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The retail real estate investment trust (REIT), Simon Property Group Inc. (SPG - Analyst Report), plans to expand and renovate its N.Y.-based iconic premium outlet center – Woodbury Common Premium Outlets. This comes as part of the company’s strategy to strengthen the tenant base and further increase traffic volumes at the property.

Founded in 1985, Woodbury Common Premium Outlets is one of the most productive shopping destinations in the world, with average sales of over $1,550 per foot and annual sales of more than $1.3 billion.

The property spans 850,000 square feet and is situated in Central Valley, N.Y. It currently boasts 220 outlet centers comprising leading global retailing giants such as – Brunello Cucinelli, Michael Kors Holdings Limited (KORS - Analyst Report), Burberry, Jimmy Choo, Saks Incorporated , Last Call by Neiman Marcus, Armani, Balenciaga and Coach, Inc. (COH - Analyst Report).

Simon Property will invest around $170 million for extensive expansion and renovation of the aforementioned outlet center. According to plan, Woodbury Common Premium Outlets will undergo expansion with the addition of net gross leasable area of 60,000 square feet. Upon completion, the property will have about 240 stores and will stretch more than 900,000 square feet.  Additionally, Simon Property expects to increase employment through the project. The extension and improvement project will likely be completed in stages, from 2014–2016.

We view the particular proposition as a strategic venture for the company and expect it to boost occupancy and tenant sales per square foot. Of late, Simon Property has been actively capitalizing on growth opportunities in top markets worldwide, with a focus on enhancing its Premium Outlets portfolio. Last month, it opened 2 premium outlets, namely Phoenix Premium Outlets in Ariz. and Shisui Premium Outlets in Japan, after completion of their development.

Simon Property currently carries a Zacks Rank #3 (Hold).

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