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Can Mixed-Used Focus Aid Simon Property Battle Adversities?
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Simon Property Group’s (SPG - Free Report) global exposure to retail assets lends its portfolio geographic and product diversification. This insulates the company from market volatility and helps it consistently post a decent performance. However, international operations expose the company to currency fluctuation risks.
The company’s international footprint fosters sustainable long-term growth and a competitive edge over its domestically-focused peers. In fact, ownership stake in Klépierre is in line with its international focus and gives it access to premium retail assets in the high barrier-to-entry markets of Europe.
Also, shares of this Zacks #3 (Hold) Ranked company have outperformed its industry over the past three months. While its shares have rallied 13%, the industry has gained 11.5% during the same time frame.
Of late, it has been undertaking various initiatives to strengthen the company’s relationship with customers. Particularly, it re-launched its brand and marketing programs. Moreover, with the omni-channel strategy gaining traction among retailers, the company is initiating programs and events, as well as entering into several partnerships for upgrading services and amenities provided to the customers.
In a bid to boost footfall at its properties, Simon Property recently welcomed two chef-driven concept restaurants at the company’s retail property — Roosevelt Field. (Read more: Simon Property Adds Two Restaurants to Roosevelt Field)
While e-commerce continues to invade market share of store-based retailers, retail REITs, like Simon Property, GGP Inc. , Kimco Realty Corp. (KIM - Free Report) and Macerich Company (MAC - Free Report) , have been witnessing shrinking footfall, as well as alarmingly rising store closures and retailer bankruptcies. Nonetheless, retail landlords are sailing through these tough times and boosting their asset productivity by adding new and productive tenants, and disposing the non-productive ones. Particularly, companies are shifting focus from apparel and accessories, and expanding their dining options, opening movie theaters, offering recreational facilities and opening fitness centers as well.
Simon Property too is investing billions to transform its properties aimed at creating multi-use destination to drive footfall at the company’s properties. The company’s transformational plans included addition of hotels, restaurants, residences and luxury stores. In fact, in May 2018, Simon Property announced the launch of a $4+ billion investment plan to transform its properties.
Although such initiatives are expected to boost net operating income (NOI) and sales at the company’s properties, such redevelopment and expansion efforts require considerable capital. Also, this increases operational risks, exposing the company to construction cost overruns, entitlement delays and lease-up risks.
Also, with a global footprint, rising uncertainties in global economies remains a concern for the company. Any adverse development in the company’s market will largely impact its result and dent the bottom line.
Lastly, any rise in interest rate would restrict its ability to refinance existing debt and increase the interest cost on new debt. This may affect the company’s financial results and affect its dividend payout.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Can Mixed-Used Focus Aid Simon Property Battle Adversities?
Simon Property Group’s (SPG - Free Report) global exposure to retail assets lends its portfolio geographic and product diversification. This insulates the company from market volatility and helps it consistently post a decent performance. However, international operations expose the company to currency fluctuation risks.
The company’s international footprint fosters sustainable long-term growth and a competitive edge over its domestically-focused peers. In fact, ownership stake in Klépierre is in line with its international focus and gives it access to premium retail assets in the high barrier-to-entry markets of Europe.
Also, shares of this Zacks #3 (Hold) Ranked company have outperformed its industry over the past three months. While its shares have rallied 13%, the industry has gained 11.5% during the same time frame.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Of late, it has been undertaking various initiatives to strengthen the company’s relationship with customers. Particularly, it re-launched its brand and marketing programs. Moreover, with the omni-channel strategy gaining traction among retailers, the company is initiating programs and events, as well as entering into several partnerships for upgrading services and amenities provided to the customers.
In a bid to boost footfall at its properties, Simon Property recently welcomed two chef-driven concept restaurants at the company’s retail property — Roosevelt Field. (Read more: Simon Property Adds Two Restaurants to Roosevelt Field)
While e-commerce continues to invade market share of store-based retailers, retail REITs, like Simon Property, GGP Inc. , Kimco Realty Corp. (KIM - Free Report) and Macerich Company (MAC - Free Report) , have been witnessing shrinking footfall, as well as alarmingly rising store closures and retailer bankruptcies. Nonetheless, retail landlords are sailing through these tough times and boosting their asset productivity by adding new and productive tenants, and disposing the non-productive ones. Particularly, companies are shifting focus from apparel and accessories, and expanding their dining options, opening movie theaters, offering recreational facilities and opening fitness centers as well.
Simon Property too is investing billions to transform its properties aimed at creating multi-use destination to drive footfall at the company’s properties. The company’s transformational plans included addition of hotels, restaurants, residences and luxury stores. In fact, in May 2018, Simon Property announced the launch of a $4+ billion investment plan to transform its properties.
Although such initiatives are expected to boost net operating income (NOI) and sales at the company’s properties, such redevelopment and expansion efforts require considerable capital. Also, this increases operational risks, exposing the company to construction cost overruns, entitlement delays and lease-up risks.
Also, with a global footprint, rising uncertainties in global economies remains a concern for the company. Any adverse development in the company’s market will largely impact its result and dent the bottom line.
Lastly, any rise in interest rate would restrict its ability to refinance existing debt and increase the interest cost on new debt. This may affect the company’s financial results and affect its dividend payout.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>