David Simon has long been accustomed to being a landlord — but he’s growing more comfortable as a retailer.
Simon, who is chairman, chief executive officer and president of mall operator Simon Property Group, touted a “very productive” second quarter to analysts on a conference call Wednesday and his company could keep investing in retailers if required.
Simon already has a test case, having bought Aéropostale with Authentic Brands Group and General Growth Properties in 2016, helping to lessen the impact of the retailer’s bankruptcy.
The ceo said more deals along those lines are “very possible.”
“We’re going to be very smart about it,” Simon said. “We’re certainly as good as the private equity guys when it comes to retail investment…We love being partners with Authentic Brands Group and we’ll work together on other distressed situations. We’re only going to buy into companies that, we think, have brands and the volume that is worth doing it.”
The mall company could also work with ABG on its recently acquired Sports Illustrated business, imagining “Sports Illustrated e-sports, gaming, food and beverage — and we’ll be at the forefront of trying to be as creative as we can with our real estate that you cannot duplicate.”
Despite the doom and gloom that still hangs over the retail business, Simon said business is good, although the strong dollar and a lack of tourist traffic has acted as something of a depressant.
Simon’s U.S. malls and premium outlets saw retail sales rise 3.5 percent to $669 a square foot for the 12 months ended June 30, the end of the second quarter. The firm’s occupancy rate stood at 94.4 percent.
That doesn’t mean the company isn’t keeping a close eye on certain retailers.
And Simon, without naming names, said some of the companies that got into trouble caused much of their own trouble.
“If you look at the bankruptcies, each one of these folks, there were things and decisions that they did that led them to that point…lack of investment, too much leverage, opening too big of stores, going international when they should have stayed domestic…it’s not endemic of our business and that’s the important point because the reality is, even with these bankruptcies that we’ve had to deal with, we’re comping up.”