America’s Biggest Mall Owner Reportedly Furloughs Nearly a Third of Its Workforce
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Simon Property Group is reportedly furloughing nearly a third of its workforce, as the impact of the coronavirus spreads from retailers to mall owners.
According to a CNBC report, the company has made the decision to furlough 30% of its full- and part-time employees at its headquarters in Indianapolis as well as at its malls and outlet centers across the United States. It also reported that some workers were laid off, but an exact number was not given.
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CEO David Simon will reportedly take a full pay cut during the pandemic, while “upper-level managers” will see their salaries reduced up to 30%.
Simon Property Group has not responded to FN’s request for comment.
In its latest annual filing, as of Dec. 31, the company employed about 4,500 workers. Of those 1,500 were part-time and 1,000 were based at its Indianapolis headquarters.
If confirmed, Simon would become the largest commercial real estate player in the retail sector to announce furloughs, potentially spelling trouble for the future of American malls, which had already been struggling to attract shoppers in an increasingly digital landscape.
According to Cowen Inc. data, foot traffic in stores for the week ended Friday, March 13, was down 30.7% year over year — and that was before the widespread temporary closures of fashion, footwear and other “nonessential” retail stores across the country.
On March 18, Simon announced that it was shuttering all of its locations through at least the end of the March. It has already extended its $6 billion revolving credit facility and term loan, providing the company with additional liquidity and financial flexibility during the health crisis. The temporary shutdowns have led analysts to predict that retail tenants would ask for either reduced rents or deferred payments, which could hit mall owners’ balance sheets even harder.
“I think [this situation] will continue for a while, and all retail stores will be at risk, including malls,” HRC Retail Advisory president Farla Efros told FN last week. “The ones that are on the bubble will suffer the most.”
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