Carlyle in running to buy Simon's stake in 47 Italian malls

Global private equity group Carlyle has made an offer for a 49% interest in an Italian retail joint venture currently held by US-based retail specialist Simon Property Group, well-informed market sources have told PropertyEU.

Known as Gallerie Commerciali Italia (GCI), the joint venture owns and manages 47 shopping centres in Italy. Generali is also believed to be interested in GCI. The Italian insurer’s real estate arm is understood to have made an offer for the 49% interest as it looks to step up its real estate exposure. The group is planning to boost its allocation to property in the next three years from 6% to around 9%.

Carlyle has a significant warchest for acquisitions in the Italian property market after raising EUR 2.2 bn of equity in 2008 for its Europe Real Estate Partners III fund. The vehicle, with a 20-30% allocation to Italy, has yet to make an investment in the market.

Market sources told PropertyEU that the Simon Property Group stake could fetch as much as EUR 500 mln, valuing the company at about EUR 1 bn.

GCI is a 51/49 joint venture between French hypermarket group Auchan and US retail specialist Simon Property Group. The joint venture owns a portfolio of over 40 shopping centres with some 500,000 m² of gross space. Credit Suisse is advising Simon Properties on the sale process, which is still at an early stage.

The divestment is part of Simon Properties' strategy to sell off non-strategic assets in a number of European countries. Earlier this year, the company divested its stake in Simon Ivanhoe, a partnership with Canadian group Ivanhoe Cambridge, to Unibail-Rodamco. Simon Ivanhoe held a portfolio of seven shopping centres in France and Poland.

Auchan, which holds its majority stake in GCI through its Immochan unit, has the pre-emption right to buy out Simon Property Group, but has not yet shown an intent to exercise it.