Simon Property Group soars after company eyes reopening 49 malls

Shares of Simon Property Group Inc (NYSE: SPG), the largest retail real estate investment trust and largest shopping mall operator in the U.S., gained more than 10% Monday following reports it has a plan to reopen 49 malls.

Malls reopen doors

Simon announced on March 18 it will close all of its retail properties to help reduce the spread of COVID-19. As early as Friday, May 1, 49 malls will re-open with a focus on states that already re-opened their economies, such as Georgia and South Carolina. By comparison, the company owned 233 retail real estate properties worldwide.

Since the COVID-19 pandemic is far from resolved from a health issue, Simon Property’s mall reopenings come with a handful of conditions, CNBC’s Lauren Thomas reported Tuesday afternoon on “Power Lunch.” For example, malls will operate in limited hours to allow for more cleaning. A capacity will also be set which prohibits more than one person per 50 square feet of retail space while signage on the floor will dictate which direction people can walk in.

Thomas said she obtained this information from an internal Simon Property memo which encourages but does not mandate customers wear masks. Staff will however offer masks and take temperature to guests who ask.

‘Writing the playbook’

Simon is not only the largest mall operator, but the first of its kind to plan for a large-scale re-opening, Thomas said. The company is therefore “writing the playbook” on how the world can take steps to return to some form of normalcy.

However, part of what could prove to be a new normal in the retail universe is a lot of closed doors as retailers struggle to remain relevant during a challenging time. It is nevertheless “up to them” to decide if individual retailers want to be a part of Simon’s “playbook” and serve their customer base in its malls.

Since the resumption of mall shopping is a new concept, some retailers are understandably holding back, Thomas said. This is the case in Georgia where national chains are “holding back” on re-opening their doors even though retail is permitted to operate.

It might be easier for smaller mom-and-pop shops to get their staff back in place as multiple major national chains furloughed many of their workers, she said. This could present a potential problem in helping Simon realize success in its challenging “playbook.”

It remains to be seen if it has similar plans to re-open malls, particularly in South Korea where the country appears to be further along in terms of re-opening the economy after dealing with the health crisis.