In its second-quarter 2018 earnings conference call, Simon Property (SPG) stated that it will continue investing in the redevelopment and expansion of its properties. Notably, the company has spent ~$5 billion on development projects over the last five years.
The largest US-based mall owner and operator announced a massive $4 billion investment plan in May this year to transform its properties in order to create value and drive footfall at its malls. The company plans to add restaurants, hotels, and luxury stores, as it believes these areas will be least affected by the rise of e-commerce.
As of June 30, Simon Property had around 23 expansion and redevelopment projects in progress across the United States, Europe, Asia, and Canada.
Recent expansion activities
Simon Property is remodeling interiors, developing new projects, adding new hotels, restaurants, and entertainment facilities to drive mall traffic. Also, the company has been quick to replace stressed retail brands with trending ones, as it did with Sears Holdings (SHLD).
Simon Property started redevelopment and transformational work on five former Sears stores in May 2018. The company intends to redevelop these properties to accommodate new retail brands, restaurants and dining pavilions, entertainment, fitness, and residential spaces.
Apart from this, Simon Property is offering small-store units ranging from 20 to 200 square feet of space. With such initiatives, it aims to take advantage of increasing spending habits of wealthier customers amid higher economic growth.
The company’s innovative ideas for expansion, redevelopment, and renovations have led to the company’s highest sales per square foot, and this figure remains ahead of competitors like GGP (GGP) and Macerich (MAC). During the second quarter, Simon Property’s total sales per square foot increased by 4.5% YoY to $646.
Simon Property and its peers mentioned above make up almost ~30.8% of the Pacer Benchmark Retail Real Estate SCTR ETF (RTL).