Simon Property Group delivers outlook for 2023
Simon credited the strong performance to the quality of the company’s portfolio, a “relentless focus on operational and cost structure,” disciplined capital allocation and a commitment to the company’s shoppers and communities.
Inflation’s impact was minimal
Yet the specter of inflation emerged last year after a banner year for retail, and the company didn’t emerge fully unscathed, he suggested: “2021 was a great year for our retailers,” Simon noted. “However, in 2022, Forever 21 and JCPenney were affected by inflationary pressures, and consumers reducing their spend. Despite not achieving the same profitability that we did in 2021, we are pleased on how we and the management teams dealt with the unanticipated external environment.”
Mall vacancy levels remained low: “Occupancy for malls and outlets at the end of the fourth quarter was 94.9%, an increase of 150 basis points compared to prior year and an increase of 40 basis points sequentially,” Simon said. “Renewals occupancy was 98.2%, and TRG was 94.5%. Average base minimum rent was $55.13 per foot, an increase of 2.3% year over year. For the year, we signed 4,100 leases for more than 14 million square feet.”
Simon provided context to illustrate company growth: “Over two years, we’ve now signed 8,000 leases for more than 29 million square feet, and we have a significant number of leases in our pipeline that will open for late 2023 and 2024 openings,” he told shareholders. “Reported retailer sales momentum continued. We reached another record in the fourth quarter at $753 per square foot with the malls and outlets combined, an increase of 6% year over year. All platforms achieved record sales levels, including the mills – it’s $679 per square foot which was a 5% increase.”
Foreign developments part of the mix
The company hasn’t limited its commercial real estate development efforts to the US, and Simon mentioned a couple of international milestones during his talk with shareholders. A tenth premium outlet was opened last year in Japan, and construction continued for a new outlet just west of Paris in Normandy, France, that will be the firm’s second outlet in that European market and its 35th international outlet.