Notably, the FY23 SSNOI guidance range reflects incremental bad debt versus FY22, as the normal pattern of post-holiday bankruptcies has resumed, though not to an alarming level. Both portfolios expect to benefit from around 100bps in occupancy gains. For FY23, SPG forecasts "at least 2% NOI growth," while MAC projects 2% to 3% NOI growth. This is primarily due to retailers targeting wealthy consumers and high-traffic areas for store openings. Our analysis of the Core NOI growth for FY23 shows that both Macerich ( MAC) and SPG have commented on strong occupancy gains and positive leasing momentum. Furthermore, Simon's portfolio is particularly appealing to e-tailers looking to establish a physical presence. ![]() The high-quality portfolio offered by Simon will continue to present prime locations for tenants, even as retail companies aim to reduce store counts. In our view, Simon Property Group's access to capital, scale, and proven track record position the firm to capitalize on attractive investment opportunities. We believe that Class A malls will maintain their dominance in the brick-and-mortar retail landscape, with high-quality malls eventually regaining their previous occupancy and rent levels. Long-term leases protect Simon's revenue, and while occupancy dipped to around 90% in 2020, it has almost fully recovered. Foot traffic in brick-and-mortar locations has returned to near pre-pandemic levels, resulting in a recovery in sales growth. Additionally, many e-tailers are now opening stores in Class A malls to capitalize on high foot traffic, leveraging their physical presence for marketing purposes, showcasing their products, and generating additional sales.Īlthough Simon is still dealing with the repercussions of the coronavirus pandemic, the fundamentals have begun to rebound. Retailers are becoming more selective with their physical locations, often choosing to establish their storefronts in high-quality assets owned by Simon, while simultaneously closing stores in lower-quality malls. Despite this trend, we believe that physical retail sales will continue to grow positively over the next decade, albeit at a slower pace compared to online sales. Currently, e-commerce accounts for nearly 30% of all retail sales, excluding categories such as autos, gasoline, groceries, and building materials. ![]() The rise of e-commerce has undeniably put pressure on brick-and-mortar retail as consumers increasingly shift their shopping habits online. As a result, we believe that Simon's portfolio will continue to be in high demand by retailers pursuing an omnichannel strategy. These high-quality properties often attract both domestic and international tourists, providing unique shopping experiences that are difficult to replicate elsewhere. Simon Property Group, the largest mall real estate investment trust in the country, has consistently managed a top-tier retail portfolio comprising Class A traditional regional malls and premium outlets in densely populated, high-income markets. As retailers pursue an omnichannel strategy and become more selective with their physical locations, we believe that Simon's high-quality malls will maintain their dominance in the brick-and-mortar realm, even as the industry faces numerous headwinds. Boasting Class A malls that attract domestic and international tourists, Simon's properties offer unique shopping experiences that are tough to replicate. ![]() com.In the ever-changing landscape of retail, Simon Property Group's ( NYSE: SPG) premium mall portfolio shines as a beacon of stability amidst the e-commerce tidal wave. Our properties across North America, Europe and Asia provide community gathering places for millions of people every day and generate billions in annual sales. Simon is a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company (Simon Property Group, NYSE: SPG). Industry Equity Real Estate Investment Trusts (REITs).
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