- Simon Property Group announces plans of acquiring Taubman in a $3.6 billion deal.
- Simon to invest $81 million in teen apparel retailer Forever 21 to save it from bankruptcy.
- Simon is confident that the best and most profitable U.S malls will stand the test of time.
- Simon has lost 24% in the stock market in the past twelve months.
America’s mall operators have recently been struggling with a sharp decline in foot traffic in the past few months. Simon Property Group, however, remains confident that the best malls will eventually survive the market challenges as it continues with its buying spree.
Simon has a reputation for the largest mall owner in the United States. Just last week, Simon had announced that it wishes to acquire Taubman in a $3.6 billion deal. Taubman has been a staunch rival for Simon in the league of U.S mall owners.
Simon To Invest $81 Million In Teen Apparel Retailer Forever 21
But that was not all for Simon in terms of investments last week. On Friday, the group also commented that it plans on making a rather sizeable $81 million investment in Forever 21 in order to save the teen apparel retailer from bankruptcy.
According to the analysts, Simon’s acquisition of Taubman stems from its thesis that the most profitable U.S malls will stand the test of time. With its investment in Forever 21, on the other hand, the American commercial real estate company is boasting a stable balance sheet that enables it to place a few risky bets in hopes of exponential returns. As per the sources, Simon Property Group currently has liquidity of more than $7.1 billion that also includes cash on hand.
With a sharp increase in online shopping, U.S mall owners are currently battling with prominent challenges of mounting retail store closures and higher risks of bankruptcies. As per the investors, if store closures continue to rise in the upcoming months, it will get increasingly hard for the mall owners to seek replacements in a timely fashion that may result in massive losses in terms of rent income.
U.S Mall Owners’ Performance In The Stock Market
The aforementioned challenges are evident in the downbeat performances of the U.S mall owners in the stock market. As compared to last year, Macerich is currently trading around 48% down while a greater 50% decrease has been noted in Washington Prime Group. The largest drop was reported in CBL’s stock that has slumped 68% as compared to a year ago.
In the past 12 months, Simon’s own performance in the stock market has also remained challenged. With a market capitalization of $4.8 billion, it has lost 24% in the aforementioned time period. Nonetheless, CEO David Simon of Simon Property Group is confident of his strategy to zig when its competitors are inclining towards zagging.