New York – Simon Property Group, the biggest mall owner in the U.S.,
said on July, 31 it is considering retail investment as it looks to keep
stores afloat. They have already rescued ailing teen apparel brand
Aeropostale.
As reported by CNBC, Simon CEO David Simon said on a post-earnings
conference call that “I think it’s very possible — we’re going to be very
smart about it.” “We’re certainly as good as the private-equity guys when
it comes to retail investment. And so, I wouldn’t rule it out,” the real
estate magnate added.
Simon, chairman, CEO and president of the namesake group, said on the
company’s second-quarter earnings call that the company has the resources —
“6.8 billion dollars in liquidity” — and the eye for the right deals. He
added that the company would be selective in supporting retailers, only
buying into brands with volume.
It’s worth recalling that earlier this year Simon and mall owner General
Growth Properties, now owned by Brookfield Property Partners, partnered to
save Aeropostale out of bankruptcy court, salvaging its real estate. A
total liquidation would have left them with more than 200 empty shops,
according to reports published by market insiders back then.
In the same vein, In February this year Simon said he was “nervous”
about additional retail bankruptcies happening during the first quarter. As
a matter of fact, later that month Charlotte Russell and Payless filed for
bankruptcy. At the time of the deal for Aeropostale, Ray Schrock, a lawyer
for the retailer, told the bankruptcy court that the investment “could be a
model for future restructurings in the years ahead.”
Could Forever21 find an unexpected saviour in Simon Property Group?
While Simon has not rescued any other struggling retailer since
Aeropostale, the mall operator may be considering a similar approach for
Forever 21, according to reports by Bloomberg and CNBC. Forever 21 reported
Bloomberg in late June, has “a small faction” within the company who
support working out investment deals with landlords as a potential way
forward for the business. The same report, however, said Forever 21
co-founder Do Won Chang and others oppose selling a stake to Simon or other
landlords.
Despite he didn’t speak to any specific opportunity, Simon told analysts
Wednesday that his company would likely work with partners again if
choosing to invest in a retailer or brand. He pointed to the success that
his company had working with GGP and later Brookfield on the Aeropostale
deal, highlights the real estate publication.
‘Retail Wire’ wonders if Simon’s move is the best one not just for the
company and its investors, but for the retail industry in general. Simon
Group’s owner also mentioned several times on the call with analysts that
the mall operator is not facing a crisis situation with tenants, despite
announcements of retail bankruptcies. He pointed to increased revenue comps
for his business and how Simon has found creative uses of newly opened
spaces to keep traffic strong.
Photo:Aeropostale store, Aeropostale corporate website
