Simon says: "Shop!" And millions do. Simon Property Group is the nation's largest shopping mall and retail center owner, with a portfolio of some 325 retail properties totaling approximately 240 million sq. ft. of leasable space across more than 40 states and Puerto Rico. The self-managed, self-administered real estate investment trust (REIT) owns, develops, and manages regional shopping malls, outlet malls (under the Premium Outlet, Prime Outlet, and The Mills brands), boutique malls, and shopping centers. Its portfolio is concentrated in the US's Southeast, Midwest, and Northeast. The REIT also has stakes in outlet centers in Japan, Malaysia, Mexico, and South Korea.
Simon invests in retail real estate properties in North America and Asia.
The real estate investment trust owns, develops, and manages retail real estate properties, which consist primarily of malls, Premium Outlets, The Mills, and community/lifestyle centers. Nationwide, it owns or holds an interest in nearly 320 income-producing properties, which comprise 160 malls, more than 60 Premium Outlets, nearly 70 community/lifestyle centers, a dozen Mills, and more than a dozen other shopping centers or outlet centers. Its portfolio reaches across more than 40 states and Puerto Rico.
As part of its business, Simon has reinstituted redevelopment and expansion initiatives with renovation and expansion projects underway at two-dozen properties in the US with 56 new anchor and big-box tenants having opened in 2012 and an additional 30 scheduled to open during 2013.
Internationally, Simon boasts ownership interests in eight Premium Outlets in Japan, two Premium Outlets in South Korea, one Premium Outlet in Mexico, and one Premium Outlet in Malaysia. Simon holds a 29% equity stake in Paris-based Klépierre SA, a publicly traded real estate company, which either owns or has an interest in more than 260 shopping centers located in more than a dozen European countries.
Sales and Marketing
Simon's clients include Delta Faucet, Hershey, Cadillac, and Samsung.
The company has seen positive revenue growth since 2008. Revenue rose 13% to $4.9 billion in fiscal 2012 from $4.3 billion in 2011 while profits increased 40%. Fueling Simon's growth were revenue increases from minimum rent, overage rent, and tenant reimbursements, while its management fees and other revenues were flat. Minimum rents rose more than $351 million; property transactions accounted for some $280 million of the increase. Comparable rents increased nearly 3%, primarily attributable to a $76 million increase in base minimum rents. Overage rents jumped 39% due to property transactions and rising tenant sales in 2012 as compared to 2011 at the comparable properties of $31.3 million. Simon's tenant reimbursements saw a 14% boost, attributable to a nearly $142 million increase from property transactions and a $21 million increase in the comparable properties. Simon attributes these gains to annual increases related to common area maintenance and real estate tax reimbursements, offset in part by declines in utility recoveries due to lower electricity costs.
Simon is focused on international expansion in select markets. Its strategy is to partner with established real estate companies in other countries. In 2013 the company entered several joint ventures to extend its reach in the US and internationally. It is partnering with McArthurGlen Group (having signed a definitive agreement) to form a joint venture through which SPG will invest in McArthurGlen, the leader in upscale, European designer outlets.
In 2012 Simon and BR Malls Participacoes S.A., the largest retail real estate company in Latin America signed a 50/50 joint venture agreement to develop and own outlet centers in Brazil. The agreement creates a Brazilian entity that is equally and jointly owned by BRMALLS and Simon to develop and own outlet centers in Brazil. The venture's first outlet center opened in Sao Paulo in 2013.
Simon and Bailian Group, China's largest retail conglomerate, signed a memorandum of understanding in 2012 to jointly develop a branded Premium Outlet Center in Pudong, Shanghai, China. The outlet center is situated adjacent to the Shanghai Disney Resort.
Simon and Institutional Mall Investors, the co-investment venture owned by an affiliate of Miller Capital Advisory and The California Public Employees' Retirement System, formed a joint venture to own and operate The Shops at Mission Viejo in the Los Angeles suburb of Mission Viejo, California, and Woodfield Mall in the Chicago suburb of Schaumburg, Illinois. As part of the agreement, Simon and IMI each own 50% of Woodfield. Simon owns 51% of Mission Viejo with IMI owning the remaining 49%.
It's expanding into Japan, as well, through a partnership with Mitsubishi Estate Co., Ltd., to open Shisui Premium Outlets, representing the ninth Premium Outlet Center in Japan.
In the US, Simon is investing in one of its top properties. In 2013 the company made plans to enhance and expand Woodbury Common Premium Outlets, the world's top outlet center. (With average sales of more than $1,550/foot and annual sales exceeding $1.3 billion, Woodbury Common Premium Outlets is a star in Simon's real estate portfolio). Also in 2013 Simon Property Group, Inc. opened Phoenix Premium Outlets, an upscale outlet shopping center serving the Greater Phoenix and Scottsdale areas.
Simon acquired 50% of Silver Sands Factory Stores, located in Destin, Florida, in 2012. The center's developer, Howard Group, remained a 50% owner. Simon assumes primary responsibility of leasing and management duties. It opened Merrimack Premium Outlets, an upscale outlet shopping center that serves the Greater Boston and Nashua markets.
Mergers and Acquisitions
In 2012 the company bought a 29% stake in Paris-based property investor Klépierre, which owns some 270 retail properties in France, Belgium, Scandinavia, and elsewhere in Europe. Simon paid BNP Paribas approximately $2 billion for the stake, after which it became Klépierre's largest shareholder. Also in 2012 Simon signed international development agreements to develop up to a dozen outlet centers in Brazil and another outlet in China adjacent to the Shanghai Disney Resort.
Simon in 2012 acquired Paragon Outlets Grand Prairie, located in Grand Prairie, Texas, and Paragon Outlets Livermore Valley in Livermore, California. Simon now owns 100% of each asset.
While the company looks for new opportunities, it also knows when to exit deals, ideally at a profit. In 2012 Simon sold its 49% stake in Gallerie Commerciali Italia to joint venture partner Auchan for $378 million. The deal included interest in 45 properties in Italy.
The founding Simon family, owners of the Indiana Pacers NBA franchise, owns more than 10% of the company. The Vanguard Group owns about 11% of the company.