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Simon Shuts Domestic Properties to Contain Coronavirus Outbreak

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In an effort to reduce the spread of coronavirus in its communities, Simon Property Group (SPG - Free Report) has decided to close all of its retail properties, including Malls, Premium Outlets and Mills in the United States till Mar 29.

The move follows the terming of the coronavirus as a pandemic. The number of infected patients in the United States continues to spike, while the spread of the virus outside of mainland China continues.

The escalating number of coronavirus cases has forced retailers, including Macy’s (M - Free Report) , J.C. Penney (JCP - Free Report) and several others, to close their stores in order to contain the spread of the virus. Some of the retailers have also reduced store hours, while many others are keeping their e-retail operations running as consumers are now increasingly opting for online purchases.

As a result, retail REITs, which have already been battling store closure and bankruptcy issues, are feeling the brunt because consumers are avoiding gathering in large public spaces. As such, total returns of REITs belonging to the Regional Malls category have plunged 60.51% so far in March, while those in the Shopping Centers group have declined 44.35%.

In fact, during Wednesday’s regular trading session, Simon Property’s shares slid more than 23% to $44.92.

Furthermore, shares of Macerich Company (MAC - Free Report) have tanked more than 50% this week. The company has announced a reduction of quarterly dividend to 50 cents per share, payable 20% in cash and 80% in common stock, slated to be paid on Jun 3, to stockholders of record at the close of business on Apr 22, 2020. The company paid a quarterly cash dividend of 75 cents per share for its shareholders in the prior quarter.

The move comes as Macerich targets retaining capital and enhancing its financial flexibility amid such an uncertain environment, while complying with the REIT taxable-income distribution requirements. With the dividend reduction and the stock dividend, the company noted that it will be able to retain incremental cash in excess of $98 million on a quarterly basis and approximately $400 million implemented on an annual basis. The company plans to deploy the cash for debt reduction, general corporate needs as well as redevelopment investments.

Here’s how shares of Simon Property and Macerich have performed so far this year.



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