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Mall Giant Simon Property Boosts 2021 Outlook Amid Retail Growth

Profitability, cash flow, customer traffic, sales and leasing momentum have all improved for Simon’s properties in the first quarter.

(Bloomberg)—Mall owner Simon Property Group Inc. increased its full-year earnings guidance as retail sales and shopper traffic pick up across the U.S.

“Our business has substantially improved after addressing the impacts from the Covid-19 pandemic,” Chief Executive Officer David Simon said in the company’s first-quarter earnings statement Monday. Profitability, cash flow and customer traffic have grown, increasing tenants’ sales. Leasing momentum is also on the rise, he said.

The company now sees funds from operations of $9.70 to $9.80 a share for the year, up from its forecast in February of $9.50 to $9.75, according to the statement.

Like other retail landlords, Indianapolis-based Simon Property took a hit in the past year as malls shuttered during local lockdowns and consumers shifted more purchases to the internet. Rent collections dropped and many big chains filed for bankruptcy.

Simon was also embroiled in a legal battle for months over its agreement to acquire rival mall owner Taubman Centers Inc. just before the pandemic hit. Simon reached a deal in November to purchase Taubman at a lower price.

In the past few months, the nation’s retail business has been rebounding as vaccination rates accelerate and cities expand reopening plans. The Taubman portfolio is also seeing signs of growth, Simon said.

Net operating income across the company’s domestic and international properties fell 8.4% in the first quarter from a year earlier due to the pandemic, according to the statement. Still, occupancy at Simon’s U.S. malls and outlets was 91% as of March 31.

The shares slipped in late trading. They were down 1.3% to $125.11 at 5:04 p.m. New York time.

© 2021 Bloomberg L.P.

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