Forget the ebb and flow of retail — things are just fine from the perch of David Simon, chairman and chief executive officer of Simon Property Group.
The mall operator saw its funds from operations — the standard yardstick for real estate operating performance — gain 16.6 percent to $865.3 million in the first quarter. This came despite decidedly lackluster sales at the retailers it leased space to: Tenants’ sales per square foot inched up just 0.2 percent to $576 versus a year ago.
But demand for space is up, with occupancy as of March 31 rising to 95.5 percent, up from 94.7 percent a year earlier.
“There are a number of key retailers that are really not performing that well,” Simon said on a conference call with analysts. “Yet that has nothing to do with what the market value of that space can be.…Retailers come and go. If we were worried about retail sales, this company was originally built — we had Kmart as our anchors. And if we had looked at Kmart sales, we would have suggested that our sales — our revenues could never grow.”
Rick Sokolov, president and chief operating officer, singled out Lego, Zara and H&M as part of a “very vibrant group of tenants that are looking to expand.”
But expansion is not the rule in retail, and real estate companies, including Simon, are focused on remodels and on the growing outlet sector.
Simon is relocating a Bloomingdale’s at its Stanford Shopping Center in Palo Alto, Calif., and is redeveloping its former location to add 120,000 new square feet of space for small shops and restaurants. And the Saks Fifth Avenue at The Galleria in Houston is being relocated to a new prototype store and the move will open up 105,000 square feet for other luxe stores and restaurants.
Simon said the company expects to invest at least $1 billion in redevelopments annually through 2016.
The company is also looking at expanding its outlet business internationally.
“We have a good outlet potential in Mexico where we got a couple of new sites that we’re pursuing aggressively, including the expansion of our one outlet there,” Simon said. “The Brazilian outlet opportunity is somewhat dormant at this point. I couldn’t find the right sites in the market. We were fortuitous in that the market obviously is correcting there, so we had no capital at risk, and we have nothing necessarily planned there.”
The company is also looking at additional outlet outposts in Asia.
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)
@heriethpaul and @gracebol have a moment on the @victoriassecret fashion show 2017. See every look from the runway on WWD.com. Link in bio. (📷: @giovanni_giannoni_photo) #wwdfashion #victoriassecret #VSFashionShow
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia