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Simon Property's Assets to Serve as Micro Distribution Hubs

Zacks Equity Research

Simon Property Group SPG and logistics-as-a-service platform for retail — Fillogic — have teamed up to launch multiple, tech-enabled micro distribution hubs, referred as Fillogic Hubs, at select retail properties. The move comes as the retail real estate market continues to evolve and focus on supporting multi-channel retailing becomes essential.

Fillogic Hubs will be opened at the Livingston Mall and Gloucester Premium Outlets, with the latter marking their first location at an open air or outlet center. Moreover, one of these new sites will represent Fillogic’s largest hub by square feet.

Over the recent years, mall traffic has continued to suffer and retailers unable to cope with competition are filing bankruptcies, raising concerns over the fate of cash flows of physical stores and landlords as the trend is considerably curtailing demand for the retail real estate space. This has affected Simon Property, Kimco KIM and other companies as well.

Moreover, with dwindling footfall at retail properties amid social-distancing mandates and higher e-commerce adoption due to the coronavirus pandemic, there is likely to be no respite in the near term.

However, the situation has also opened up scope for mall-based distribution hubs. Fillogic is aimed at helping retailers improve services, lower costs and make optimum asset utilization with the help of such strategically positioned, mall-based, tech-enabled distribution hubs. These mall-based distribution centers, situated close to the customers of the retailers, facilitate faster delivery of products.

Recently, some retail properties of Macerich MAC, Taubman Centers TCO and Brookfield Properties have also been selected, where Fillogic launched tech-enabled micro distribution hubs.

Notably, Simon Property enjoys market leadership with an impressive history of generating significant cash flows and a decent liquidity position. The company has also made significant investments over recent years to add value to its properties. Amid the retail apocalypse narrative, adoption of an omni-channel strategy and successful tie-ups with premium retailers as well as Fillogic will likely help it sail through.

Rob Caucci, Fillogic’s co-founder and co-CEO, also noted, “The quality of their national property portfolio and their forward-thinking approach to the future of retail made it a no-brainer for us to team up with them in shaping that future together.”

Nevertheless, rent collections, occupancy and pricing power of Simon Property are likely to bear the brunt in the near term.

Currently, Simon Property carries a Zacks Rank #5 (Strong Sell). Over the past year, shares of the company have declined 61.7%, compared with the industry’s decline of 25.7%.


 

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Kimco Realty Corporation (KIM) : Free Stock Analysis Report
 
Macerich Company The (MAC) : Free Stock Analysis Report
 
Taubman Centers, Inc. (TCO) : Free Stock Analysis Report
 
Simon Property Group, Inc. (SPG) : Free Stock Analysis Report
 
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