Simon Property Jumps as It Reopens Properties Closed by Pandemic

Simon, the country’s biggest mall owner, continues to reopen properties.
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Shares of Simon Property Group  (SPG) - Get Report soared Wednesday as the country’s biggest mall owner continues to reopen properties that were closed by the coronavirus pandemic.

On May 11, the company announced that it had reopened 77 of its U.S. retail properties. In addition, 12 of Simon's designer and international premium outlet properties were reopened.

Simon has 209 properties in the United States.

The company has had a sterling reputation in the mall industry for years, and its REIT stock was a market star, outperforming the S&P 500 from 2005 to 2017.

But online retailers have sharply cut into the business of brick-and-mortar retailers during the past few years. And that has hurt Simon, even though it is widely acknowledged as the top operator in the mall industry.

Then the pandemic really put the kibosh on Simon, as it had to close all of its U.S. properties in March. Over the last three months, Simon shares have plummeted 43%, even after Wednesday’s gain, compared to a 1% climb by the S&P 500.

Morningstar analyst Kevin Brown lowered his moat rating on Simon Monday to no moat from a narrow moat.

“We continue to believe that Simon's portfolio of Class A malls provides one of the most attractive retail portfolios,” he wrote in a commentary.

“However, we are worried about what sales growth will look like for even the best properties as the fallout from the coronavirus will likely be felt by brick-and-mortar retail for several years.”

Simon shares recently traded at $72.18, up 13.76%.