Simon Property Breaking Ground for NJ Premium Outlets - Analyst Blog

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The retail real estate investment trust (REIT) - Simon Property Group, Inc. ( SPG ) 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 Premium Outlets.

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. ( WPG ) spin-off.

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 guidance.

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. ( CDR ) and General Growth Properties, Inc. ( GGP ), both carrying a Zacks Rank #2 (Buy).

Note: 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: SPG , GGP , CDR , WPG

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