Author Topic: SPG - Simon Property Group  (Read 11482 times)

Gregmal

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Re: SPG - Simon Property Group
« Reply #60 on: August 09, 2020, 02:42:00 PM »
Not really. I'd guarantee theyre getting more than the $5 sq/ft Sears and JCP are currently paying. The future of any mall is not going to be 100% retail. As we continue to see, they have many, many different options here. Location is key. SPG has it.

EDIT: Further, if the thesis was that they'd get $5 a sq ft for their anchors and their anchors were all going out of business in the next 5 years....getting anything kind of debunks that and automatically improves the profile... These guys are world class operators.
« Last Edit: August 09, 2020, 02:43:50 PM by Gregmal »


Gregmal

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Re: SPG - Simon Property Group
« Reply #61 on: August 09, 2020, 03:08:22 PM »
https://www.wsj.com/articles/amazon-and-giant-mall-operator-look-at-turning-sears-j-c-penney-stores-into-fulfillment-centers-11596992863?mod=hp_lead_pos1

Owning the dirt gives you plenty of options....looks like they may not even need to demo the whole mall to go the "industrial/warehouse" route.

How much can they charge /sqft renting part of the mall as warehouse? Itís a lesser use for sure. It also rounds counter network effects of a mall, if you rent out part of it for other purposes.

I'm sure they can't charge much but even for department stores they were never able to charge much. This is probably even better in that it is lower capex than dept stores. It does take away from the network effects to some degree if the mall is thought of in a traditional sense. But the mall of the future is mixed uses - gyms, restaurant, bars, entertainment, office/hotel (maybe not anytime soon).

I think the best value for the dirt is in that malls are strategically located near major highways which incidentally is exactly what you need for warehouses. Additionally thanks to NIMBYism, there might not be many other options in some communities. Not to mention lower construction costs since the plumbing, electric, walls, etc. are already there.

This is already happening.

https://www.bizjournals.com/washington/news/2018/05/18/stay-shop-marriott-expands-its-partnership-with.html

https://www.bizjournals.com/seattle/news/2019/02/25/simon-property-group-nhl-northgate-hocky-leiweke.html

People are just blinded by the narrative.

Mephistopheles

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Re: SPG - Simon Property Group
« Reply #62 on: August 09, 2020, 03:16:56 PM »
Not really. I'd guarantee theyre getting more than the $5 sq/ft Sears and JCP are currently paying.

Depends on location. The avg nationawide rent/ft for a pure play warehouses is right around that number. I think GRIF charges that in Lehigh Valley. If you're talking about say NYC, then it's 4x as much. Idk how much SHLD or JCP paid in NYC.

Gregmal

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Re: SPG - Simon Property Group
« Reply #63 on: August 09, 2020, 03:34:22 PM »
True, but in any event, one narrative after another continues to fall and this, if accurate, seems consistent with what has been hinted at for a while and scoffed at by many.

Every time there is a retail bankruptcy, its like "OMG see!", but most dont understand how a bankruptcy works and if you look at the figures, who cares? Its not as though the leases are being rejected(by and large) in BK court. I'd further argue that a bankruptcy just further makes those companies reliant on their top grossing locations...another advantage to Simon.

They are the only company I am aware of who isn't viewed as savvy when they buy out other companies at pennies on the dollar with JV partners; in fact, its skewed as a negative despite already demonstrating the ability to turn this into a windfall. Further, bankruptcy, especially in retail, does not equal failure if you have any familiarity with the way private equity bleeds these things. But the perception remains...brand goes BK= worthless, SPG buys it = desperate.

The model is already out there. Look at the high end casino buildups. Entertain, living, convenience, except these will be just outside/in major cities. COVID significantly accelerated this. Trough earnings should be now through the next 18-24 months IMO. And its not like we're going to have to worry about profitability.

This was just written up on VIC last week as well FYI.