Simon Property Group Inc. (SPG), a leading real estate investment trust (REIT), has recently opened its second ‘Premium Outlet Center’ in South Korea to capitalize on the increasing fervor of premium shopping buzz spurred by an improvement in market fundamentals. The company inaugurated Paju Premium Outlets in Paju, which is located in close proximity to the northwest of downtown Seoul.
Simon had developed the shopping center in partnership with Shinsegae – a South Korean department store franchise. The property spanning approximately 328,000 square feet of gross leasable area (GLA), houses 160 retail stores that showcase both international and domestic brands such as Armani, Coach, Marc Jacobs and Vivienne Westwood.
The shopping mall is designed as an outdoor village with Art Deco-style architecture, and features eco-friendly facilities such as solar-energy water-heating that lower the center’s energy usage and overall carbon footprint.
In 2007, Simon had opened its first Premium Outlet Center in southeast Seoul. With the recent addition, the company presently has 69 Premium Outlet Centers in its kitty across the globe, including 57 in the U.S., 8 in Japan, 2 in South Korea and 1 each in Mexico and Puerto Rico.
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, Simon’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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