Simon Property Group suffers billion-dollar earnings hit

Chief Executive Officer of Simon Property Group David Simon. (Alamy, Getty)

David Simon, CEO of Simon Property Group (Alamy, Getty)

In April 2019, amid a war with e-commerce, mall magnate David Simon told investors, “I think most of the bad news is behind us. But I can’t guarantee it.”

He sure couldn’t.

Simon Property Group had a rough year. The coronavirus pandemic accelerated store closures and devastated revenues for the mall landlord.

“I do frankly want to turn the page on 2020,” the CEO said during an earnings call Monday.

Over the course of the year, the REIT lost 13,500 shopping days across its portfolio to lockdowns.

The largest U.S. mall operator’s net operating income fell 17.1 percent for the year, thanks largely to rent abatements, uncollectible rent, lower sales-based rent and less ancillary property income. Simon agreed to $341 million in rent deferrals and $410 million in rent abatements during the pandemic.

For the year, Simon lost nearly $1.15 billion in lease income, management fees and other streams, and revenue dwindled to $4.6 billion from $5.76 billion.

In the fourth quarter, reported net income of $312.7 million was down from $590.4 million from a year earlier. For the year, consolidated net income was $1.28 billion, a dramatic drop from last year’s $2.42 billion.

“We worked our you-know-what off to mitigate that through cost savings,” Simon said. “We were pretty aggressive in running the ship as lean and as tight as we could.”

Simon noted that the company plans to sell properties.

Occupancy was 91.3 percent as of Dec. 31. As of Feb. 5, the company has collected 90 percent of its net billed rents for the second, third and fourth quarters combined across its U.S. retail portfolio.

Still, Simon has been investing back into its company.

Simon saved retailers Forever 21, Lucky Brands, Brooks Brothers and J.C. Penney from bankruptcy, and completed its acquisition of Taubman Realty Group.

“We’re optimistic that in the future our value will begin to be appreciated again,” Simon said.

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