February 4th, 2009Simon Puts Brakes on Development
Indianapolis, IN-Continuing a successful conservative approach, Simon Property Group plans no new construction starts this year, executives said at the company’s fourth quarter conference call. Capital expenditures in the United States in 2009 will total between $250 million and $275 million, less than one-third of the 2008 sum.
Expenditures in 2010 will be less than $50 million, said David Simon, chairman and chief executive officer. “We currently do not plan to begin construction on any major projects in 2009,” Simon said.
Simon reiterated a previous statement that “the new development business is dead for a decade. Maybe I’m overdramatizing, but there’s going to be little new development for some time to come.”
Construction is under way domestically on: Cincinnati Premium Outlets, a 400,000-square-foot upscale manufacturers’ outlet center scheduled to open in August, and a 600,000 square foot expansion of The Domain in Austin, Texas, opening in November; a 220,000-square-foot expansion of Camarillo Premium Outlets, opening in April; and the addition of Nordstrom to South Shore Plaza, opening in 2010.
Internationally, construction continues on: the 225,000-square-foot Ami Premium Outlets, located northeast of central Tokyo, opening in July; and centers opening in Argine (outside Naples, Italy), Catania (Sicily, Italy); and three projects in China. All but the Catania project (which opens in June 2010) are scheduled for 2009 openings.
Leasing also remains relatively healthy, though the company acknowledged that it has been renegotiating with some tenants.
“Where we have a tenant in extreme distress we are working with them to find a mutually acceptable way to maintain their presence,” said Richard S. Sokolov, president and Chief Operating Officer. The diversity and strength of the company’s portfolio, Sterrett added, gives the firm the breathing room to create innovative solutions to maintain occupancy.
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