The retail real estate investment trust (REIT) -
Simon Property Group, Inc.
) broke ground for a multi-million dollar project - Gloucester
Premium Outlets in Gloucester Township, NJ last Thursday.
Slated to open in 2015 summer, this project is a joint venture
between Simon and PREIT-Rubin, Inc. Developed and managed by Simon,
the project would welcome a varied mix of over 80 retailers. This
outlet would offer several product types including apparel and
shoes, fashion accessories, leather goods, home furnishings as well
as specialty goods.
Apart from operating as a shopping destination, Gloucester Premium
Outlets would also act as a swanky entertainment zone for its
visitors. It would offer additional amenities like a Food Pavilion
with several dining options, an outdoor lounge area, luxuriant
landscapes and large green space to host community events like
musical shows, charity occasions and children's activities.
Moreover, its nearness to both the Atlantic City Expressway and the
Black Horse Pike is expected to draw more crowds at Gloucester
Therefore, once it comes into operation, we expect this strategic
property to drive growth for Simon Property and help in augmenting
its top line. In fact, with the economy showing signs of recovery,
spending capability of the richer consumers is improving.
Consequently, such Premium Outlets would help the company to
leverage on this rise in the richer class consumerism.
Last month, Simon Property reported second-quarter 2014 funds from
operations (FFO) of $2.16 per share, which came 2 cents ahead of
the Zacks Consensus Estimate and a nickel above the year-ago
quarter figure. The quarterly FFO includes the transaction cost of
10 cents per share associated with the Washington Prime Group Inc.
The 2.4% year-over-year improvement in quarterly FFO per share was
primarily driven by a notable rise in base minimum rent and
occupancy rates. Moreover, the company hiked its 2014 FFO per share
Simon Property currently carries a Zacks Rank #3 (Hold). Investors
interested in the retail REIT industry may consider better-ranked
stocks like Cedar Realty Trust, Inc. (
) and General Growth Properties, Inc. (
), both carrying a Zacks Rank #2 (Buy).
FFO, a widely used metric to gauge the performance of REITs,
are obtained after adding depreciation and amortization and other
non-cash expenses to net income.
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