Simon Property Group's 2Q Profit Drops 49% Amid Pandemic

By Maria Armental

Mall landlord Simon Property Group Inc.'s profit dropped by nearly half in the second quarter, underscoring the hit from the coronavirus pandemic.

Second-quarter profit dropped to $254.2 million, or 83 cents a share, from $495.3 million, or $1.60 a share a year earlier.

The largest mall owner in the U.S. said rent collections from its domestic retail portfolio, including some level of rent deferrals, was about 51% of the contractual billings for April and May combined, approximately 69% for June and approximately 73% for July. Those percentages, it said, haven't been adjusted for any rent abatements granted.

"Despite losing nearly 10,500 shopping days in our U.S. portfolio in the second quarter, we produced solid profitability and positive cash flow from operations," Chief Executive David Simon said in a statement. "We have generally been encouraged by the shopper response, particularly in certain locations, after re-opening."

The results come as The Wall Street Journal reported that Simon, is negotiating a deal with Amazon.com Inc. for space left by ailing department stores, like J.C. Penney Co. and Sears Holdings Corp., to use as Amazon distribution hubs.

The company said it had opened all of its U.S. retail properties as of July 10 but seven properties in California were later closed, and remain closed, due to the pandemic.

Funds from operations, a key performance metric for real-estate investment trusts, fell to $2.12 a share from $2.99 a share a year earlier. Total revenue fell to $1.06 billion from $1.4 billion a year earlier.

Analysts surveyed by FactSet expected about 70 cents a share in profit, $2.08 a share in FFO and $1.09 billion in revenue.

Simon had withdrawn financial projections for the year citing the pandemic.

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