Economy Watch: Simon Quits Bid for Largest British Mall Owner

Simon Property Group decided it doesn't want to be the biggest U.K. mall owner badly enough; U.S. housing prices continue to fall; and small businesses continue to struggle.

By Dees Stribling, Contributing Editor

Indianapolis-based Simon Property Group Inc., the largest mall owner in the United States, is destined not to be the largest owner of malls in the United Kingdom after throwing in the towel on Tuesday on its bid to acquire Capital Shopping Centres Group PLC (CSC), currently the largest retail property owner in that country. Simon, which already owns a little more than 5 percent of CSC, had made a $4.5 billion offer for control of the mall owner, but was spurned.

CSC preferred instead to strike a deal with Peel Group, headed by the “eccentric Lancastrian businessman John Whittaker,” as one British news outlet called him (others said that billionaire Whittaker “scuppered” Simon Properties’ deal). In any case, Whittaker is selling Trafford Centre in Manchester to CSC in return for shares in CSC, enough to make him the largest shareholder in the U.K.’s largest mall owner.

Malls are a prized commodity in Britain these days, with most of the country’s new developments put on hold because of the recession. Just in recent weeks, British Land bought Drake Circus in Plymouth for $375 million, and Legal & General Property acquired Fremlin Walk in Maidstone for $144 million.

CoreLogic index confirms U.S. housing prices down

No surprise here: CoreLogic’s Home Price Index for November showed that home prices in the United States declined for the fourth month in a row. Also according to the company, national home prices–including distressed sales–were down by 5.07 percent in November 2010 compared to November 2009.

“We’re continuing to see the influence of seasonal declines that typically depress home prices during the latter part of the year, but the fact that the rate of decline increased for November is indicative of the uphill battle we’re facing with the housing recovery,” Mark Fleming, chief economist for CoreLogic, noted in a statement on Tuesday.

Including distressed sales, the five states with the greatest year-over-year depreciation, according to CoreLogic, were Idaho (down 13.56 percent), Alabama (down 11.18 percent), Arizona (down 10.38 percent), Oregon (down 9.26 percent) and Mississippi (down 8.37 percent). A few states saw appreciation, however, such as Maine (up 8.58 percent), North Dakota (up 4.41 percent) and Wyoming (up 3.67 percent).

Small businesses still a little glum

The National Federation of Independent Business–representing small businesses, who do a lot of the job-creation in the United States–said on Tuesday that its Index of Small Business Optimism declined 0.6 points in December, to 92.6. That’s a small decline, but a small increase had been expected.

Small business owners still say they are bummed about weak sales, a sentiment that generally slows down hiring and spending on capital projects. “The hope for a pick-up in the small business sector did not materialize, but new weaknesses did not appear either,” William C. Dunkelberg, chief economist for the NFIB, said in a statement on Tuesday.

By contrast, Wall Street was a little optimistic on Tuesday, with the Dow Jones Industrial Average edging up 34.43 points, or 0.3 percent. The S&P 500 gained 0.37 percent and the Nasdaq was up 0.33 percent.

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