said Simon CEO David Simon in a statement.

Chelsea’s four malls in Japan complement the 48 European malls of which Simon is part-owner, creating “a combined organization with a truly global platform from which to grow both the full-priced and premium outlet retail real estate businesses,” said Chelsea CEO David Bloom in a statement.

Bloom continues as CEO of Chelsea, which keeps its Roseland, NJ, headquarters as it becomes a division of Indianapolis-based Simon Property Group. Bloom joins Simon’s board as an advisory director.

Simon reports sales-per-square-foot of $402 for 2003; Chelsea’s was $399 for 2003.