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Simon (SPG) & Jose Andres Collaborate, Boost Dining Experience

Simon Property Group SPG announced that it would collaborate with José Andrés Group (“JAG”) to bring award-winning restaurants to several of the company’s premier properties. The move is expected to draw more shoppers to SPG’s shopping centers, making it a strategic fit.

The JAG portfolio includes globally renowned dining, ranging from Michelin-starred fine dining to fast casual eateries. With the introduction of unmatched culinary experiences at Stanford Shopping Center in Palo Alto and The Shops at Crystals, JAG is set to step into new markets and expand its footprint in existing anchor cities.

JAG will also introduce Zaytinya — an innovative mezze menu inspired by Turkish, Greek and Lebanese cuisines, built on José Andrés' deep knowledge of Mediterranean cooking and years of research and travel — to The Forum Shops at Caesars Palace in Las Vegas.

The new restaurants are expected to open in 2023-2024.

Per Jonathan Murphy, co-president, Simon Malls, “We are proud of this announcement, which continues our commitment to owning and developing properties with premier dining and mixed-use experiences.”

Simon Property has been exploring the mixed-use development option, which has gained immense popularity in recent years, as it helps capture the attention of people who prefer to live, work and play in the same area.

In November 2022, Nobu Hospitality and Simon Property celebrated the opening of Nobu Hotel & Restaurant Atlanta at the mixed-use development — Phipps Plaza — in Buckhead.

Additionally, Simon Property’s adoption of an omnichannel strategy and successful tie-ups with premium retailers has paid off well in recent years. Its online retail platform, coupled with an omnichannel strategy, is likely to be accretive to its long-term growth. It is also focused on tapping growth opportunities by helping digital brands enhance their brick-and-mortar presence.

In November 2022, Simon Property announced that Leap, the retail platform for modern brands, will open numerous stores at its properties. The move will help many digitally native brands to strategically expand as omni-channel retailers.

Further, Simon Property capitalized on purchasing recognized retail brands in bankruptcy. Investments in them seem strategic for Simon Property as the brands have been generating a decent amount from digital sales.

The increase in consumers’ preference for an in-person shopping experience following the pandemic downtime has been driving the recovery in the retail real estate industry. Retailers continue to rent out more physical store spaces to meet this growing demand. As a result, SPG’s portfolio of premium assets in the United States and abroad has been experiencing solid leasing activity.

In 2022, it signed 1,262 new and 1,517 renewal leases (excluding mall anchors and majors, new development, redevelopment, and leases with terms of one year or less) with a fixed minimum rent across its U.S. Malls and Premium Outlets portfolio.

With a solid balance-sheet position and ample financial flexibility, SPG is well-positioned to capitalize on long-term growth opportunities.

Shares of this Zacks Rank #3 (Hold) company have gained 18.2% in the past six months compared with its industry’s growth of 13.4%.


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Zacks Investment Research

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Stocks to Consider

Some better-ranked stocks from the retail REIT sector are Regency Centers REG, Federal Realty Investment Trust FRT and Essential Properties Realty Trust EPRT, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Regency Centers’ current-year FFO per share is pegged at $4.08.

The Zacks Consensus Estimate for Federal Realty’s ongoing year’s FFO per share is pegged at $6.45.

The Zacks Consensus Estimate for Essential Properties Realty Trust’s 2023 FFO per share is pegged at $1.64.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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