Can Simon Property Group Save Forever 21?
Simon Property Group (NYSE: SPG) is one of the largest mall landlords in the world. As such, it is well aware of the "retail apocalypse" threatening real estate investment trusts (REIT) and leading to retailers closing stores or, worse, completely shut down. That said, financially strong Simon is in a good position to can get creative when it comes to dealing with troubled lessees.
Right now, it is teaming up with Brookfield Property Partners (NASDAQ: BPY) and privately held Authentic Brands Group in an attempt to buy apparel retailer Forever 21 out of bankruptcy for $81 million. Here's why that's a good idea, some proof that Simon and its partners know what they are doing, and some speculation on what might come next.
Forever 21 is a fast-fashion retailer that focuses on quickly bringing out affordable new styles on a regular basis. It is a staple of most malls. For example, Simon has exposure to Forever 21 stores in 98 of its total portfolio of around 200 enclosed malls and factory outlet centers. The troubled retailer accounted for roughly 1.4% of Simon's rent roll in the third quarter. Losing Forever 21 would hardly be a death knell for Simon, but there's more to the story.
Source Fool.com
