Simon Property Group Inc. (SPG), a leading real estate investment trust (REIT), has recently expanded and rechristened a retail shopping center in Las Vegas Boulevard – a major road in the Las Vegas metropolitan area of Nevada that is best known for the Las Vegas Strip and its casinos. The strategic move is aimed at better communicating the premium quality of the diverse array of products offered at the mall that was acquired by the company in 2003.
Simon has renamed ‘Las Vegas Outlet Center’ as ‘Las Vegas Premium Outlets – South’ and has extended the retail space at the property by approximately 70,000 square feet of gross leasable area (GLA) with the addition of about 13 new stores. The company has also renovated the shopping center, including a complete external makeover and notable interior improvements such as a wall-to-wall remodeling of the two food courts.
In addition, Simon has increased the parking space to facilitate higher customer footfalls, and upgraded the interior lighting facilities with high-efficiency compact fluorescent fixtures that lower the center’s energy usage and overall carbon footprint. With the expansion, the mall presently has about 140 stores spanning a GLA of 535,000 square feet of retail space.
Since its inception in 1993, the shopping center has etched a mark of being one of the leading shopping destinations of the region, and has offered a daily discount of 25% to 65% on an impressive list of popular brands such as Coach, DKNY, Esprit and Kenneth Cole.
At the same time, Simon has also rebranded the sister center of the erstwhile Las Vegas Outlet Center, located in downtown Las Vegas. The company has renamed the shopping mall as ‘Las Vegas Premium Outlets – North’ that currently features about 150 retail stores such as Ann Taylor, Diesel, Kenneth Cole, Lacoste, Polo Ralph Lauren, St. John, and Theory.
Simon is the largest publicly traded retail real estate company in North America with assets in almost all retail distribution channels. The company generally enters into long-term leases with its tenants, which insulate it from short-term market swings that have weighed on other players in the industry. Furthermore, the company’s international presence gives it a more sustainable long-term growth story than its domestically focused peers. The geographic and product diversity of the company safeguards it from market volatility and provides a steady source of income.
We maintain our ‘Neutral’ rating on Simon, which presently has a Zacks #3 Rank translating into a short-term ‘Hold’ rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months. We also have a ‘Neutral’ recommendation and a Zacks #3 Rank for Macerich Co. (MAC), one of the competitors of Simon.
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