Mall Giant Simon Lost $1B Last Year, But Expects 2021 to Be Brighter

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Mall giant Simon Property Group lost more than $1 billion in revenue last year — largely due to rent abatements at its properties — but expects 2021 to be brighter.

Simon, the largest mall owner in the country, had $4.6 billion in revenue and $1.1 billion in net income in 2020, according to its fourth-quarter earnings released on Monday. That’s a drop from the $5.8 billion in revenue and $2 billion in net income that the real estate investment trust (REIT) posted in 2019.

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The hit in revenue and income was largely due to the coronavirus pandemic that forced Simon to lose nearly 13,500 shopping days as its properties closed for months to stop the spread of the virus and retailers struggled to pay rent.

Simon said it granted about $400 million in rent abatement for retailers during the pandemic, and that that contributed to its net operating income falling by 17.1 percent from 2019 to 2020.

Despite the bleak year, where it faced its worst revenue in decades, the REIT was expecting its fortunes to turn in 2021.

“2020 was a difficult year for all those affected by COVID-19, including our company,” David Simon, president and CEO of Simon, said in a statement. “We feel confident we have turned the corner, and we expect growth in earnings and cash flow in 2021.”

The company estimated its net income will be between $4.60 to $4.85 per diluted share this year, an improvement from the $3.59 per share last year, and its funds from operation will be between $9.50 to $9.75 per share, compared to the $9.11 per share in 2020.

Simon has spent the pandemic buying up bankrupt retailers, including JCPenney and Brooks Brothers, while closing on the acquisition of rival Taubman Centers at a nearly $800 million discount.

It’s also dealt with struggles beyond its pandemic-induced financial losses. Last week, Deutsche Bank foreclosed on Simon’s Town Center at Cobb mall in Atlanta and took over the property. Simon’s also planning to give up control to four other struggling malls around the country. Still, Simon ended the year with $1.5 billion cash on hand, according to its earnings statement.

And Simon isn’t the only REIT that faced a huge hit because of the pandemic. Brookfield Property Partners, one of North America’s largest commercial landlords, announced that it lost $2 billion in 2020 as COVID-19 emptied offices around the country.