Clarifying the Math on a Potentional Simon/GGP Portfolio

Corrected at 12:38 PM with Mills mall totals.

I've seen this kind of math done a few places in addition to references that suggest Simon and GGP together would own 50 percent of the malls in the country. That's not entirely accurate.

CRE Beat, a blog well worth checking out, did the math like this:

NPR reported last night on the potential merger of Simon and General Growth and stated that the combination would result in one company controlling 1/3 of the (regional) malls in the US. Didn't quite sound believable to me, so after doing some digging, I have found that:

Simon owns 387 malls

General Growth owns 200 malls

ICSC reports that there are 765 regional and 614 super regional malls in the US for a total of 1,379 malls

So, well, I was wrong, SPG + GGP would own more than 1/3, 43% of the malls in the US in fact.

Only, that's not right.

Simon does not own 387 regional malls in the United States. As of Dec. 31, 2009, Simon's records indicate that the company owned 380 properties in the U.S. and internationally. According to this fact sheet the firm owns just 162 regional malls in the U.S. in addition to 41 Premium Outlet Centers, 36 properties in the Mills portfolio, 67 community/lifestyle centers, 15 "other properties" and 59 international properties. Update: In a footnote on Simon's fact sheet it says that 16 of the Mills properties are malls.

Meanwhile, General Growth, owns 216 malls, according to its mall directory.

So in reality, what we're looking at is a combined entity that would own 378 394 regional malls--which works out to 27 28.6 percent of the 1,379 malls that ICSC counts in the U.S. In addition, it's quite possible that Simon would seek to divest some of those malls. In the end, if the deal goes through, I do expect Simon to have considerable weight in negotiating with vendors and tenants, but it won't become the near monopoly some of the numbers being tossed around are suggesting.

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