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Simon Continues International Push in Deal to Develop Brazilian Outlet Centers

In latest international deal, Simon Property Group has signed a 50/50 joint venture agreement to develop and own outlet centers in Brazil with BR Malls Participacoes S.A. (BRMALLS).

The joint venture agreement provides for the creation of a Brazilian entity that will be equally and jointly owned by BRMALLS and Simon to develop and own outlet centers in Brazil. The venture’s first outlet center is expected to open in the State of Sao Paulo in 2013.

Simon owns and operates outlet centers in the United States, Japan, South Korea, Malaysia, Mexico and Puerto Rico. In addition, it is currently developing outlet centers in China and Canada. Overall, it has interests in 70 Premium Outlet Centers. BRMALLS, meanwhile, is the largest retail real estate company in Brazil, with a portfolio comprised of 46 retail real estate properties located across all five regions of Brazil.

“We are very pleased to be partnering with a world class organization like BRMALLS to bring Simon's premium outlets to Brazil,” John Klein, president of Simon's premium outlets division, said in a statement. “We already welcome large numbers of Brazilian visitors to our outlet centers in the United States, such as Woodbury Common Premium Outlets, Orlando Premium Outlets and Sawgrass Mills, and we look forward to also serving these valued shoppers in Brazil.”

This is the unique combination of the experience of the world's leading owner and operator of outlet centers with the local expertise of the largest shopping mall company in Brazil,” BRMALLS CEO Carlos Medeiros said in a statement. “Through this JV, we will bring to the Brazilian consumer the real outlet center concept, offering national and international designer and name brands at discounted prices.”

This is one of four major international initiatives Simon has announced in 2012.

In early March, Simon signed a memorandum of understanding (MOU) to jointly develop a Premium Outlet Center in Podung, Shanghai, China with Bailian Group, the largest retail conglomerate in China. The MOU provides for the establishment of a formal joint venture between Simon and Bailian with respect to a proposed Premium Outlet Center project in the Pudong area of Shanghai owned by the Pudong City Government and adjacent to the Shanghai Disney Resort. Bailian and Simon will jointly execute this project. The MOU also provides the joint venture the opportunity to develop additional Premium Outlet Centers in mainland China.

About one week later, Simon signed a definitive agreement to acquire a 28.7 percent equity stake (54.43 million shares) in Klépierre, a Paris-based real estate company that focuses on the ownership, management and development of shopping centers across Continental Europe, for approximately $1.5 billion from BNP Paribas. Klépierre’s portfolio includes 271 shopping centers in 13 countries, with 50 percent of its properties in France and Belgium, 25 percent in Scandinavia, and the balance in Central and Southern Europe.

Lastly, this week, Simon announced that construction of the 500,000-sq.ft. Toronto Premium Outlets center will April 25, 2012. The project is a 50/50 joint venture between Calloway REIT and Simon. The joint venture was originally announced last May.

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