The company cut the dividend proactively in the midst of a crisis. However Simon Property Group did cut (reduce) its dividend in 2020.ĭespite the cut, investors can have faith in the company's ability to return cash to shareholders. Simon Property Group has historically been a strong dividend payer, and has grown its payout to investors. Most investors have interest in Simon Property Group for the dividend that the company pays. We can see that operating metrics held up reasonably well during the 2020 pandemic, and that operating results have largely been strong (showing growth) prior to the pandemic - a sign of the company's strength despite the perception of secular challenges in the mall space. From Q2 of 2020 through Q4 of 2020, Simon Property Group was able to collect 90% of its net billed rents, and occupancy in 2020 was more than 91% for the year.

The quality of tenants combined with geographies with strong foot traffic led to Simon Property Group holding up better than many of its peers during the pandemic. Simon Property Group boasts a strong portfolio of high grade malls and premium outlets in population dense areas. As I said above, it is often the weakest players that feel the brunt of a secular decline, while the strongest players will fare better, absorbing the weak. The negative headwinds in the shopping mall space have been felt the most by lower quality malls. While the mall space has been labelled as being in secular decline, it is important to understand the dynamics within this. Simon Property Group Is A 'Best In Class' Operator Simon Property Group fits this description. Meanwhile, the weaker players will continue to struggle, or go away completely.īecause of this, a power player in a challenged industry can still perform at a high level. The larger, better run, better funded industry players will take advantage of weakness and acquire/take share to grow larger. The tougher operating environment tends to widen the gap between the 'haves' and the 'have nots'. Whenever there is a large scale deterioration of an industry, something interesting tends to happen. Shopping malls have been closing in the US since before 2017, primarily because of a combination of e-commerce growth and a mall landscape that was extremely overcrowded.ĭid the pandemic disrupt the shopping mall industry across the board? Absolutely, and while there will be a recovery of sorts - the prolonged impact of the pandemic will be that it accelerated a secular shift towards e-commerce. However, shopping malls were seeing secular challenges long before the world came to know what Covid-19 was. Malls have been one of the most negatively impacted sectors, just behind senior housing, hospitality, student lodging, and gaming.

This has obviously hurt businesses involved in the mall space.

The Shopping Mall Sector Was Declining Before CovidĪs a place where many consumers gather in close proximity, shopping malls have been one of the hardest hit sectors throughout the Covid pandemic. We will detail below why shares are potentially attractive for income seeking investors. With a history of strong performance and the stock at discounted levels, I believe that there is still value in Simon Property Group for investors. These trends were only accelerated in 2020 with the pandemic.Ī historically strong REIT, Simon Property Group ( NYSE: SPG) is a 'best in class' player in the declining shopping mall space, but has seen pressure on its stock in response to secular challenges. A combination of e-commerce growth and an overcrowded mall landscape have combined to initiate the closures of brick and mortar retail spaces in the country. A well-known example of these 'big picture' trends, is the US shopping mall space. Secular trends can be powerful forces, and sometimes a good company can get caught up in the negative sentiment that secular trends can create. Photo by YurolaitsAlbert/iStock via Getty Images

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