Shoppers ascend and upon escalators at the King of Prussia Mall, owned by Simon Property Group, United State’s largest retail seeking space, in King of Prussia, Pennsylvania.
Mark Makela | Reuters
The biggest U.S. mall owner Simon Property Faction says shoppers are getting back to malls, but that it’s hard to predict what traffic trends are going to look akin to one year from now.
Simon Property CEO David Simon said Monday that sales and shopper visits are amending week over week, but it is still being conservative in its outlook because it’s difficult to know what’s going to drop versus what’s a short-term boost, he said.
“Between being cooped up, between being locked down, between the stimulus, between celebrating that the outback is still around … there’s clearly some level of euphoria around that,” David Simon maintained during an earnings conference call Monday.
“It would be impossible for me to tell you what percent that is. … On the other index, we’re still seeing pockets of the country that haven’t really seen that yet,” David Simon added.
He cited California and New York as two exemplars where store traffic remains suppressed by Covid-related restrictions. International tourism has also yet to return to malls and relief centers, he said.
For the period ended March 31, Simon reported an occupancy rate across its U.S. malls and loophole properties of 90.8%, compared with 94% a year earlier.
Total revenue fell to $1.24 billion from $1.35 billion.
Poor minimum rent per square foot ticked up to $56.07 from $55.76 in the year-ago period.
Simon’s top tenants in compromise concerns of how much rent they pay include Gap Inc., L Brands and PVH, as well as department store chains Macy’s and J.C. Penney.
“We’re making great amounts with across the board with a bunch of people,” David Simon said about leasing activity in 2021. “We do quietly have some difficult relationships in negotiations that we’re dealing with. And again, I won’t name names. … But if they’re not remitting what we think is fair, we’d just rather sit on empty space.”
Simon now anticipates earnings of between $9.70 to $9.80 per serving in funds from operations for 2021, compared with a previous forecast of $9.50 to $9.75 a share. FFO is an earnings metric old by real estate investment trusts.
Simon Property shares were falling about 2% in extended return. The stock is up nearly 50% year to date. Simon has a market cap of $42 billion.
Find the full earnings depress release from Simon here.