Simon Property Group says it will acquire its outside partner’s 42 percent interest in the Forum Shops at Caesar’s Palace in Las Vegas for $174 million. Greenwhich, Conn.-based The Gordon Group, Simon’s outside partner in the center, announced in January it was unhappy with the partnership and that it had formed a joint venture with Taubman Centers. The agreement triggered a buy-sell provision compelling Simon to either buy out Gordon Group or sell its own interest in the Forum Shops.
The Forum Shops average tenant sales exceed $1,100 per square foot. A 175,000-square-foot expansion—financed by Simon—will open in fall 2004 and upon completion, a stabilized 12 percent return in excess on the incremental investment is expected.
Simon, along with partner Westfield America, is attempting a hostile takeover of Taubman. The deadline for the takeover is Valentine’s Day, this Friday, when Simon says it will abort its plans if two-thirds of Taubman common stock shareholders fail to accept the $20-per-share offer. If Simon does abandon the takeover, Legg Mason analyst David Fick says the company would lose a minimum of $4 million in expenses.