SPG - Simon Property Group

[Gregmal]

Simon Property SPG $141.63

 

Large cap value hidden in plain sight, buying today at 2012 share prices and a crisis level valuation. Fully liquid shares. Buy it and forget about it.

 

Completely safe and well covered 5.8% current yield with projected growth

 

Indisputable industry leader with a top notch management team capable of not only navigating the waves but staying ahead of the competition and establishing new trends

 

Absurdly low cost of capital, just raised $3,5B of 15+ year notes at 2.6%

 

Diligent manager of the balance sheet with recent refinancing of sr secured notes and active share repurchase program. Total annual capital returned to shareholders approaching 8%.

 

Compelling JV structured to mitigate companies expose to pure development risks

 

Global footprint and in house operations/relationship managers streamline much of the process and creates cost savings relative to peers with piece meal real estate operations.

 

Malls, Malls, Malls, is valid, just not here. Simon boasts a 95% occupancy rate and is known for the quality of its locations. Baby has largely been thrown out with the bathwater. Simon could lose ALL of it’s top 5 anchor tenants AND have 75% of ‘20+’21 leases expire without renewal with little to no impact on its current profile or ability to repurchase stock or pay out the current dividend.

 

Essentially the mall Armageddon thesis is playing out and probably somewhere in the 7th or 8th inning. Simon has not only navigated the crisis but grown. They’ve continued to improve SS NOI and FFO, nearly DOUBLING their dividend per share during the 6 year Mall Apocalypse starting in 2013 without the undertaking of an unhealthy payout ratio.

 

Simon is currently trading at a historically low P/FFO, lower in fact than in did at any point during the GFC

 

Coronavirus is just latest excuse for people to hit the bid.

 

I own shares. This is not investment advice. Yada Yada

 

 

EDIT: Whoops. Like a lot of threads lately, Sanjeev, you'll need to move this one.

 

[Spekulatius]

TCO is cheap too, their properties seem just as good as SPG, however their balance sheet is worse. Does it matter though - if malls go the way of bowling alleys, they are both screwed.

 

In my opinion, we are not in 7-8th inning, we are in the 2-3rd. Online sales are growing to 12%+ this year and are just getting started imo. I would not be surprised if we are at 50% we tweet 2030 and 2035. That means they many malls will either have to disappear or will have to fundamentally change. My guess is also they the privet to restaurants may not work, with the pivot to takeout. Some of the malls can be reconfigured to community centers or work life places, but there just too much mLl space to go around to keep everything productive. It is also questionable to me they after all this reinvestment needed, the total rents of the new mLl hybrids will really be higher than they were before the conversion. So all this capital recycling may just be a defensive move may not improve cash flows much.

 

My vote is that it’s a value trap.

[Gregmal]

I dont think everything is going to turn into a bowling alley. There is a clear difference between dust bowl locations with 60% occupancy rates and failing anchors, and top tier locations in high traffic corridors centered around bustling communities and work/residential facilities. Mid-high 90's occupancy rates with the type of tenant diversification SPG has speaks for itself.

 

Retailers will not all go online and call it a day. They won't all just go sell on Amazon either. If a physical store makes money, they have little to no reason to shut it down. If anything that approach is counter productive. A lot of retailers still make money, you're just seeing a transition period where the mid tier down to the bottom, who lose money get killed. The rest will adjust and rents will have to rerate. But at the same time, much of this has been taking place for years already. As has been noted on some of the calls, if anything, the push out of B and C creates more demand for prime space in A.

 

Anyone thinking this space is just going to evaporate needs to go check out the new mega mall at the Meadowlands.

 

People love the SRG's and the HHCs of the world, but frankly, IMO SPG has those same type of opportunities available to it, with a better management team, and lower cost of capital. They have plenty of levers to pull, and at the current valuation really dont need much of anything to go wonderfully right.

 

I'd also add, that due to Simons market position and expertise, it is possible for most mall companies to fail and still have this thing standing tall. Not to mention that there has been some activity in the space; COBF favorite Brookfield has been making moves here for a few years now. Which is not to say I wholeheartedly agree with them, but I do think some smart folks see avenues to reposition this space, and the narrative that basically every player here will be wiped out is bogus. Simon is hands down the best, and from these levels, should be A-OK if not better.

 

 

[Guest cherzeca]

6 year low.

[BG2008]

If anyone want my unsolicited opinion, well too late. 

 

If I were to own a mall, it would be Simon's.  Since having a kid, my wife and I have been spending a lot of time at the mall.  We noticed that there is a lot more "fly by night" operators now.  Yes, the occupancy is high at 95%, but the quality has gone down by quite a bit.  At the Roosevelt Field Mall on Long Island, you are starting to see coin stores, Catholic stores, etc.  What used to be a nice looking Abercrombie (okay, by comparison) with nice corporate designs etc is now just shelves with very little tenant improvement.  It's not as nice of an user experience.  This mall used to have a wait list to get in and now has several locations that are permanently dark.  I second what Spek says about being in the 2-3rd inning of a brick&mortar to e-commerce transition, it is tough.  We are also at sub 4% unemployment and you are seeing these qualitative issues pop up.  What happens in a recession and retailer go out of business en mass?  One of the problems with Malls that is a bit different than multi-family, office, or warehouse.  If you have 20% vacancy in a 10 story building, it is likely confined to 2 floors.  No one else in the building will care.  But if your mall has a 20% vacancy, it is very dreary.  Malls are synergistic animals.  They need energy and a sense of buzz.  Once that is gone, it kind of spirals.  Once a place is not fun/cool to hang out, the retailers take notice and get out and puts the place into a spiral. 

 

I have noticed that many digital native brands do take on real estate.  They are starting to notice that you need in store experiences to try on products.  Look at Warby Parker and the mattress stores.  Ironically, Best Buy is doing quite well, Apple, Samsung, and Microsoft have all adopted a brick and mortar strategy.  It makes sense to try on a new product in your hands if you are plucking down $999 for a new iPhone.  Ironically, the speed of innovation of electronics actually necessitates brick and mortar interaction.  That was not something that I anticipated.

 

What about re-development opportunities?  I have come to appreciate malls parcels as great development parcels.  Increasingly, you are seeing Multi-family and hotels being built on Mall outparcels.  This makes a ton of sense as Malls are generally the best located real estate.  My issue with this optionality (a big part of Brookfield's thesis) is that Simon is great at what they do "leasing retail real estate".  It's their DNA just like value investing is in our DNA.  I am trying hard to learn tech and software, but at this moment, I am just okay.  Once in a while, I can spot an obvious bargain.  Development is a whole different game.  You need 15-20% IRR on projects to justify a transition to a mixed use location.  Look at HHC, they have a $110-$120mm G&A that is trending to $75mm after a cost cut.  That's the kind of organization that you need and the NPV will be some figure that is discounted deeply to reflect the development risk.  The problem with Simon is that each location is different and distinct and they only have a mall to work with. Meaning, HHC benefits from having a lot of sites in one town.  SRG and Simon will only have their core 100 acres.  Unless they have been zoned for re-development, it is hard to create that kind of density, local government buy-in, etc.  There is benefit to scale and experience in a local region.  But if your development sites are spread over hundreds of location, you have to "get up to speed" on every single location.  It's too hard for me.  BAM's involvement with malls is actually the main reason why I never invested in BAM.  BPY's acquisition of some NYC retail and some malls made me scratch my head. 

 

Anyways, another useless, unsolicited a-hole opinion from me regarding malls.  But Simon is absolutely the best operator in this space and they own the best trophy assets without a doubt. 

[kab60]

Really appreciate you bringing up the topic. I keep looking at these plays, and optically most of these players look cheap, but I'm scared by the combination of high financial leverage and operating leverage. Whenever I'm intriged by the mall carnage I go back to Alliance Data Systems or retailers that I think will do fine despite Amazon etc.

 

I think lots of retailers will thrive in this environment, but I also don't see online shopping slowing down. ADS is hit by mall exposure but with wayyy less financial leverage and a more variable cost structure - plus, they're sort of good co/bad co and unlike the mall REITS there's little risk they have to spend most of their cash flows just to keep the status quo.

[Guest cherzeca]

OT, but relevant imo. I look at bricks and mortar's relationship to digital as morphing into a win/win rather than a zero sum game eventually...meaning that Warby Parker had to go retail because people want to see the glasses on their faces now!, not when they get them in mail.  AMZN selling books in actual stores!  bricks and mortar has to become more "entertainment" oriented...fun to get out of the house to shop, but it will.  the interesting dynamic I see is with AMC.  the one digital killer is streaming, and yet Netflix took over the old Paris theater on 57th st (NYC). I can see DIS/Netflix etc buying AMC (DOJ seeking to kill old settlement decree that prevents downstream movies/theaters consolidation).  whether we are in 3rd inning or 7th inning of mall disintegration, I think there are opportunities to find deep value in bricks and mortar.  unless we are all a simulation, in which case...

[Gregmal]

No worries Bill, we love unsolicited a-hole opinions. Disruptive music in the echo chamber is always appreciated.

 

 

A few points/comments.

 

As a real estate junkie, I would challenge anyone to thoroughly scroll through the Simon portfolio. It is stunning and just a truly spectacular collection of premier assets in largely prime location. Something to admire and certain not anything that would fall into the category of "I wouldn't own it at any price"...so theres that.

 

Balance sheet is robust. Name another RE company capable of raising cash at 2.6%?

 

There are major differences between Simon and others that came before it. There is also the fact that so many others have come before it and these guys are best in the biz management; surely they have taken note and learned from the Sears and the Macys of the world. But, for comparisons sake..

 

Sears/Seritage- Simon has better locations, better management, better balance sheet. Profitability is not in question. They also dont have to worry about running a retail business. As for redevelopment? Let me again say, 2.6%/ 15 years. Buffett and many others like Seritage, but for the life of me I can not find an argument to like SRG and not like Simon better.

 

Macy's- Same arguments as above. Simon doesnt have to worry about running retail. They dont have to worry about winding down and eliminating thousands of jobs. All the locations(generally speaking) with Simon are good, not so for Macy's.

 

Howard Hughes- HHC is definitely better positioned than the above two, but again, whats their cost of capital?

 

Regarding specific types of redevelopment? I think this is overblown. If Seritage can reposition old Sears stores into residential than so can Simon, but with more attractive locations and cheaper capital. Howard Hughes will have some reliance on retail, so if retail is a goner, it will hurt them too. They have better layout for office, but who says you cant take a prime location mall and add office? I am also probably more bearish on office than I am retail. Hughes IMO has an edge with residential. But you cant make the argument(after scouring the SPG portfolio) that you couldn't take most of those locations and sell 1/2/3 br condos. Almost all of Simons locations would support high end residential.

 

Stuff like this is truly exciting:

 

For example, at Northgate Mall in Seattle, Washington, we are re-imagining this 60-year-old center to include NHL Seattle’s Corporate Headquarters and practice facility, one million square feet of Class A office, over 1,000 residential units

and approximately 375 hotel rooms, all served by a new mass transit solution. This current retail-only shopping mall will be completely transformed upon our completion.

 

Nobody has better dirt than Simon, nobody has better overall locations, nobody has higher quality tenants and nobody is better managed. Thats the pitch. I mean look, even Brookfield, who has tried to build another Simon, basically ended up only buying Simons junk. Even if, as noted, tenant quality goes down, cash is still cash. Yes, in a market assigning multiples, you'll suffer short term in terms of how you're rated if the tenant quality dampens, but at the same time, you're getting paid(and paid exceptionally well) to wait and the mix of short term or less than 12m leases is like 2-3% of total revenue. Easy come, easy go.

 

 

 

[BG2008]

No worries Bill, we love unsolicited a-hole opinions. Disruptive music in the echo chamber is always appreciated.

 

 

A few points/comments.

 

As a real estate junkie, I would challenge anyone to thoroughly scroll through the Simon portfolio. It is stunning and just a truly spectacular collection of premier assets in largely prime location. Something to admire and certain not anything that would fall into the category of "I wouldn't own it at any price"...so theres that.

 

Balance sheet is robust. Name another RE company capable of raising cash at 2.6%?

 

There are major differences between Simon and others that came before it. There is also the fact that so many others have come before it and these guys are best in the biz management; surely they have taken note and learned from the Sears and the Macys of the world. But, for comparisons sake..

 

Sears/Seritage- Simon has better locations, better management, better balance sheet. Profitability is not in question. They also dont have to worry about running a retail business. As for redevelopment? Let me again say, 2.6%/ 15 years. Buffett and many others like Seritage, but for the life of me I can not find an argument to like SRG and not like Simon better.

 

Macy's- Same arguments as above. Simon doesnt have to worry about running retail. They dont have to worry about winding down and eliminating thousands of jobs. All the locations(generally speaking) with Simon are good, not so for Macy's.

 

Howard Hughes- HHC is definitely better positioned than the above two, but again, whats their cost of capital?

 

Regarding specific types of redevelopment? I think this is overblown. If Seritage can reposition old Sears stores into residential than so can Simon, but with more attractive locations and cheaper capital. Howard Hughes will have some reliance on retail, so if retail is a goner, it will hurt them too. They have better layout for office, but who says you cant take a prime location mall and add office? I am also probably more bearish on office than I am retail. Hughes IMO has an edge with residential. But you cant make the argument(after scouring the SPG portfolio) that you couldn't take most of those locations and sell 1/2/3 br condos. Almost all of Simons locations would support high end residential.

 

Stuff like this is truly exciting:

 

For example, at Northgate Mall in Seattle, Washington, we are re-imagining this 60-year-old center to include NHL Seattle’s Corporate Headquarters and practice facility, one million square feet of Class A office, over 1,000 residential units

and approximately 375 hotel rooms, all served by a new mass transit solution. This current retail-only shopping mall will be completely transformed upon our completion.

 

Nobody has better dirt than Simon, nobody has better overall locations, nobody has higher quality tenants and nobody is better managed. Thats the pitch. I mean look, even Brookfield, who has tried to build another Simon, basically ended up only buying Simons junk. Even if, as noted, tenant quality goes down, cash is still cash. Yes, in a market assigning multiples, you'll suffer short term in terms of how you're rated if the tenant quality dampens, but at the same time, you're getting paid(and paid exceptionally well) to wait and the mix of short term or less than 12m leases is like 2-3% of total revenue. Easy come, easy go.

 

Greg,

 

Agree with most of what you're saying.  I just think time may or may not be your friend and I think I can buy it cheaper when the economy hits the skids.  That's literally my playbook.  So interesting situation, just not tomorrow. 

[BG2008]

BTW, Howard Hughes is selling most of their retail assets except for the Seaport and Downtown Summerlin (outdoor lifestyle center, not enclosed malls).  They are even selling stuff that are brand new that they just built within the last few years. 

[BG2008]

OT, but relevant imo. I look at bricks and mortar's relationship to digital as morphing into a win/win rather than a zero sum game eventually...meaning that Warby Parker had to go retail because people want to see the glasses on their faces now!, not when they get them in mail.  AMZN selling books in actual stores!  bricks and mortar has to become more "entertainment" oriented...fun to get out of the house to shop, but it will.  the interesting dynamic I see is with AMC.  the one digital killer is streaming, and yet Netflix took over the old Paris theater on 57th st (NYC). I can see DIS/Netflix etc buying AMC (DOJ seeking to kill old settlement decree that prevents downstream movies/theaters consolidation).  whether we are in 3rd inning or 7th inning of mall disintegration, I think there are opportunities to find deep value in bricks and mortar.  unless we are all a simulation, in which case...

 

Warby Parker has 1,000-2,000 sqft locations Abercrombie was likely 8,000-10,000. Not enough to make up for the lost space.  CAC via Google and social media is the new rent.  When you value something at 4-5% cap rate, you are implying growth in rent into perpetuity.

 

SPG bought Aeropostale to prevent a mass closing of stores. If there was a "jump the shark" moment, this was it

 

https://www.wsj.com/articles/mall-owners-go-on-defensive-to-rescue-aeropostale-1474968602

 

Sorry for being an a-hole

[BG2008]

I wish I did software I Banking back in the days and not selling 3 regional malls. 

[Gregmal]

No worries Bill, we love unsolicited a-hole opinions. Disruptive music in the echo chamber is always appreciated.

 

 

A few points/comments.

 

As a real estate junkie, I would challenge anyone to thoroughly scroll through the Simon portfolio. It is stunning and just a truly spectacular collection of premier assets in largely prime location. Something to admire and certain not anything that would fall into the category of "I wouldn't own it at any price"...so theres that.

 

Balance sheet is robust. Name another RE company capable of raising cash at 2.6%?

 

There are major differences between Simon and others that came before it. There is also the fact that so many others have come before it and these guys are best in the biz management; surely they have taken note and learned from the Sears and the Macys of the world. But, for comparisons sake..

 

Sears/Seritage- Simon has better locations, better management, better balance sheet. Profitability is not in question. They also dont have to worry about running a retail business. As for redevelopment? Let me again say, 2.6%/ 15 years. Buffett and many others like Seritage, but for the life of me I can not find an argument to like SRG and not like Simon better.

 

Macy's- Same arguments as above. Simon doesnt have to worry about running retail. They dont have to worry about winding down and eliminating thousands of jobs. All the locations(generally speaking) with Simon are good, not so for Macy's.

 

Howard Hughes- HHC is definitely better positioned than the above two, but again, whats their cost of capital?

 

Regarding specific types of redevelopment? I think this is overblown. If Seritage can reposition old Sears stores into residential than so can Simon, but with more attractive locations and cheaper capital. Howard Hughes will have some reliance on retail, so if retail is a goner, it will hurt them too. They have better layout for office, but who says you cant take a prime location mall and add office? I am also probably more bearish on office than I am retail. Hughes IMO has an edge with residential. But you cant make the argument(after scouring the SPG portfolio) that you couldn't take most of those locations and sell 1/2/3 br condos. Almost all of Simons locations would support high end residential.

 

Stuff like this is truly exciting:

 

For example, at Northgate Mall in Seattle, Washington, we are re-imagining this 60-year-old center to include NHL Seattle’s Corporate Headquarters and practice facility, one million square feet of Class A office, over 1,000 residential units

and approximately 375 hotel rooms, all served by a new mass transit solution. This current retail-only shopping mall will be completely transformed upon our completion.

 

Nobody has better dirt than Simon, nobody has better overall locations, nobody has higher quality tenants and nobody is better managed. Thats the pitch. I mean look, even Brookfield, who has tried to build another Simon, basically ended up only buying Simons junk. Even if, as noted, tenant quality goes down, cash is still cash. Yes, in a market assigning multiples, you'll suffer short term in terms of how you're rated if the tenant quality dampens, but at the same time, you're getting paid(and paid exceptionally well) to wait and the mix of short term or less than 12m leases is like 2-3% of total revenue. Easy come, easy go.

 

Greg,

 

Agree with most of what you're saying.  I just think time may or may not be your friend and I think I can buy it cheaper when the economy hits the skids.  That's literally my playbook.  So interesting situation, just not tomorrow.

 

Agree on recession and its probably the main thing I am concerned with.This will get a lot cheaper if we hit the skids. A few dominos fall and yea it'll get cheaper, probably a decent bit. But isn't that what folks like us do? Buy cheap and then, often, a bunch cheaper lol

 

I'm certainly going to be early but I figure the $5-6 Corona discount(sadly not a beer special) is at least a reasonable starting point for a position. I just get excited about real estate like this and the contrarian nature of the investment. Say "malls" to people and look at the reactions. But malls dont have to be malls forever. And its rare to have the chance to buy companies and assets of this caliber at these kind of prices. It often takes an exceptional situation, and what is happening to malls and retail is certainly quite exceptional, even historic. So its a pain trade Im willing to make. Hopefully, Ive got a few decades.

[Cigarbutt]

^I would say committing capital to SPG now requires balls of steel and a true long-term outlook given the secular (slowly happening) and cyclical pressures (to come).  The long (very long?) thesis can be defended as SPG is selling at 11x 2020 FFO estimate.

 

SPG is a solid operator with a solid balance sheet (some margin of safety and capacity to redeploy free cash flows) and the thesis revolves around class-A malls which means more pain (to which degree who knows) but eventually a benefit related to repurposed malls. 

 

{Not too far from where I live, some years ago, there was a GM plant that closed over contaminated land and there was a feeling that the area would become desolate. It took a while but the whole area has been repurposed (stores, large and small, restaurants, real estate etc) and now the traffic is very favorable and the only people who remember the GM plant are people who used to work there. The location of the land was the key ingredient; it just took a while to happen.}

 

Within the next 10 years, interestingly, putting BPY and SPG side by side, on a weighted probability basis, I think that SPG is more likely to relatively outperform in a quiet new normal environment and more likely to outperform if things go south, which means that an interesting trade would involve a balanced long-short trade: shorting BPY and going long SPG. Today’s SPG dividend yield is at 5.8% and would almost compensate for the BPY dividend (for now) at 6.9%. In the event of a significant downturn and a true buy-and-hold perspective, one could cover the BPY position and transfer the funds into SPG.

 

[CorpRaider]

Interesting stuff.  Don't love their moves to try and bail out/prop up retailers...see reports they are going to bid for forever 21.  Maybe not as dumb as the VNO toys r us 1/3 deal.  I get the idea though, why not go with the strong horse if it is just as cheap, kinda' thought that about KIM versus SRG last year or so. 

 

It seems to me that malls blow more than other retail RE for omni-channel and one day delivery (like it takes ~50% of the time it takes for amazon to get me a TV from China to drive all around the parking decks and walk to the store you want), but like you said it is about the dirt really.  Also kind of hate the fake outlets in a world of the internet....maybe real outlets would work but ones where they make goods specifically for the outlet...I don't know.

 

David Simon said they would have made a bid for the GGP assets or some of them but BAM was already in control of the process.  Easy to say that when you didn't pull the trigger I suppose.  I've watched a number of his talks/appearances...well I suppose I've nothing to say about them. 

 

 

[Gregmal]

Here's another angle Ive been grappling with, that may perhaps be a hidden area of safety. Anchor tenant rolloff.

 

Historically, right, your anchor has been the draw and everything else kind of flows through that. However I dont really think that is the case anymore, and if anything its probably the opposite. People tend to come for "everything else"(whatever that entails...ie restaurants, entertainment etc), not because of the large box anchors. Nevertheless, they've got these deadbeat, hanging on by a thread, anchor stores priced at like $5/sf and representing a negligible total percentage of revenues. Thesis kind of jumps off the Seritage page, but are these things going away really a headwind? I think it could be a tailwind. Replace them with a hotel, flex office, or residential, and boom, in those locations, you're probably getting a 10x increase in revenues. Heck, you can even take a page from Righteous Gemstones and open a mega church!

[BG2008]

Here's another angle Ive been grappling with, that may perhaps be a hidden area of safety. Anchor tenant rolloff.

 

Historically, right, your anchor has been the draw and everything else kind of flows through that. However I dont really think that is the case anymore, and if anything its probably the opposite. People tend to come for "everything else"(whatever that entails...ie restaurants, entertainment etc), not because of the large box anchors. Nevertheless, they've got these deadbeat, hanging on by a thread, anchor stores priced at like $5/sf and representing a negligible total percentage of revenues. Thesis kind of jumps off the Seritage page, but are these things going away really a headwind? I think it could be a tailwind. Replace them with a hotel, flex office, or residential, and boom, in those locations, you're probably getting a 10x increase in revenues. Heck, you can even take a page from Righteous Gemstones and open a mega church!

 

You know I am too snobby for a mega church in my high end Simon Mall!

[Jurgis]

For serious mall investors only: https://www.bloomberg.com/features/american-mall-game/

[Gregmal]

I also really like the juice on the options here. A lot of different setups where you can collect some pretty fat premiums to own the stock at big discounts to current prices.

[no_free_lunch]

I am in on this one.  Bought a bit higher but it seems quite appealing now.

 

FCF is somewhere around $3B.  So p / fcf of 13-14x, cheap on that basis.  Debt to fcf is around 8x, not too bad for real estate.  It has been a few months but I believe they significantly decreased their leverage from 2007-08 era.

 

Yes, it is probably dead money for awhile but then it has a 6%+ yield.  I don't have confidence that the market will exceed that over the next 5 to 10 years, so this seems reasonable.

 

Even as the malls slowly die, I think they will be able to find new revenue streams.  They can convert to condo's, put in gyms / movie theatres, auto dealerships.  There are a lot of options if you have a good location.  They are leveraged low enough that they should survive the transition.

 

Gregmal, do you mean selling calls?

[Gregmal]

I was referring to all the options, however I personally wouldn't sell calls against this. I dont like screwing with my upside on what are deemed to be high risk high reward investments.

 

I was more so referring to the at what price is this investable? question. You can get over $3 per share selling $100 puts due Jan 2021. I certainly wouldn't mind getting $3+ a share in exchange for maybe owning share with a $97 cost basis. I started buying this week and have a cost around 141 so if nothing else its a reminder that you can certainly get swept under really quick, but if you're fine with that its an easy investment. I was again looking at stuff like Seritage and it just reinforces what a bargain SPG is if you are ok investing in that space.

[Gregmal]

How strong are Simons locations?

 

https://www.cnbc.com/2019/10/01/heres-a-map-of-the-forever-21-stores-set-to-close.html

 

The store closure list released on Tuesday includes the Forever 21 store at the World Trade Center, owned by Unibail-Rodamco-Westfield, in New York. It has 18 locations owned by Westfield in total.

 

There are 16 Macerich locations on the list.

 

The list has 10 locations owned by Taubman, including its store at Beverly Center in Los Angeles. It has nine Tanger locations, which are in outlet centers, and eight from Washington Prime Group. It has seven CBL locations and six Pennsylvania REIT locations.

 

None of these landlords were immediately available to respond to CNBC’s requests for comment.

 

 

Notably with only one location on this list is Simon Property Group, the largest mall owner in the U.S. and also one of Forever 21′s biggest unsecured creditors, along with Brookfield Retail Partners. There are eight Brookfield stores on the list.

 

Also on the store closure list are Forever 21′s stores in SoHo in New York and at the Mall of America.

[rogermunibond]

Sounds like SPG and BAM are providing DIP funding for F21 operations in their malls.

[Gregmal]

Simon + a few buys Forever 21

 

The playbook?

 

https://www.cnbc.com/2019/07/31/simon-property-could-save-retailers-from-going-out-of-business.html

 

Simon added the mall owner “made a ton of money” in its Aeropostale deal.

 

We're certainly as good as the private-equity guys when it comes to retail

- David Simon

 

 

 

[RAFA1989]

Interesting news out today.

 

During the earnings call Bloomberg put out a piece mentioning merger talks between Simon and Taubman (another high quality mall owner).

 

https://www.bloomberg.com/news/articles/2020-02-04/simon-property-is-said-to-have-held-merger-talks-with-taubman