Simon Property Group CEO on Sears
Simon Property Group (NYSE:SPG) held it’s earnings and conference call yesterday. Beyond being of general interest to anyone interested in real estate especially commercial real estate, Jeffrey Spector of BofA Merrill Lynch asked about some of Sears recent deals and Simon had some interesting comments.
Jeffrey Spector – BofA Merrill Lynch, Research Division
I’m also here with Craig, who will have a question after me. My question was just focused on Sears’ decision to lease space to Primark. Also, Amazon’s announcement to open a store in New York City, we’ve been getting a lot of incoming calls, questions on those announcements, and what that could mean. If you could just provide some thoughts on those announcements and maybe where you think things continue with Sears in their leasing efforts?
David E. Simon – Chairman and Chief Executive Officer
Well let me — I’ll have — I’ll give you 2 quick top of the head remarks and then I’ll let Rick add whatever he wants. Look, on Amazon, leasing space, I’m not — it’s, all the details aren’t out, but there’s clearly a benefit for the overused word, omnichannel bricks and clicks, however you want to describe it, there’s a real benefit. In fact, it’s very interesting when I see Sears as a online retailer, depending on which study you look at. I mean, they’re anywhere from — they’re clearly in the top 10. They may be as high as #5. And I would argue it’s because of their physical presence that allows them to be so important in the online presence. And you’ve heard it from retailers that the synergy between having the physical and the online presence and now the move toward mobile, and how its all been integrated. So — and clearly, we’ve seen a number of pure online retailers going to physical stores. So the — it’s got to be in the equation for a retailer to have a physical presence. I don’t think there’s any question in that. And as our retailers have gotten more sophisticated in the online world, I think that’s going to play to our benefit. On the Sears leasing, we have one that we’ve consented to in King of Prussia. That was part of their agreement to consent to our ability to expand the 2 centers. We worked very collectively to do that. I think Sears would be the first to tell you that in certain markets and certain stores they don’t underperform, or in fact they have too much space. And they will look to release some of that space or sell some of the real estate. We still think they have a physical presence that’s going to be important to them. And we’ll continue to work with them on a collaborative basis that meets our needs, and our shoppers’ needs and theirs. And we expect to, at the end of the day, for both of us to benefit from that.
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