Special purpose acquisition companies (SPACs) are the flavor of the month with investors and those wanting to take businesses public, and now Simon Property Group (NYSE:SPG) is getting in on the action.
The shopping mall operator filed with the Securities and Exchange Commission (SEC) a notice it was creating Simon Property Group Acquisition Holdings, a SPAC that will target "an industry that will benefit from the experience, expertise and operating skills of our management team."
Off on a new tangent
Simon Property Group is still contending with the retail apocalypse that bankrupted major chains and forced them to close stores. To keep its malls from experiencing vacancies, Simon began acquiring retailers out of bankruptcy, often in partnership with fellow mall operator Brookfield Asset Management (NYSE:BAM) and brand management firm Authentic Brands Group.
Among those acquired include J.C. Penney, Forever 21, and Aeropostale.
The SPAC is taking the mall operator into a whole new direction. The filing says it believes "this new pillar will support (Simon Property Group's) delivery of innovative solutions to elevate and reinvent shopping and transform retail."
Considering the state of the industry, a retail SPAC would seem risky, but data analytics firm Placer.ai has become a sector bull for malls after analyzing mall traffic data. The industry was overwhelmed by the COVID-19 pandemic but steadily improved throughout last year.
According to Placer.ai, the combination of early strength last year, a strong recovery after Black Friday, and the sector's ability to bounce back, even as traffic ended down 32%, "all reinforce the idea that 2021 could be much kinder to indoor malls than many expect."
A new business at "the intersection of retail and technology" could capitalize on that trend. The SPAC is planning to raise $300 million by selling 30 million units at $10 per unit.