The COVID-19 pandemic has negatively impacted property owners during the past year, and mall landlord Simon Property Group was no exception. The company saw its profits drop during the first quarter of 2021, Commercial Observer reports. However, Simon Property Group Chairman and CEO David Simon noted the “business has significantly improved” since the pandemic hit during the company’s earnings call this week. Simon also said that the company increased its earnings projection.
“The increase in traffic for our open air and suburban centers has been very encouraging, with higher sales volumes in March compared to 2019 levels,” Simon said in a statement.
The company posted $934 million in funds from operations in the first quarter of 2021, according to Commercial Observer. The figure is a decrease from the $981 million Simon reported during the same time period in 2020. Simon also saw revenue fall from $1.35 billion during the first quarter of 2020 to $1.24 billion at the beginning of 2021. The decreases from last year have not discouraged the company as it’s now starting to see improvements.
“We’re pleased with the results,” Simon said. “We’re encouraged with what we are seeing.”
Simon’s optimistic outlook likely comes from the increased traffic at its properties across the United States. The company’s properties’ sales volumes have also gone up, it was recently reported.. Additionally, Simon collected 95 percent of its rents from its tenants during the first quarter, which matches pre-COVID levels. The combination of the COVID-19 vaccine rollout, eased restrictions and a new round of government stimulus have helped boost mall traffic, according to Yahoo Finance.
The company is also seeing its confidence in previously bankrupt retailers be rewarded. Simon picked up JCPenney, Brooks Brothers and Eddie Bauer through its Sparc Group. The company announced these brands have outperformed their sales and growth during the past two months. Meanwhile apparel retailers Forever 21 and Aéropostale surpassed their plans by more than $135 million combined.
These retailers’ performances allowed Simon to increase its 2021 earnings projection—a significant achievement given how many retailers had to file for bankruptcy during the past year and malls had to close for months due to the pandemic. The company does not expect to return to 2019 occupancy levels until next year or 2023 as it handles rent negotiations with tenants however.
“We still have some difficult relationships and negotiations that we’re dealing with—if they’re not paying what we think is fair, we’d rather just sit on empty space,” Simon said.
Joe Dyton can be reached at joed@fifthgenmedia.com.
