MAC Macerich Co

Simon Property Group Inc. (SPG), a leading real estate investment trust (REIT), has recently opened its first Premium Outlet Center in South East Asia with the inauguration of Johor Premium Outlets in Johor Bahur, Malaysia. The Premium Outlet is a 50-50 joint venture partnership with Genting Berhad – the investment holding and management company of Asian conglomerate Genting Group.

Spanning 173,000 square feet of gross leasable area (GLA) featuring 80 stores, Johor Premium Outlets is strategically located in close proximity to Senai Airport and the city center of Singapore and is about three hours from Kuala Lumpur. The mall offers an unrivaled mix of leading designer and name-brand products at significant discounts of 25-65%, and is set up in an architecturally distinct village-style setting with charm and ambiance.

Simon Property is also reportedly in talks with various reputed Chinese retailers to set up its premium outlet division in China - one of the fastest growing economic regions of the world. The growing popularity of several European and American retailer brands in China has further made Simon Property overtly optimistic about its success in the country as it intends to capitalize on the increasing fervor of premium shopping buzz spurred by an improvement in market fundamentals.

The company presently has 70 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 Malaysia, Mexico and Puerto Rico. Premium Outlet Centers in the U.S. are strategically located in close proximity to major metropolitan markets such as New York, Los Angeles, Boston and Chicago and visitor markets such as Orlando, Las Vegas and Palm Springs.

Simon Property 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 Property’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 Property, which presently has a Zacks #2 Rank translating into a short-term ‘Buy’ rating. We also have a ‘Neutral’ recommendation and a Zacks #3 Rank (short-term ‘Hold’) for Macerich Co. (MAC), one of the competitors of Simon Property.

 
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