SPG Gets Premium Japan Property

Simon Property Group, Inc. (SPG - Analyst Report), the largest publicly traded retail real estate company in North America, has recently opened a premium outlet in Japan. The outlet has been developed by a JV called Chelsea Japan Co. Ltd., in which Simon Property has 40% stake. The remaining 60% of the JV is owned by Mitsubishi Estate Co. Ltd., the second largest real estate developer in Japan.

Currently only Phase I of the outlet, known as Ami Premium Outlet, spanning 225,000 square feet of gross leasable area, has been opened to the general public. Ami Premium Outlet is the eighth outlet of the JV in Japan, the others being Gotemba Premium Outlets and Sano Premium Outlets (both serving Tokyo), Rinku Premium Outlets (Osaka), Kobe-Sanda Premium Outlets (Kobe-Osaka), Sendai-Izumi Premium Outlets (Sendai), Toki Premium Outlets (Nagoya) and Tosu Premium Outlets (Fukuoka).

Ami Premium Outlet is strategically located in the close proximity of Ami-Higashi interchange on the Ken-O Expressway (Metropolitan Inter-City Expressway) and Narita International Airport. The outlet is presently leased to leading shopping brands like Adidas, Beams, Coach, Diesel, Fauchon, Ray Ban, Tommy Hilfiger, True Religion and Viaggio Blu.

With a current equity market cap of $11.8 billion, Simon Property is by far the largest publicly traded regional mall company in the US. Its largest competitors are Taubman Centers Inc. (TCO - Analyst Report) and Macerich Co. (MAC - Analyst Report) with equity market caps of about $1.22 billion and $1.14 billion respectively. Simon Property’s international presence gives it a more compelling long-term growth story than its domestically focused peers. We reiterate our Buy rating of the company.