The first policy will insure Mall of America, a 78-acre development here with more than 4.2 million sf of retail and entertainment space, against damage incurred from acts of terrorism. Simon plans to more than double the size of Mall of America. The second policy will insure the remainder of Simon's shopping center portfolio against similar perils.
Simon Property Group bought the policies from Lexington Insurance Co., a subsidiary of American International Group. The purchase of the policies settles the company's disputewith GMAC Commercial Mortgage Corp., which had sued Simon to force them to buy terrorism insurance. GMAC, the Mall of America's principal lender, filed the lawsuit in the Fourth Judicial District Court in Hennepin County. Besides Simon Property Group, the owners of Mall of America include Teachers Insurance and Annuity Association and Triple Five Corp.
"We are pleased that we were able to successfully negotiate an acceptable premium for terrorism insurance with Lexington Insurance Co.," says David Simon, the company's chief executive officer.
Simon says the premium for the terrorism insurance coverage is substantially less than that which GMAC originally intended to charge for the coverage, but declined to say how much it cost.
"It was extremely important that we secure coverage that would provide protection for our properties but not impose an unreasonable burden on our malls' tenants, many of whom are small business owners," Simon says.
Simon Property Group is a self-administered and self-managed real estate investment trust that owns or has an interest in 251 properties containing 187 million sf of gross leasable area in 36 states, with seven assets in Europe and Canada.
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