Simon Family Real Estate Dispute: Herb Simon Sues Nephew's Family Over Secret Restructuring

Herbert Simon, co-founder of Simon Property Group (SPG) and majority owner of the Indiana Pacers, has initiated a significant lawsuit against the family of his deceased nephew, David Simon. The lawsuit centers on allegations that David Simon secretly restructured S.F.G. Company LLC (SFG Co. LLC), a private real estate holding company owned by the Simon family, shortly before his death. Herb Simon and other preferred equity holders claim this restructuring deprived them of millions of dollars in shares and preferential distribution rights.

SFG Co. LLC was established in 1995 by Herb Simon and his late brother Melvin Simon to manage real estate assets that were not included in Simon Property Group when it went public. The company's original operating agreement granted preferential distribution rights to certain equity holders, including Herb Simon. According to the lawsuit, David Simon had engaged in discussions with Herb Simon about liquidating the company in the years leading up to his death. However, these talks reportedly ceased after Herb Simon rejected David Simon's offer to buy his shares at heavily discounted values. The complaint alleges that after these negotiations failed, David Simon unilaterally undertook a secret restructuring just weeks before his passing, transferring SFG Co. LLC's assets to a new entity called SFG HoldCo and eliminating the preferred distribution rights without consent.

The plaintiffs argue that these actions violated SFG Co. LLC's operating agreement and were executed without the consent of other equity holders. The lawsuit seeks to declare the restructuring invalid, reinstate the previous governance structure, and award compensatory and punitive damages. Eli Simon, David Simon's son and the current CEO of Simon Property Group, has dismissed the lawsuit as a “meritless complaint,” stating his focus remains on leading Simon Property Group and delivering long-term shareholder value.

This legal dispute is significant for the markets given the substantial real estate assets and Simon Property Group shares held by SFG Co. LLC. Court documents indicate that as of April 2026, SFG Co. LLC held approximately 6.9 million shares of Simon Property Group, valued at over $1.53 billion. While the lawsuit does not directly target Simon Property Group, the potential implications for the management of the family's substantial assets and corporate governance of related private entities are being closely watched by the broader real estate sector and investors.

The Simon family has a history of legal disputes concerning the management of their wealth. Notably, a significant legal battle over the inheritance of Melvin Simon's estate occurred after his passing in 2009. This new lawsuit once again highlights the complexities inherent in the intergenerational transfer of billions in wealth and the control mechanisms within private company structures.

Analysts and market observers note that the outcome of the lawsuit will determine the ultimate control and distribution rights over these significant assets. While the plaintiffs are asking the court to invalidate the secret restructuring and restore the company's original structure, the defendants deny the claims. This legal process is anticipated to have considerable effects on the future management and asset distribution of the Simon family's vast real estate empire.