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Simon Property Group’s Retail Mall Business

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Sep. 17 2015, Updated 8:08 a.m. ET

Overview

Simon Property Group’s (SPG) US properties primarily consist of malls, premium outlets (including the Mills outlets), community centers, and other retail properties. These properties contain an aggregate of approximately 182 million square feet of GLA (Gross Leasable Area).

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Malls

Malls typically contain at least one traditional department store anchor, or a combination of anchors and big box retailers, with a wide variety of smaller stores connecting the anchors. Additional stores are usually located along the perimeter of the parking area.

Simon Property’s 109 malls are generally enclosed centers and range in size from 425,000 to 2.5 million square feet of GLA. The company’s malls contain more than 13,900 occupied stores, including approximately 516 anchors, which are predominately national retailers.

Premium outlets

Premium outlets generally contain a wide variety of designer and manufacturer stores located in open-air centers. Simon Property’s 68 premium outlets range in size from approximately 150,000 to 850,000 square feet of GLA. Premium outlets are generally located near major metropolitan areas or tourist destinations.

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The Mills

The Mills are outlets made up of 13 properties across the US that generally range in size from 1.1 million to 2.2 million square feet of GLA. They’re typically located in major metropolitan areas, and they have a combination of traditional mall, outlet center, and big box retailers and entertainment uses.

Community centers and other properties

Simon Property also has interests in three community centers and 14 other retail properties. These community centers range in size from 230,000 to 900,000 square feet of GLA.

Simon Property’s other retail properties range in size from approximately 150,000 to 750,000 square feet of GLA and are considered non-core to company’s business model. In total, community centers and other retail properties represent 1.4% of the company’s total operating income, before depreciation and amortization.

As of fiscal 2014, approximately 97.1% of Simon Property’s GLA in malls and premium outlets was leased to other companies, and approximately 98.4% of the owned GLA for The Mills was similiarly leased.

Investors looking for exposure in commercial real estate can invest in REIT ETFs. Simon Property Group and Public Storage (PSA) make up 8.16% and 4.06% of the Vanguard REIT ETF (VNQ), respectively. Equity Residential (EQR) makes up 6.7% of the iShares Cohen & Steers REIT ETF (ICF).

In the next part of this series, we’ll discuss Simon’s top inline and anchor tenants.

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