Mall owner Simon Property Group has formed a “blank check” company to go on the hunt for “a company or assets with significant growth potential and prospects.” The company added, in a press release, that it has filed for an initial public offering (IPO) with the goal of raising $300 million for the new entity.
The move comes as the retail industry is reeling from a double blow: fallout from the pandemic and the great shift of consumer buying to online sales. Simon owns such properties as the upscale Copley Place in Boston.
The new company will be a special purpose acquisition company (SPAC) called Simon Property Group Acquisition. A SPAC, or blank-check company, has no commercial operations, but is formed to raise cash and go shopping for an existing company or companies to acquire.
According to the release, “The target will likely be in an industry that will benefit from the experience, expertise, and operating skills of the management team” and Simon Property Group, the nation’s largest mall owner.
Indianapolis-based Simon said the IPO will offer 30 million “units” at $10. Each unit will consist of one share of common stock and one-fourth of a warrant, exercisable at $11.50. “At the proposed deal size, Simon Property Group Acquisition will command a market value $375 million,” the mall owner said.
The new company will be led by David Simon, the CEO and chairman of Simon Property Group, who will serve as chairman; Eli Simon, as CEO and director; and Brian McDade as chief financial officer. McDade currently serves as CFO of Simon Property Group.
Reshaping malls has become a hot topic, amid retailer bankruptcies and the difficulties malls are having in collecting rent. In 2020, every major traditional mall tenant was facing serious financial trouble or declared bankruptcy.
For example, JCPenney and Sears both filed for bankruptcy. As the pandemic hit, Simon malls had 63 JCPenney stores and 11 Sears stores.