Real Estate Rebound Story?


Simon Property Group , the nation’s largest retail REIT, reported results that beat Street estimates on Friday. With consumer spending in question is there any hope that real estate can be saved by America's shopping malls?

Simon Property Group CFO Steve Sterrett joins the panel for this conversation. Following is a summary of his main points.

How’s your vacancy rate?

“The malls are pretty healthy,” replies Sterrett. “We ended the year with 93% occupancy in the regional malls and that’s a seasonal peak for us. Right now we’re in a period when retailers will either get more aggressive or pull back on space. It’s not surprising that retailers are getting more cautious, but that’s the time when you want to be the landlord and not the retailers.”

How closely does your business reflect the overall economy?

“What you see in terms of what the retailers report, we see in our portfolio,” replies Sterrett. “But for us, the most clear indication has been unemployment. As long as the country is at full employment, Americans will spend their paychecks at the mall.”

Are you feeling any credit pinch?

“Money is clearly much tighter,” Sterrett says. “The spill over of subprime has certainly impacted commercial markets. But the size and the breadth and the depth of our relationships with financial institutions serves us well.

Traders, how can investors play it?

I’m short Simon, reveals Karen Finerman. I think it’s a great company but for me it provides a retail hedge.

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Trader disclosure: On Feb.6, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC), (YHOO), (DIS); Najarian Owns (BIIB), (CSCO), (EBAY), (MSFT), (XLF), (C), (BIIB), (NWA), (AMR); Najarian Owns (AAPL) Calls, (NIHD) Calls, (SKS) Calls; Najarian Owns (MA) Puts; Finerman Owns (GS); Finermna's Firm And Finerman Own (TEL), (TYC); Finerman's Firm Owns (KSS), (RTH), (RTP), (WMT), (YHOO), (JCP), (AEO), (BR), (SUN); Finerman's Firm Owns (MSFT) And Is Short (MSFT) Calls; Finerman's Firm Is Short (SPY), (IYR), (IJR), (IWM), (MDY), (BHP), (COF), (SPG), (WFC), (MHGC); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Fineramn's Firm Owns (CROX) And (CROX) Options, Finerman Owns (CROX)