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Simon Property Group SPG is seeing improving demand for its retail properties. Recently, Swiss chocolate retailer, Läderach, announced signing lease agreements with the retail real estate behemoth for opening 15 new premium chocolate stores in Simon Properties across California, Florida, Massachusetts, New York, Texas and Virginia, beginning early August through September.
Läderach is presently focusing on expansion in the United States. In the past year, Läderach has witnessed high e-commerce demand for its chocolates for consumption and gifting in these locations and hence, took the decision for the in-store experience. Thus, tying up with a behemoth in the retail space like Simon Property has been a prudent move.
The leasing to Läderach is in line with Simon Property’s strategy to boost its tenant mix and boost shoppers’ footfall at these properties.
Retail REITs, which have already been battling store closures and bankruptcy issues, are battling pandemic-induced challenges with e-commerce adoption increasing manifolds, and social-distancing requirements affecting customer traffic and rental collections from tenants. In fact, apart from Simon Property, this turbulence has affected other retail REITs, including Macerich MAC, Regency Centers REG and Kimco KIM.
Nevertheless, with the resumption of the economy and an improving leasing environment, Simon Property is poised to benefit from its superior assets in premium locations. The vaccination roll-out and the additional fiscal stimulus support consumer sentiment. The company will also likely see growth in both earnings and cash flow this year. In June, it has announced a 7.7% hike in the second-quarter 2021 dividend.
Restructuring its portfolio, aiming at premium acquisitions and transformative redevelopments, adoption of an omni-channel strategy and successful tie-ups with premium retailers augur well for Simon Property’s long-term growth. Additionally, it is exploring the mixed-use development option, which has gained immense popularity in recent years, as well as capitalizing on buying recognized retail brands in bankruptcy.
Shares of this Zacks Rank #3 (Hold) company have gained 47.5% so far in the year compared with the industry’s rally of 24.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Simon Property Group, Inc. (SPG) : Free Stock Analysis Report
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