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Victory! Simon says it has overcome Covid as earnings bounce back

Nation’s largest mall owner has “overcome the arbitrary shutdown of our business,” CEO said

Simon Property Group CEO David Simon (Getty, Simon)
Simon Property Group CEO David Simon (Getty, Simon)

Nearly two years into a pandemic that shrank its portfolio and forced some of its competitors into bankruptcy, the head of the nation’s largest mall owner believes his firm has weathered the storm.

“We’ve overcome the arbitrary shutdown of our business,” Simon Property Group CEO David Simon said on the REIT’s third-quarter earnings call.

Just a few quarters ago, the REIT was collecting just over half of rent owed by its tenants and was suing them left and right to claw back that cash. Even earlier this year, the company suffered a billion-dollar earnings hit.

But today, Simon had positive news to report. The company’s funds from operations hit $1.18 billion this quarter, beating estimates and blowing away the $723.2 million recorded in the same period last year by over 50 percent. Net income also jumped to $679.9 million, from $145.9 million in the third quarter of 2020.

In part, that’s thanks to an increase in rent collections. The company brought in $1.2 billion in lease income in the past three months, up from $993 million in the same period last year.

Occupancy for the company’s shopping centers was at 92.8 percent. with base minimum rent per square foot at $53.91.

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Simon said diversification efforts have paid off. Since last year, the company has been investing in bankrupt retailers, such as J.C. Penney, Brooks Brothers and Forever 21. Simon has repeatedly assured investors that the company, despite being the largest owner of shopping malls in the U.S., is not solely a mall REIT.

“We’re just a different company than what most think of us,” Simon said. “Even though you call us a mall company, I think we’ve proven to be beyond that.”

The company also recently acquired mall operator Taubman Realty Group. Still, Simon’s malls account for 73 percent of the company’s net operating income, according to a supplemental report. Taubman makes up another 8 percent.

Labor shortages were also a cause for concern for Simon, who said he personally offered to help unpack J.C. Penney boxes at shipping ports.

“We’ll do whatever it takes to get product into our stores,” he said.

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RetailShopping MallsSimon Property Group