While the CEO of the country’s biggest mall owner thinks that retail store closures will slow down this year, he added that he “can’t guarantee it.”
“I think most of the bad news is behind us,” Simon Property Group CEO David Simon told analysts on a post-earnings conference call Tuesday (April 30), according to CNBC. “But I can’t guarantee it.”
His latest comments come after Simon admitted in February that he was “nervous” about additional retail bankruptcies happening during the first quarter. Later in that month, teen apparel retailer Charlotte Russe, personalized-gift company Things Remembered and Payless filed for bankruptcy. In fact, there have been more store closures announced by U.S. retailers so far this year than in all of 2018.
“It’s safe to say … we did anticipate some [of those] bankruptcies,” Simon said on Tuesday. “We are looking at a few others. … We will see how the rest of this year shapes up for them.”
Simon is doing its best to protect its interests. While mall vacancy rates rose during the first quarter to 9.3 percent from 9 percent in the fourth quarter of 2018, Simon has been adding new types of tenants to its malls. The company plans to open at least five Marriott International hotels at its properties in the coming years, and at its Phipps Plaza mall in Atlanta, there will be a Nobu Hotel and a 90,000-square-foot Lifetime Fitness complex.
In addition, Simon announced a partnership with Ohio-based marijuana company Green Growth Brands to open 108 locations this year at its properties, including Roosevelt Field Mall in New York and The Galleria in Houston.
Simon noted in his remarks, “It’s going to take some work this year to balance out” the retail store closures with brick-and-mortar openings.
In the meantime, Simon shares were down more than 2 percent after the company reported first-quarter funds from operations of $1.08 billion, which was slightly below expectations. However, the company said sales per square foot during the quarter ended March 31 went up 3.1 percent from a year earlier, and occupancy at its malls and premium outlet centers was at 95.1 percent, up from 94.6 percent the previous year. Simon also reaffirmed its outlook for 2019.