David Simon

Retail might have taken a beating, to say the least, during the coronavirus pandemic, but Simon Property Group is still pretty bullish, all things considered.

During its most recent earnings call in early May, David Simon said the “business has significantly improved” compared to recent months — the company lost $1 billion in revenue last year — and rent collections have returned to pre-pandemic levels.

Also, Simon was able to close the acquisition of rival Taubman Centers in December, something it walked away from at the beginning of the pandemic, at a nearly $80 million discount.

And the company went all-in on its strategy of picking up bankrupt retailers, mainly under its Sparc Group venture with Authentic Brands Group. It bought Lucky Brand, Brooks Brothers, JCPenney and Eddie Bauer last year.

While the strategy of picking up nearly bankrupt brands might not be sustainable in the long run, Simon said it’s already exceeded expectations.

Brands in Sparc have beat the company’s sales and growth goals this year, with Forever 21 and Aéropostale beating it by more than $135 million, Simon said during the earnings call.

But it hasn’t all been rosy for the country’s largest mall owner. Profits and revenues still dipped in the first quarter of 2021 compared to the same time last year, and it lost some properties.

Simon defaulted on Deutsche Bank’s $200 million loan for the Town Center at Cobb mall in Atlanta in February, with the bank taking control of the asset. It also plans to give up control of four other struggling malls around the country that carry a $410.9 million mortgage debt, MarketWatch reported.

And the mall owner is still in disputes with some retailers throughout its portfolio, with Simon expecting to lose a few more tenants in the process.

“We do have difficult relationships or negotiations that we’re dealing with,” Simon said. “If they’re not paying what we think is fair, we’d rather just sit on empty space.”—N.R.