Simon Property Group, a REIT focused on retail, dining, entertainment, and mixed use, announced that it would acquire a 50% interest in global real estate and investment firm Jamestown by the end of the year from the company's founders, Christoph and Ute Kahl, who will continue to be shareholders.
"Jamestown will operate independently and continue to be led by CEO Matt Bronfman and President Michael Phillips, who will retain their existing ownership," the release said. "Christoph will transition from day-to-day involvement as the company's Chairman to a member of the new Jamestown Board of Directors."
The press release from the companies didn't divulge the financial details, but it did note that the 39-year-old Jamestown had more than $13 billion in assets as of June 30, 2022.
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In the fiscal year ending December 31, 2021, Simon had $5.1 billion in revenue with net income of $2.2 billion, according to public filing data from S&P Global Market Intelligence. It also had $38.4 billion in assets, not discounting for depreciation.
"The partnership will unlock new value creation opportunities and create a platform for future growth in the investment management sector," the release said. According to the companies, Simon brings "a deep platform of resources and operational tools that will enhance the firm's ability to scale and grow." Jamestown, on the other hand, gives Simon "an opportunity to capitalize on the growing asset and investment management businesses with an experienced fund manager and mixed-use operator and developer, utilizing the Jamestown platform to accelerate Simon's future densification projects."
It's been clear for a while that the mall format has needed a refresh, with many underperforming, although Simon's class A properties have been an exception. The REIT did report strong mall leasing in the second quarter, and in June it planned to expand some existing properties and develop new ones.
However, a good run by one company doesn't mean a category is strong or that the better performers shouldn't consider not putting all their eggs in one basket. Problems are more widely spread, and the format has been running colder for some time.
In May, Paris-based Unibail-Rodamco-Westfield (URW) announced plans to sell its portfolio of 24 malls in the U.S. Inflation and gas prices took a toll in the summer.
At the same time, with many companies now expecting a recession in the near future, getting access to additional resources might be wise. Jamestown might find the connection to Simon to be useful in case of a dip in property prices that might offer some acquisition opportunities.
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