If it fails, will more people know about it? Yes. "If it works out, will more people know about it? Yes. "Is it going to receive far more focus and notice than our other investments? Absolutely," Sokolov told Business Insider. JCPenney has 67 locations in Simon's 207-property portfolio totaling millions of square feet. Still, a failure with JCPenney could saddle Simon with a glut of space at a moment when it will be hard to fill as record numbers of stores have folded or cut their footprints. "That's peanuts for them," said Floris van Dijkum, an analyst at Compass Point Research & Trading, adding that the company has about $7.5 billion in cash and a trove of assets worth tens of billions of dollars. One of the footnotes of the JCPenney's deal is that Simon Property Group will be plowing only $150 million of its own cash into the acquisition. Simon, through a spokesman, declined to directly comment for this article. "There's an opportunity to make a lot of money with a relatively small investment, if they're efficiently managed and they produce merchandise that people want to buy," said Rick Sokolov, a senior executive at Simon Property Group who has long been one of Simon's closest colleagues and confidantes. In buying JCPenney and other retailers, Simon has stressed that his company is snapping up storied brands at an opportune moment when their values have plummeted to just pennies on the dollar and that can be revived to reap big gains. They described a savvy, ultracompetitive CEO who so far has made prescient moves, steering his company into safer and forward-thinking investments as the US was reaching mall oversaturation.īut some also pointed to Simon's winner-take-all mentality and sharp elbows as a potential liability as he increasingly relies on partners and a more collaborative relationship with tenants. In the second quarter, just 57% of Simon Property Group's tenants paid rent and Simon told analysts he doubted he'd ever collect 20% of those unpaid millions.īusiness Insider spoke with more than a dozen people who know and have worked with Simon to learn more about the press-shy mall king and his career make-or-break moment. Mounting a turnaround of JCPenney, which has eluded a string of CEOs and the hedge-fund billionaire Bill Ackman, will test Simon's ability to juggle conflicting roles and his strategy to reinvigorate a mall business threatened by a torrent of bad news from changing consumer habits, to the rise of e-commerce, and, in recent months, a global pandemic. It's his largest push yet beyond owning malls into possessing the retail businesses that occupy them, a divide few owners have crossed. Simon, in partnership with another large landlord, Brookfield Property Group, is now set to acquire JCPenney's brand and operations, including 550 stores it owns or leases. "We've had a few screaming matches, including earlier today," a lawyer said in a Texas bankruptcy-court hearing. Negotiations would continue, and Simon would flash another hallmark of his hard-bargaining style: his infamous temper. "I think we just bought it," Salter recounted Simon telling him in a follow-up call. Whether it was a bluff or genuine retreat, the group of lenders holding $5 billion of debt against the department-store chain capitulated. Salter is the CEO of Authentic Brands Group, which controls several well-known brands and has teamed up with Simon to buy up bankrupt mall staples including Forever 21 and Brooks Brothers. "We would like to do it, but we're pushing too hard," one of the chief bidders, David Simon, chairman and CEO of the country's biggest mall owner, Simon Property Group, told his friend and business partner, Jamie Salter. Visit Business Insider's homepage for more stories.Ī week before a $1.75 billion deal would be announced to buy JCPenney, a rescue of the 118-year-old retailer seemed to be slipping away behind closed doors.Business Insider spoke with more than a dozen people who know and have worked with Simon to learn more about the press-shy mogul and his efforts to turn around a moribund retail industry.As the mall king relies on more partners and increasingly collaborative relationships with tenants, some observers point to his winner-take-all mentality and legendary temper as potential sticking points.Simon has for years reached beyond his core business, buying retailers that occupy his company's spaces and branching out into other areas like e-commerce in an effort to embrace change in the industry. In leading a partnership to buy the bankrupt department store JCPenney, Simon Property Group's chief executive David Simon faces a make-or-break moment whether he can reinvent and restore his multi-billion-dollar mall business.Account icon An icon in the shape of a person's head and shoulders.
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