Simon Property Launches Simon Venture Group - Analyst Blog

In order to leverage on the growing opportunities of technology application in the retail sector, real estate investment trust (REIT) – Simon Property Group, Inc. SPG – launched Simon Venture Group. This new venture will make investments in retail innovation that are aimed at improving the shopping experience of customers.

Specifically, Simon Venture Group will target both direct and indirect strategic investment options. Investments will be made across stages, starting from early-stage to high-growth technology companies and involve Seed to Series C+ investments.

J. Skyler Fernandes will lead this new entity. Formerly, he was a partner of a multi-stage venture capital fund, Centripetal Capital Partners, and worked on retail, consumer Internet and high-tech with commercial applications.

We believe such the move will enable Simon Property Group to enhance its business, experience high yield from its investments and therefore ride on the growth trajectory going forward.

As a matter of fact, improving economy and growing consumer confidence set ground for growth of the retail sector. Therefore, this is an opportune moment for companies providing real estate support to the retail sector. Moreover, with competition intensifying from growth of e-commerce, product delivery to customers has become a major area of combat for the mall REITs.

Last year we witnessed retail REITs such as Simon Property Group, The Macerich Company MAC and General Growth Properties, Inc. GGP collaborating with Deliv to offer same-day delivery service to retailers. These companies are leveraging on their nationwide real estate properties – mall and retail outlets – and using these as distribution centers. With the stores already enjoying presence in the cities and within the vicinity of target customers, delivery of items can be speedy as well.

Simon Property currently has a Zacks Rank #2 (Buy). Investors interested in the real estate operations industry may also consider Federal Realty Investment Trust FRT, which has the same rank as Simon Property.