luxury revenue strategy Simon is at the forefront of industry-gallery

  Issa Khalil went to Seattle last week, his favorite football team, the Dallas Cowboys, the Seahawks play their first home game of the season to see. It included a detour: Shopping in Seattle Premium Outlets.

"We have online at this point," said Khalil, 26, living in Calgary who worked in the hotel industry and plays in a men's soccer league. He was his father and cousin to the store to Nike Inc., and "nothing" else with signature Swoosh manufacturer of sportswear headed place.

Shoppers such as Khalil, to contribute to the growth of the buoy Indianapolis Simon Property Group Inc., which acquired the Seattle Premium Outlets by their $ 3500000000 purchase of Chelsea Property Group in 2004.

Output luxury shopping malls, where high-end retailers such as Coach Inc. and Michael Kors Holdings Ltd. are reducing hawk goods now the main source of growth d'Indianapolis Real Estate Investment Trust, the largest in the country.

"The purchase of Chelsea by Simon eight years ago was probably the best fusion REIT," said Cedrik Lachance, CEO of real estate firm Green Street Advisors Research Inc. in Newport Beach, California. "'S initial investment was a great success for Simon."

Discount Centres have Simon's most powerful non-retail real estate stock in the last five years, and this is a company as the No. 2 U.S. mall owner, General Growth Properties Inc has. Hedge fund manager Bill Ackman, whose Pershing Square Capital Management LP owns about 10 percent of the total growth, is for companies to combine lobbying, as Simon said last week that he has no interest in buying its rival.

Outlets were several factors that Ackman highlighted in the promotion of an agreement.

"The majority shareholding in the company of Simon shopping center, in the MCP has no presence, proved to be a commercial property with a high degree of resilience in times of economic weakness and contributes significantly" funds from operations, a measure of cash flow, said Ackman in a 27th August letter to the Board the general growth.

In 2004, the year of acquisition Chelsea Simon General Growth spent $ 11.3 billion to buy Rouse Co., which includes the full fare shopping centers and land for master-planned communities - a case of missed Simon. The purchase was part of an acquisition spree, the Chicago-based General Growth of $ 27 billion of debt. If he does not refinance loans in 2009, the company's largest real estate company, was to file for bankruptcy.

Simon tried to buy General Growth, when he was bankrupt. She lost to a group of Ackman and Toronto-based Brookfield Asset Management Inc., which now owns about 42 percent of the company and said he had not made the intention to sell its stake. Overall, growth has also said he will not explore a sale.

Outlets represent approximately 12.5 percent of the gross leasable area of ​​properties in the world of Simon. They represent about a third of the net asset value of the company, said Lachance. Simon operates 72 premium outlet centers in 28 states and Puerto Rico, Mexico and Asia, with plans to open six more in 2013, including the first in Canada and Brazil.

Premium Outlets, including more red carpet designer outlet stores classic, by exploiting the desire to "fashion brand and household goods retailing while meeting" increase consumer needs the revenue and pay lower rents developed during a period of sluggish economic growth.

"This is a big trend," says Jeremy Moller, a retail broker in JSH Properties Inc. in Seattle. "After the accident, many retailers realized they could sell as many bags $ 600."

Discounts vary by retailer and product. A Michael Kors outlet near Seattle, the popular Hamilton tote sells for $ 329, as little as 5 percent less than the versions on the site of the designer. Other products are more than offset half, in some cases, because it is the end of the season. The bag in Layton Kors signature "baggage" of color, a caramel brown, sold for $ 155, from $ 368.

Evacuation centers are cheaper to build and operate than traditional shopping centers. Your out-of-the-way places, they make relatively easy to extend still close enough to the cities in order to attract customers. There were approximately 67.9 million square meters of shopping center space in the past year. 23 percent more than a decade earlier, according to Value Retail News, a publication of the International Council of Shopping Centers

Construction of traditional shopping centers, especially near urban areas, put on ice because of the limited space for new developments. Only one enclosed mall in the United States opened in 2006, said Jesse Tron, a spokesman for the ICSC New York.

"In relation to the green grass or ground development is almost all evacuation centers," said John Sheehan, an analyst at Edward Jones in St. Louis.

Simon opened 142.7 million in New Hampshire in June and construction began on the other three taken over evacuation centers, two of which are in partnership with other developers after its latest quarterly report. The company has $ 750 million in the expansion and renovation of existing homes budgeted in 2012, compared to $ 265 million last year.

The largest markets for upscale Simon square Woodbury Common, north of Manhattan. Woodbury Common Premium Outlets receives about 12 million visitors a year, making it the No. 1 tourist destination in the State outside of Manhattan, said Susan Hawvermale, Director of Tourism in Orange County, New York, where Woodbury Common is. The mall is more than three times the annual visitors than the Empire State Building.

"This is the best game in the world," David Simon, CEO of Simon Property, the city said in a conference call with analysts on 27 April Woodbury. "What we think is clear from closely with the city, but the fact that we are making progress and approvals, I think we take this asset to another level."

The Morris leaned a spokesman Simon to comment further.

Simon stabbed traditional financial results separately from the Premium Outlets Mall activity in 2009. This year the sector contributed 19.7 percent of total revenues. The company has more than 21 centers, when he bought the first Outlets Acquisition Co. in 2010 for $ 2.3 billion.

Simon shares rose 66 percent in the past five years, while Greensboro, North Carolina-based Tanger Factory Outlet Centers, the second-largest U.S. outlet owner, jumped 63 percent, making the most powerful of the regional shopping center Bloomberg. General Growth has fallen 49 percent in that time.

"For Simon and Tanger, the number of outlets and the profitability of the branches have increased significantly", Stephen Waters, a partner at Compass Advisers said in New York, the Tangier in its 2005 purchase recommended a portfolio of outlets Blackstone Group LP. "Sales per square meter for the best outlets are very high and compete with those in traditional shopping centers."

Other companies try to remove some of those sales. Santa Monica, Calif.-based Macerich Co., which was the company last year when it bought Fashion Outlets of Niagara, expanded the property and the construction of a second mode called Chicago stores will be opened in August 2013. Glimcher Realty Trust, in Columbus, Ohio, May announced a name change of its branches as "exit Collection", which will include the renovation of the shopping center Jersey Gardens in Elizabeth, New Jersey, and the rehabilitation of the SuperMall in Auburn, Washington

"Simon and Tanger leaders are very, very clear in this category," said Rich Moore, analyst at RBC Capital Markets in Solon, Ohio. You have the "majority of companies in the next five years," he said said.

For retailers, discount centers are a way to attract consumers to the recession. Nike, in Beaverton, Oregon, had 464 stores in operation in late May. The total reserves of 557 marks, according to its annual report

Michael Kors, their first store opened in 2005 in Woodbury, now 85 outlet stores, 168 against regular stores. Coach, the New York-based leather goods maker, plans to open at least 30 stores in North America in 2013, at least 20 of them factory outlets, said CEO Lew Frankfurt on 31 July teleconference results.

The request was the last weekend of the pixels in Seattle, where dozens queue outside the shop coach, whereupon obliged to shift the input. Workers distributed coupons for an additional 30 percent reduction in wait for those who join the crowd inside snap wallets and key chains.

"The reason why it is important to Simon, because it is important for retailers," Sheehan, an analyst Edward Jones, said the company made. "You want to meet the demand."