America's Simon Property Group is expected to pursue the $6.4 billion CFS Retail and a deal with Melbourne billionaire John Gandel rather than have a tilt at Westfield’s Australia spin-off Scentre, according to sources in New York and Sydney.
Speculation has been running hot for months that property behemoth Simon is eyeing an entry into the Australian retail property market, with the $18.5bn Scentre recently mooted as a potential target.
Westfield Corporation has also been mooted as a potential target for Simon, though like Scentre could be hard for the group to swallow, sources said.
However, CFS Retail — which owns Chadstone and Chatswood Chase malls — is thought to be a better fit with the company’s DFO chain similar to the outlet centres Simon has in its non-American portfolio.
Last July, Simon chief executive David Simon refused to rule out a tilt at CFS Retail while responding to questions from CLSA analyst John Kim.
CFS Retail has been widely regarded as a takeover target after the Commonwealth Bank internalised the management of the shopping centre landlord.
A side deal with Gandel could see Simon sell the billionaire its 50 per cent share of the $3bn Chadstone to take out his 26.74 per cent stake in CFS Retail.
Simon would hold on to CFS Retail’s premium centres, including the Emporium in the Melbourne CBD, while carving off second-tier assets to direct investors.