Simon Property Group Inc.’s malls are open and the landlord has seen its rent collection numbers climb in recent months as the U.S. grapples with the coronavirus.
Still, Chief Executive Officer David Simon acknowledged the company will struggle to collect rent from some tenants and that it’s hard to predict how long it will take to recover from the economic fallout of COVID-19.
“I was feeling pretty good in June about finally getting back to work, and I feel less good in July and now I’m totally confused,” David Simon said Monday on an earnings call. “I’m sure there will be some level of abatements and rent collections issues as we move forward for the rest of the year.”
Simon’s shares gained as much as 6.6 per cent to US$69.81 on Tuesday after the company posted revenue that beat estimates. The shares had slipped 56 per cent this year through Monday’s close.
The company said in a statement that 91 per cent of its tenants at its U.S. properties are opening and operating and that rent collection had reached 73 per cent in July, up from about 51 per cent in April and May. Its net income slipped nearly 50 per cent in the second quarter compared with 2019, in part because of US$215 million in rent abatements and write-offs from bankrupt tenants.
Simon is in locked in a legal battle with rival mall owner Taubman Centers Inc. over a planned acquisition that it nixed in June. Taubman posted revenue and adjusted net income that missed estimates on Monday, with the company’s loss of US$34.1 million wider than expected.
Simon Property said that it’s entire portfolio of U.S. malls was open on July 10. But five days later, it had to shutter seven properties in California, where coronavirus cases have spiked.
Simon expressed frustration that malls are being treated differently than other retailers by government officials.
“There’s not a lot of difference frankly, between a Costco store and a Simon mall when it comes to protocols and cleanliness and air quality,” Simon said. “Let us compete. We suffered two months, where we could not compete and that’s just not fair.”