Largest US mall operator to reopen half of retail properties this month

Washington

SIMON Property Group, the biggest US mall operator, intends to have about half of its over 200 retail properties in the country open within the next week, even as some of its major retail tenants struggle to stay afloat.

The company was forced to temporarily close all its US retail properties in March due to the Covid-19 pandemic, leading it to report over a 20 per cent decline in quarterly profit and scrap its annual forecast.

Simon Property did not disclose the percentage of total rent it had collected in April or May, key figures investors were looking for, as major retail tenants cut or pause monthly rent payments to shore up cash reserves.

Gap, one of Simon Property's biggest tenants, said in April it would save about US$115 million per month by ceasing paying rent for its stores, while several other major retailers in the company's malls are on the brink of collapsing completely.

J Crew and Neiman Marcus both filed for bankruptcy last week, while J C Penney was preparing to do so and close about a quarter of its roughly 850 stores.

Simon Property's chief executive officer David Simon declined to discuss details of negotiations the company is having with tenants over reductions in rent, but hinted at some of the tension in talks.

"The bottom line is we do have a contract and we do expect to get paid," he said.

Net income attributable to Simon Property's shareholders fell 20.2 per cent to US$437.6 million, or US$1.43 per share, in the first quarter ended March 31. Analysts had expected earnings of US$1.65 per share, according to IBES data from Refinitiv.

Mr Simon also said it suspended or eliminated more than US$1 billion of capital expenditure meant for redevelopment and new construction projects.

The company said it had already re-opened 77 retail properties in regions where the lockdown restrictions had eased.

Health experts have warned that reopening parts of the economies and public places too quickly may cause a new wave of Covid-19 infections, but Simon Property's CEO is confident that his malls would reopen safely. "Unless you have science, don't blame our openings on an increase in that community's Covid-19," Mr Simon, who sits on US President Donald Trump's advisory council tasked to help decide how to reopen the US economy, said.

The company also said that it will still declare a second-quarter dividend and expects to pay out 100 per cent of its taxable income in 2020 in cash. REUTERS