A
s the retail landscape continues to shift, Simon Property Group Inc., a behemoth in the real estate investment trust (REIT) industry, finds itself navigating treacherous waters. The company's struggles to keep its malls afloat are symptomatic of a broader decline within the REIT sector, driven by dwindling foot traffic and the inexorable rise of e-commerce.

    Simon Property Group's woes are further complicated by its stake in Forever 21, which is on the brink of collapse after closing over 200 locations. The company's decision to buy out the brand's assets for $81 million has only added to its financial burdens, as the once-thriving retailer now serves as a liability.

    In an effort to revitalize its portfolio, Simon Property Group is shifting its focus from high-end "A" grade malls to mid-tier "B" grade properties. The company plans to fill vacant spaces in underperforming malls and outlets over the next two years, with a goal of modernizing these areas to attract new tenants.

    Simon Property Group's financial performance has been a mixed bag, with its price-to-funds from operation ratio hovering at 16.37 – a moderate level that could decline further if mall closures continue. However, the company's recent change in strategy appears to be paying off, with quarterly fund from operations rebounding to $3.68 per share by February.

    CEO David Simon is optimistic about the future, citing a plan to revitalize Smith Haven Mall on Long Island through a lease agreement with a major retailer. He expects a 12% return on investment within the first two years, a promising sign that the company may be turning a corner.