Simon Property Group Posts Billion Dollar Covid Related Income Drop for 2020
The loses come from drops in rent as business closed due to the Coronavirus.
Simon Property Group, America’s largest mall owner, posted a net decrease in rent revenues for 2020 of $1.16 billion over 2019. Rents collected dropped from $5.76 billion to $4.6 billion. David Simon, CEO of Simon Property Group, made the revelation in an earnings call on Monday.
The company saw its net operating income fall by 17.1 percent in 2020. It cited rent abatement, non-collectable rent and lower sales-based rent due to the Coronavirus crisis as a major contributing factor for this. Simon Property Group agreed to $341 million in rent deferrals because of lease holders who had no money to pay and $410 million in rent abatements since the start of the Covid crisis.
The news should not come as a surprise to anyone. Take a drive around any of the strip malls along the main roads and local routes in the U.S. and you will see countless businesses shuttered. Governments have ordered the closures of businesses deemed not essential. Restaurants and places of entertainment have been hit especially hard.
Indoor shopping malls around the world, from Israel to Los Angeles, have been closed for almost a year now. Local authorities ordered their closures so as to stem the spread of the Coronavirus from all those people packed into indoor spaces at the same time.
Simon Property Group listed a total loss of 13,500 shopping days across its portfolio due to lockdowns.
“2020 was a difficult year for all those affected by COVID-19, including our Company,” said David Simon, Chairman, Chief Executive Officer and President. “We feel confident we have turned the corner, and we expect growth in earnings and cash flow in 2021.”
But David Simon is optimistic about 2021. Expecting a rebound this year he said, “The [retailers] that want to grow their business are excited. The healthy retailers that believe in their business — believe in their plans — are making deals.”
“We still, even to this day, have a handful of large tenants unfortunately, that have yet to resolve their receivables,” CEO Simon told analysts Monday. “Are we completely out of the woods? Not yet, but we’re well on our way.”
If the new vaccines spread enough, quickly enough, and if new technologies for sterilizing the air in indoor spaces, cleaning it from all virus, not just Covid-19, get implemented worldwide, then governments will have no problem authorizing the reopening of indoor malls. The latter tech should also make it easier to keep such places open should there be another pandemic in the future.
Read more about: Coronavirus, COVID-19, Simon Property Group
