Every meaningful metric demonstrated YoY growth including occupancy, base rent, Sales PSF, portfolio NOI, FFO, and their dividend. These capabilities and platforms will offer significant synergies with Simon's ongoing projects and will allow Simon to expand into the lucrative CRE Asset Management business dominated by the likes of Blackstone and Brookfield.Īll this to say, Simon continues to explore and execute on strategies for growth.Īnd the Q1 2023 numbers back it up. Jamestown boasts a strong track record in mixed-use redevelopments and a prestigious Asset Management business. In Q4 2022, Simon acquired a 50% stake in Jamestown, a global Mixed-Use development and management company based in Atlanta. Not only will the redevelopment be an accretive investment of capital, but the hotel units have also increased the Phipps mall foot traffic and sales. The Phipps Plaza redevelopment in Atlanta has been an excellent case study. CEO David Simon noted a 60% return on their OPI investments in his Q3-2022 opening remarks.įurthermore, when Simon notices that one of their malls is underperforming or is no longer in an optimal position to attract consumers, they utilize their strong balance sheet and credit ratings to adapt the malls to consumer preferences… whether it’s more experiential tenants such as upscale restaurants and spas, or better use of the space such as apartment units, luxury hotel rooms, and Life Time Fitness centers.Īs noted in the latest earnings call, Simon is planning to build over 2,000 multifamily units along with luxury hotel rooms throughout planned redevelopments that will be executed over the next 3-5 years. Despite blowback from the markets who interpreted this as a desperate move to keep their tenants paying rent, the investments have paid off with more room to grow. Not only did this ensure that these retailers would remain operating tenants in their malls, but now they would be able to participate in the upside sales of these businesses when they bounced back. ![]() Penney in partnership with Brookfield Properties. During COVID, Simon recognized that retailers with some juice left in the tank were going bankrupt due to the shutdowns, and they prudently bought them out of bankruptcy for pennies on the dollar including Brooks Brothers in partnership with Authentic Brands via their joint venture known as SPARC, and J.C. Simon has been exceptional at adapting to those trends in order to stay relevant and powerful within the industry. Throughout the years, the retail landscape has continuously changed based on consumer behavior and trends. Placer.ai Simon is more than just a mall portfolio And the numbers are confirming that with every meaningful metric growing since the 2020 COVID plunge and some even surpassing pre-pandemic levels. And guess where they want those stores to be… around people and other stores! It’s a never-ending cycle of demand for Class A mall space. The oversaturated Class B, C, and D malls are dying left and right, leaving less competition for Class A malls to attract high-quality retailers.Ĭlass A malls are deemed Class A because they are located in major populous cities, attract the highest quality tenants, and in turn, boast the highest Sales per Square Foot ($500+)! Yes, retailers are moving to an expanded online presence, but studies are showing that their retail business is optimized by combining that online presence with brick-and-mortar stores. “What, are you an idiot?! Malls are a dying breed! No one wants to shop in person anymore, all retailers are turning to e-commerce!” Simon is more than just a mall portfolio: Simon is actively investing in growth. Class A malls are alive and well: Market Data shows that traffic at top-tier malls is thriving since the COVID pandemic.Ģ. There are two factors that support this idea:ġ. ![]() Based on my analysis, it is becoming clearer and clearer to me that the fundamentals of the company and the price simply do not align and therefore today is an excellent opportunity to acquire more than what you're paying for. I believe one of the best opportunities to do just that in the market today is presented via Simon Property Group ( NYSE: SPG). ![]() Value investing, put simply, is buying more than you're paying for. Sam Diephuis/DigitalVision via Getty Images ![]() Active contributors also get free access to SA Premium. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Editor's note: Seeking Alpha is proud to welcome Pearl Investments as a new contributor.
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