American shopping center owner Simon Property Group reports first quarter 2019 earnings

The largest shopping center owner in the country expects the pace of the store premises to slow down after a nasty start to the year. But the CEO will not make any promises.

"I think most of the bad news is behind us," Simon Property Group, CEO David Simon, told analysts at a post-earnings conference on Tuesday morning, referring to store closures and retail cards. "But I can't guarantee it."

Simon's shares fell more than 3% after real estate investment firm reported quarterly funds from operations ̵[ads1]1; a carefully monitored metric in the industry – of $ 1.08 billion or $ 3.04 per share, compared to $ 1.03 billion, or $ 2.87 per share, a year ago. It was slightly below analysts' expectations, said BTIG's Jim Sullivan.

In February, CEO Simon said he was "nervous" for a few more retail cards during the first quarter. It was just before the youth trade Charlotte Russe, personal gift company Things Remembered and Payless ShoeSource all filed for bankruptcy later that month. Now, several store closures have already been announced by US dealers in 2019 than in all of 2018. "It is safe to say … we foresee some [of those] bankruptcies," said CEO Simon, Tuesday. others … We will see how the rest of this year creates for them. "

An effect of this shakeout, shopping mall summary rose in the first quarter to 9.3% from 9% in the fourth quarter of 2018, according to real estate research firm Reis. This is the highest vacancy that the company has tracked since the third quarter of 2011 when it was 9.4%, said Reis.

In turn, Simon has been at the forefront of adding new types of tenants to the malls in a bid for Keeping their malls relevant, including taking some of their assets and turning them into "mixed-use" centers of apartments, hotels, offices, and gyms, for example, in Simon's Phipps Plaza Mall in Atlanta, adding one Nobu Hotel and a 90,000 square meter is the Lifetime Fitness complex.

Earlier this year, Simon said it would partner with Ohio-based marijuana company Green Growth Brands to open 108 locations selling CBD products this year on its properties, including the Roosevelt Field Mall in New York and The Galleria in Houston.

"It's going to take some work this year to balance out," says all of the executive vice president's closures with brick and mortar openings, CEO Simon. He added that Easter traffic at malls was "slow" this year. But Simon says "see some rebound" now.

Simon said the mall's sales per square meter in the quarter ended March 31, increased 3.1% from one year ago to $ 660. That said, the occupancy rates in the malls and premium outlet centers were 95.1%, up from 94 , 6% a year ago. Simon also confirmed his view for the year-round tax in 2019.

However, Simon is not the only American mall owner who fights this recent wave of store closures. Others are trying to paint an image of the industry to show how many of the affiliation in 2019 is expected, and to point out that the closures come from just a handful of retail chains.

"A little bit of data parsing gives color to the nature of these closures," said Executive Prime Minister Lou Conforti of Washington Prime last week. "Six retail chains [account] for 73% of this year's closures, compared to 21% in 2016 and 27% in 2018. So more concepts are not falling, just those who are." [19659002] Simon's shares have risen more than 9% over the past twelve months, bringing their market value to around $ 52.7 billion.