In an era when many shopping malls are struggling, obtaining a stake in a successful shopping mall can be a difficult task. After all, there are not many successful shopping malls for sale, and the lucrative malls that are for sale are often very expensive acquisitions.
High asset real estate sales or transfers are very complex transactions, often involving a difficult negotiation process and the need for highly detailed contracts that account for both foreseen events and unforeseen circumstances. Recently, the Wall Street Journal estimated the value of one local and complex real estate transaction involving a local mall at about $1 billion.
The transaction involves the King of Prussia Mall, one of the country’s largest and most successful shopping malls. While other malls have struggled, the King of Prussia Mall has reported sales of about $750 per square foot of retail space, while other malls have reported averages of $350 to $450 per square foot of retail space.
The real estate transaction involved Simon Property Group’s buyout of other owners who had a stake in the 2.4 million-square-foot mall. According to the Wall Street Journal, Simon owned 12.4 percent of the mall before the transaction and increased its stake in the mall to about 96 percent.
Reportedly, the transaction involved buying out multiple stakeholders in the mall. The largest portion of the transaction involved the 50 percent ownership stake that was held by Lend Lease Corporation. Earlier this year, Lend Lease put its ownership stake up for sale. According to the Journal, Simon felt that it needed to move quickly to prevent a competitor from acquiring control of the mall. When Lend Lease struck a deal to sell to another buyer, Simon exercised its right of first refusal and bought Lend Lease’s stake on essentially the same terms.
Source: The Wall Street Journal, “Simon Property Buys Most of Pennsylvania Mall,” Kris Hudson, Sept. 14, 2011
