May 11, 2021 at 04:00PM

The country’s largest mall owner said the improving domestic economy is driving an increase in shopper sentiment and improving foot traffic and sales across its global commercial real estate portfolio.

In reporting its first-quarter results for the three months ending March 31, Simon Property Group said it collected 95 percent of its billed rents last quarter and that tenant collections had returned to pre-COVID levels of approximately 98 percent.

Although the Indianapolis-based company said its Q1 occupancy rate fell half a percentage point from Q4 to 90.8 percent, this year’s decline was actually only about 40 percent of the historical average post-holiday drop.

“We generally feel pretty good. Much better than we’ve felt in a long time and we’re seeing a resurgence in brands,” CEO David Simon told investors and analysts on the company’s earnings calls. “A great example is Crocs. Crocs was hot a decade ago, people thought it had lost its mojo, maybe it had, but now it’s killing it.”

In addition to footwear, Simon said it is seeing strength from “strong retailers” such as American Eagle and Urban Outfitters, as well as from restaurateurs looking to retrofit vacant spaces as soon as possible.

“So we’re seeing footwear, we’re seeing apparel, we’re seeing a lot of brands that are new that are coming in that want great retail real estate,” he said.

International Growth And Guidance

Simon also pointed to the rise of newly opened domestic and international properties, including the COVID-delayed debut in April of the U.K.’s West Midlands Designer Outlet — a 197,000 square-foot open-air facility, as well as the opening of its fifth premium outlet in South Korea.

Simon is also in the process of a major redevelopment project that will refresh several of its malls in the U.S., including the Northshore and Burlington Malls in Boston, the West Town Mall in Knoxville and the Tacoma Mall (Tacoma, Wash.) that are scheduled to be completed this year and contribute to earnings.

In light of Monday’s announcement that Simon’s SPARC Group joint venture with Affiliated Brands had acquired outdoor and sportswear retailer Eddie Bauer, Simon said his company’s other brand and retail investments were adding significant value.

“Our local brands within SPARC outperformed their plans in March and April, on both sales and gross margin led by Forever 21 and Aeropostale,” he said, “and we’re also very pleased with the JC Penney early results. They continue to be above our plan.”

Taken together, Simon Property said it was raising its full-year guidance by about 7 percent from the guidance it gave in early February, an uptick some analysts questioned as being too conservative.

“We expect, in the U.S., to do better than what we initially thought, and I hope you’re right, I hope we’re conservative, and I hope we do better than what we’re guiding to, but you know it’s just been a traumatic time for this company and our folks and you can’t blame us,” Simon remarked.

In short, Simon said he was comfortable with his company’s current portfolio.

“Our space isn’t going anywhere. Our malls aren’t going anywhere. They’re still great real estate, and demand is picking up,” he said.

Shares of Simon Property Group have more than doubled over the past year and are currently worth roughly $40 billion.

Simon Property Says Crocs Is ‘Killing It’ As Demand From Brands, Restaurants, Apparel Rises …

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