Author Topic: SPG - Simon Property Group  (Read 14888 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? It’s 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.

Gregmal

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Re: SPG - Simon Property Group
« Reply #64 on: August 10, 2020, 01:24:19 PM »
$2+ FFO during Q2, US mall occupancy 93%, Base minimum rent per square foot was $56.02 at June 30, 2020, an increase of 2.8% year-over-year(certainly not driven by JCP or SHLD)


The Company has collected from its U.S. retail portfolio, including some level of rent deferrals, approximately 51% of its contractual rent billed for April and May combined, approximately 69% for June and approximately 73% for July with only de minimis deferrals.  These percentages have not been adjusted for any rent abatements granted.     

Massive contrast to BPY

#retailislikesuperdead
« Last Edit: August 10, 2020, 01:27:04 PM by Gregmal »

racemize

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Re: SPG - Simon Property Group
« Reply #65 on: August 10, 2020, 02:37:12 PM »
$2+ FFO during Q2, US mall occupancy 93%, Base minimum rent per square foot was $56.02 at June 30, 2020, an increase of 2.8% year-over-year(certainly not driven by JCP or SHLD)


The Company has collected from its U.S. retail portfolio, including some level of rent deferrals, approximately 51% of its contractual rent billed for April and May combined, approximately 69% for June and approximately 73% for July with only de minimis deferrals.  These percentages have not been adjusted for any rent abatements granted.     

Massive contrast to BPY

#retailislikesuperdead

BPY said this:
Quote
Rent collections in this portfolio in the second
quarter were approximately 34%, with July collections trending significantly stronger.

Looks like SPG is counting rent deferrals as part of collection.  Unclear if BPY did.

Spekulatius

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Re: SPG - Simon Property Group
« Reply #66 on: August 10, 2020, 03:46:45 PM »
Watch the tenant receivables in the cash flow statement  -623M (or ~60% of the Q2 “revenues”). This number was positive by 48M last year.
Those revenues And FFO’s are all hot air.
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Gregmal

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Re: SPG - Simon Property Group
« Reply #67 on: August 10, 2020, 04:44:20 PM »
Call was decent. Muted on the Amazon stuff but indicated worst was seemingly behind it(duh), although still will be issues with certain tenants. See Gap... but thats a case of scumCo trying to milk the situation rather than inability to pay. Frankly if I was DS I would just lock all the doors at Gap, Old Navy and Banana. Take a hike chumps. Otherwise seemed pretty honest about the challenges ahead and also the opportunities. Expecting to have the original capital outlay from JV's returned within a year. Only malls not open are predictably in CA.

Deferrals and abatements are largely par for the course/industry standard, and at least at face value, came in better than most peers. If this was the doomsday quarter....yea. Sign me up.

Spekulatius

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Re: SPG - Simon Property Group
« Reply #68 on: August 10, 2020, 05:11:58 PM »
The quarter wasn’t good at all. I read the transcript and can’t really follow Simon’s disclosure. He is not giving out straightforward numbers. They were also drilled on the receivables issue that caught my attention and the answer was evasive, Imo

Excerpt:
Quote
Nicholas Yulico

I'm just trying to reconcile a couple of numbers here. I know you gave the collection data, which is inclusive of deferrals for April, May, June. They ran between 50% of contractual rent to 70%. And in those months yet, if we look at your cash flow statement in the 10-Q, it's showing that your quarterly cash flow from operations were down over 90% if you just try and figure out what the quarter number is, not the 6-month number. So I mean that would presumably mean a pretty low cash collections number.
« Last Edit: August 10, 2020, 06:24:12 PM by Spekulatius »
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Gregmal

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Re: SPG - Simon Property Group
« Reply #69 on: August 10, 2020, 05:36:56 PM »
The quarter wasn’t good at all. I read the transcript and can’t really follow Simon’s disclosure. He is not giving out straightforward numbers. They were also drilled on the receivables issue that caught my attention and the as wer was evasive, I o

Excerpt:
Quote
Nicholas Yulico

I'm just trying to reconcile a couple of numbers here. I know you gave the collection data, which is inclusive of deferrals for April, May, June. They ran between 50% of contractual rent to 70%. And in those months yet, if we look at your cash flow statement in the 10-Q, it's showing that your quarterly cash flow from operations were down over 90% if you just try and figure out what the quarter number is, not the 6-month number. So I mean that would presumably mean a pretty low cash collections number.

I mean I dont think anyone is going into the Q expecting dazzling, tailwind driven numbers. Certainly wasn't the expectation a few months ago, nor the expectation at a $6x.00 print. But the numbers being reporting arent different than whats reported across the board. Everyone was government mandated shut for April, most May as well, and many March. So Q1 you got a hint of the impairments coming as far as rent checks being received. Q2, at best half the Q was nil. What you and the analyst are referring to, correctly, is indeed "hot air", but its also industry standard for reporting. Why would they be reporting differently than everyone else has to date? You come to an agreement on deferrals, or lease extensions, or in some cases amendments that make the lease non rejectable, it gets thrown into the column of "received". So its accounted for in some cases upfront when yea, there is an extending risk that paying back 2 months in the back half of the year never happens...but this is much less a concern with a normal store than it likely is for a movie theatre, gym or bar. Is this bs accounting across the board? Probably, but its the same exact terms the banks/lenders use/have used, even pre COVID for most covenant related issues. A LOC with a XX day delinquency trigger is not tripped despite non cash payment if there are renegotiations, abatements, or modifications related to a lease extension. The same type of stuff we're talking about here.

So "good"? OK, sure whatever. Same way VNO, SLG, BAM, every single other company didnt report an aesthetically "good" quarter. If this is the "disaster"/kitchen sink/end of world Q....The sky isn't falling after all. Thats good.