Simon Property Group, a major U.S. mall operator, has recently sold off its nearly 10% stake in Authentic Brands Group (ABG) for nearly $1.2 billion. This move brings Simon’s total proceeds from its investment in ABG to $1.45 billion over the past two quarters. The company had previously sold shares in the fourth quarter, with Leonard Green & Partners, General Atlantic, HPS Partners, Jasper Ridge Partners, and Singaporean wealth fund Temasek Holdings among the buyers. Simon is also considering a zero-capital deal for struggling retailer Express Inc.
While Simon has exited its investment in ABG, the company still maintains a joint venture with ABG called SPARC, which oversees a range of major distressed brands. Simon also holds stakes in department store JC Penney and real estate giant Brookfield. CEO David Simon stated that the decision to sell the ABG stake was simply a matter of getting the right bid at the right time. Simon has been gradually pulling back from retail investments and has indicated the possibility of withdrawing from retail holdings within the next five to 10 years.
In recent years, Simon has expanded its retail portfolio through acquisitions in partnership with ABG. The company acquired fashion retailer Aéropostale out of bankruptcy in 2016 and has since acquired several other brands, including Nautica, Forever 21, Lucky Brand, Brooks Brothers, Eddie Bauer, and Reebok. Despite selling its ABG stock holdings, Simon has expressed interest in acquiring bankrupt apparel company Express Inc. through a zero-capital deal. This potential acquisition would help prevent the closure of Express stores in Simon and Brookfield malls.
CEO David Simon remains optimistic about the future of retail and the company’s ability to deploy capital effectively. He pointed out that the mall industry has made a comeback and highlighted the company’s $11 billion in liquidity. Simon believes that the company’s ability to capitalize on opportunities during downturns sets it apart from competitors who may become fatigued. Simon’s willingness to sell assets at the right price and seek out new investment opportunities reflects the company’s strategic approach to its business and its focus on maximizing shareholder value.
Overall, Simon Property Group’s decision to exit its investment in ABG and pursue new retail acquisitions demonstrates the company’s adaptability and strategic vision. By leveraging its partnerships and financial resources, Simon continues to position itself as a key player in the retail industry. As the company navigates changing market conditions and consumer trends, its ability to identify value-creating opportunities and make strategic investments will be crucial to its long-term success.
