Increased occupancy and climbing rental rates helped drive net income growth at Simon properties in the fourth quarter. The Indianapolis-based REIT reports that same-center NOI increased by 3.2 percent for the year and by 2.2 percent for the quarter, year on year.
Average base rent was $53.11 per square foot, up by about 3 percent versus last year. Leasing spreads were at 11.4 percent, meanwhile. Retail sales per square foot came to $628, up from $614, an increase of 2.3 percent. Occupancy at the company’s centers was 95.6 percent, up by 30 basis points from the end of the previous quarter.
Simon, the country’s biggest owner of shopping centers, says it has no interest in acquiring any competitors and did not participate in the bidding on the recent acquisition of Westfield Group. “The market was dying to have a mark on a portfolio,” Chairman and CEO David E. Simon said on an earnings call. “Unibail, as you know, has agreed to acquire Westfield, and they did it at a very healthy valuation — and yet the market yawned on it. So I just find the whole thing ironic. We continue to be out of the big-deal business. We're not involved in any of the activity there.”
Leasing action Tommy John opened a store at Simon's King of Prussia (Pa.) Mall in the fourth quarter
Instead, Simon will focus on densifying and boosting value at its existing properties, the executive said. During the fourth quarter, Simon acquired and gained control of 12 Sears stores at its malls. The company added or redeveloped some 635,000 square feet of space during the period.
“We expect to begin construction this year on a number of transformational projects where we will replace department stores with significantly more productive uses, at Phipps Plaza, King of Prussia and Southdale Center,” David Simon said. “I can't tell you how excited we are to get these spaces back. Where the media likes to make it as the beginning of the end, we think it's the rebirth.”
By Brannon Boswell
Executive Editor, Commerce + Communities Today
