He used an analogy to suggest it makes sense for Simon to pursue out-of-favor retailers right now because they come at bargain prices but could offer an upside when the economy turns. The S&P 500 rose around 9.1% during the same period.īill Smead, chief investment officer of Smead Capital Management, recently increased its investment in Simon Property Group to around 2.3% of its portfolio.

mall owner by number of malls are flat since June 30, when news started to emerge that it was interested in buying more flagging retailers. Some investors said they think Simon Property is being astute and making out-of-favor investments that might seem foolhardy now but could pay off in the long term. I see it as the natural conclusion of the 50-year run of the mall industry.' 'Nobody in the $5.5 trillion-a-year retail business stands to lose more from bankrupt tenants or declining tenants than Simon Property right now, ' said Nick Egelanian, president of SiteWorks, a retail consulting firm. Some view Simon's moves as boosting the company's income while buying time to reconfigure malls with only one anchor department store. malls could shut for good as tenants close their doors. Analysts say there is still a glut of malls, and that as many as half of the roughly 1,100 U.S. One thing the two strategies have in common: a focus on maintaining occupancy levels at Simon malls as high as possible.

With another partner, Simon is in advanced talks to buy J.C. and Lucky Brand Dungarees LLC out of chapter 11. The mall operator and a partner recently agreed to buy apparel retailers Brooks Brothers Inc. It is using cash to help stabilize some companies whose demise would mean closing stores in Simon malls. But the move would challenge a long-held industry belief that anchor tenants are crucial for attracting foot traffic to other stores.Īt the same time, Simon has been trying to keep aspects of the old business model intact, despite heightened pressure from e-commerce and other forces that have pushed some once-prominent retailers into bankruptcy. to convert department stores into warehouse distribution hubs, say people familiar with the matter, an innovation that could plug large holes filled by ailing tenants such as Sears Holdings Corp. Giant mall owner Simon Property Group is pursuing an unorthodox business strategy, smashing the foundation of the traditional industry model on the one hand while trying to glue certain elements of it back together with the other.

David simon malls