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Shares of the biggest U.S. mall owner, Simon Property Group, have been battered along with the rest of its industry this year, as retailers shutter thousands of stores in malls permanently, and dozens file for bankruptcy protection during the global health crisis.
Simon, which operates some of the most valuable so-called Class A malls in the country such as Roosevelt Field in New York, has major differences from most of its peers, though.
It has acted unlike any traditional mall owner. To start, it has still managed to maintain its fortress balance sheet during the coronavirus pandemic, with $1 billion of annual excess cash flow after its dividend is paid out to shareholders. Simon has also acquired two retailers, so far, out of bankruptcy protection during the pandemic — men's suit maker Brooks Brothers and denim company Lucky Brand. It is also working with Brookfield on a deal to save department store chain J.C. Penney. It has taken the position of suing some of its tenants, like Gap, for not paying rent this year.
And it is currently in a contested court battle with the high-end mall owner Taubman Centers, trying to get out of a $3.6 billion takeover deal it agreed to before the coronavirus pandemic struck.
"Think about what Simon is doing right now: They are running a mall company, enforcing rent contracts, buying bankrupt retailers, litigating Taubman ... [and] they have the financial ability to do all that and still pay a $1.30-per-share dividend," said Piper Sandler analyst Alexander Goldfarb. "You do the math and go, 'Wow, that's a pretty amazing entity.'"
Here's why some analysts think Simon presents a buying opportunity, even as retail struggles and malls fall out of favor with consumers.