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About Simon Property Group, Inc.

Simon Property Group is the largest shopping mall and retail center owner in the US. The self-managed, self-administered real estate investment trust (REIT) owns, develops, and manages regional shopping malls, outlet malls (under the Premium Outlet and The Mills brands), boutique malls, and shopping centers. Its real estate portfolio is composed of some 230 retail properties totaling approximately 190 million sq. ft. of leasable space. Its portfolio covers 35 states and Puerto Rico, though much is concentrated in the US Southeast, Midwest, and Northeast. The REIT also has stakes in outlet centers in Canada, Mexico, Europe and Asia. The company is still run by the founding family. 

Operations

Simon Property’s primary operations are the ownership, development, leasing, and management of its retail real estate portfolio. The extend of its involvement, and revenue generation, varies by its degree of ownership. In addition to owning some 200 properties in the US, it is a joint-venture partner in about 80, mostly international, properties. It also uses joint ventures to hold equity investments in several European real estate holding companies. It manages the day-to-day operations of its owned properties as well as about 60 of its joint-venture properties. The remaining properties, all of which are located outside the US, are managed through joint ventures in which Simon shares, but does not have majority, control.

The company makes about 60% of its revenue from rental income, just less than 30% from tenant recoveries (reimbursements to Simon Properties for common area maintenance, real estate taxes, etc.), and the rest from overage rents, management fees, and other corporate revenue.

Geographic Reach

Indianapolis, Indiana-based Simon Property Group owns and operates – wholly or as part of joint ventures – retail real estate properties in the Americas, Europe, and Asia.

By far its largest market is the US, where it generates over 95% of its revenue and holds nearly 95% of its long-lived assets.

Sales and Marketing

Simon Property enters long-term tenancy contracts with retailers to fill its properties. Its lease terms must be competitive to attract desirable tenants and its management services provide post-sale customer care to its lessees and also strive to pull consumer traffic into its properties with local advertising and special events (Santa Claus at the Mall, for example).

Many of its properties are anchored by major tenants such as JCPenney, Macy’s, Dillard’s, Neiman Marcus, and Bloomingdale’s and supplemented with smaller stores like Dick’s Sporting Goods, Nordstrom, Kohl’s, and AMC Theatres. Its Premium Outlets are home to a variety of popular retailers including Adidas, American Eagle Outfitters, Ann Taylor, Columbia Sportswear, Michael Kors, Tommy Hilfiger, and The North Face.

Occupancy for its US malls, Premium Outlets, and Mills-branded properties remain above 95%. No one tenant accounts for more than 5% of its consolidated revenue.

Financial Performance

The long-term trend in revenue has been positive over recent years. Revenue has climbed steadily since 2014, growing from $4.9 billion in that year to $5.7 billion in 2018. Net income has grown in parallel, jumping from $1.4 billion to $2.4 billion over the five-year period.

Simon Property’s 2018 revenue of $5.7 billion grew about 2% from 2017’s $5.5 billion in part as a result of higher occupancy rates, rents, and dollar-per-square-foot sales number from its tenants. In 2018, net income from continuing operations was $2.4 billion compared to $1.9 billion in 2017. 

Cash at the end of 2018 was $514.3 million. Cash from operations contributed $3.8 billion to the coffers, while investing activities used $236.5 million, mainly for capital expenditures. Financing activities used another $4.5 billion for mortgage and unsecured debt payments and partnership distributions.

 

Strategy

 

The retail industry is encountering both cyclical and structural changes, including a younger demographic that prefers to spend their disposable income on experiences over material goods and internet-based e-commerce that emphasizes convenience for the consumer. Simon Property is changing with the times by reformulating the tenant mix in its properties to bring more experiential options and addressing new and redevelopment needs in growth markets. Although internet-based retail presents challenges to many of Simon’s typical tenants, the REIT maintains the relevance of a brick-and-mortar presence. Still, it is modifying its store mix within its properties to include more entertainment and residency offerings, while still working with its long-standing clients to fill space in its retail properties.

Acknowledging the changing retail dynamic, Simon is diversifying its properties away from apparel-heavy approaches by transitioning its tenant base to include residential space, hotels, entertainment options, restaurants, and wellness centers. The idea is to entice consumers to its property not only to shop but to be entertained and possibly even spend the weekend. Centers such as The Domain in Austin, TX and the jointly-developed Brickell City Centre in Miami, FL exemplify this new approach.

Simon is averaging $1 billion in annual investments to build new, or redevelop existing, properties. In 2018, Simon opened the Denver Premium outlets in Colorado and acquired the remaining 50% in a joint venture at The Outlets at Orange in Los Angeles.  In 2018, Simon invested $600 million in redevelopment projects at sites, including at Aventura Mall in Miami and Desert Hills Premium Outlets in Cabazon, California. The company’s approach is to start with the aesthetic and functional appeal and then to add on-site customer service and technology to make the shopping experience easier and more efficient for shoppers and retailers.

Branching out into new areas, the company has launched a new online shopping platform for its premium outlets featuring more than 300,000 products from 2,000 brands. It is also embracing the growing popularity of cannabis-based products with a new partnership in 2019 with Green Growth Brands to open about 110 shops within its malls selling CBD-infused products. 

Company Background

Simon Property Group helped change the face of the US retail landscape from mom-and-pop stores to shopping malls. The original Simon Property Group (formed in 1993) was the offshoot of brothers Melvin and Herbert Simon's Melvin Simon & Associates (MSA, founded in 1959). 

To get started, the Simons sometimes borrowed cash from friends, but during the 1960s and 1970s developers could usually borrow 100% of a shopping center's construction costs after securing an anchor tenant. Leases then provided money to repay debt and make a down payment on the next project. The Simons consistently retained equity, developing a huge asset base that they used as collateral for larger projects. 

The new strip malls boasted retail's two most important virtues -- price and convenience -- and in time they developed into the modern mall. MSA built its first indoor mall in the mid-1960s in snowy Fort Collins, Colorado. By the late 1960s, MSA and other developers were consumed with mall projects. 

As the 1989 real estate slump hit, the Simons were busy building the largest mall in the country, just outside Minneapolis. Completed in 1992, the Mall of America included a roller coaster, a two-story miniature golf course, and a walk-through aquarium. In 1993 Simon Property Group went public in one of the largest IPOs of its time. 

Simon Property Group, Inc.

225 W WASHINGTON ST
Indianapolis, IN 46204-3438
Phone: 1 (317) 636-1600

Stats

Employer Type: Publicly Owned
Stock Symbol: SPG
Stock Exchange: , NYSE
EVP and CFO: Andrew A. Juster
Chairman and CEO: David Simon
President and COO: Richard S. Sokolov
Employees (This Location): 1,000
Employees (All Locations): 5,000

Major Office Locations

Indianapolis, IN

Other Locations

Anchorage, AK
Boaz, AL
North Little Rock, AR
Brea, CA
Cabazon, CA
Camarillo, CA
Carlsbad, CA
Folsom, CA
Gilroy, CA
Laguna Hills, CA
Mission Viejo, CA
Orange, CA
Palo Alto, CA
San Diego, CA
Santa Rosa, CA
Torrance, CA
Vacaville, CA
Westminster, CA
Alamosa, CO
Aurora, CO
Clinton, CT
Waterford, CT
Dover, DE
Boca Raton, FL
Boynton Beach, FL
Coral Springs, FL
Doral, FL
Estero, FL
Fort Myers, FL
Jensen Beach, FL
Leesburg, FL
Melbourne, FL
Miami, FL
Ocala, FL
Orange Park, FL
Orlando, FL
Panama City Beach, FL
Pensacola, FL
Port Charlotte, FL
Port Richey, FL
Saint Petersburg, FL
Sanford, FL
South Miami, FL
Sunrise, FL
Atlanta, GA
Buford, GA
Dawsonville, GA
Duluth, GA
Kennesaw, GA
Waipahu, HI
Cedar Rapids, IA
Davenport, IA
Alton, IL
Aurora, IL
Lincolnwood, IL
Orland Park, IL
Peoria, IL
Springfield, IL
Bloomington, IN
Edinburgh, IN
Evansville, IN
Greenwood, IN
Indianapolis, IN
Kokomo, IN
Lafayette, IN
Michigan City, IN
Mishawaka, IN
Muncie, IN
Noblesville, IN
Pleasant Prairie, IN
Topeka, KS
Lake Charles, LA
Boston, MA
Braintree, MA
Chestnut Hill, MA
Danvers, MA
Hyannis, MA
Lee, MA
Needham, MA
North Attleboro, MA
Peabody, MA
Saugus, MA
Wrentham, MA
Bowie, MD
Glen Burnie, MD
Hanover, MD
Waldorf, MD
Bangor, ME
Kittery, ME
Portland, ME
Ann Arbor, MI
Albertville, MN
Duluth, MN
Edina, MN
Saint Paul, MN
Independence, MO
Lebanon, MO
Osage Beach, MO
Springfield, MO
Smithfield, NC
Merrimack, NH
Salem, NH
East Brunswick, NJ
Edison, NJ
Elizabeth, NJ
Flemington, NJ
Hackensack, NJ
Jackson, NJ
Jersey City, NJ
Lawrenceville, NJ
Livingston, NJ
Rockaway, NJ
Toms River, NJ
Albuquerque, NM
Las Vegas, NV
Reno, NV
Central Valley, NY
Garden City, NY
Huntington Station, NY
Lake Grove, NY
Lakewood, NY
New York, NY
White Plains, NY
Yorktown Heights, NY
Ada, OH
Aurora, OH
Cleveland, OH
Lima, OH
Oklahoma City, OK
Tulsa, OK
Langhorne, PA
North Wales, PA
Philadelphia, PA
Pittsburgh, PA
Tannersville, PA
West Mifflin, PA
Whitehall, PA
Charleston, SC
Greenville, SC
Rapid City, SD
Sioux Falls, SD
Crossville, TN
Knoxville, TN
Memphis, TN
Austin, TX
Cedar Park, TX
Corsicana, TX
El Paso, TX
Garland, TX
Georgetown, TX
Harlingen, TX
Houston, TX
Katy, TX
Longview, TX
Mcallen, TX
Mercedes, TX
Midland, TX
San Antonio, TX
San Marcos, TX
Tyler, TX
Arlington, VA
Charlottesville, VA
Chesapeake, VA
Harrisonburg, VA
Leesburg, VA
North Chesterfield, VA
Winchester, VA
Kennewick, WA
North Bend, WA
Quil Ceda Village, WA
Seattle, WA
Tacoma, WA
Fond Du Lac, WI
Green Bay, WI
Greendale, WI
Johnson Creek, WI