Simon Property Swaps Eddie Bauer for Larger Stake in Authentic Brands Group

Simon Property has traded Eddie Bauer for a bigger piece of Authentic Brands.

The CEO of America’s largest mall owner made the announcement Monday (Feb. 6) as the company released its quarterly earnings.

Those earnings saw “a net gain of $0.25 per share, principally from the sale of our interest in the Eddie Bauer licensing [joint venture] in exchange for additional equity ownership in Authentic Brands Group,” David Simon said during the company’s earnings call.

That means Simon Property now owns 12% of Authentic Brands Group (ABG), valued at roughly $1.5 billion, Simon said.

Eddie Bauer, a century-old outdoor sportswear seller, joined the stable of retail brands owned by SPARC Group in 2021. SPARC is a joint venture between Simon and ABG, and it includes brands such as Reebok, Nautica, Forever 21 and Lucky.

Last year, ABG purchased U.K. fashion brand Ted Baker in a deal valuing the firm at a highly discounted $253 million.

It also owns a majority stake in David Beckman’s DB Ventures, which controls the rights to the British soccer star and celebrities that include Elvis and Shaquille O’Neal.

During the earnings call, Simon was asked if the company had plans to invest in new retailers that might be struggling.

“If we do, it will be opportunistically,” he said, noting that most of the company’s work has been “on the bankruptcy front or where somebody wanted to unload a business.”

In general, he said, “there’s not a lot of distress in retail right now. I’m not saying it won’t develop in the year. But there are some brands out there that are in trouble that obviously people know about. But we don’t see playing in any of those situations.”

During an earnings call last year, the company said its so-called Other Platform Investments (OPIs) were performing well, with its efforts to revive struggling brands proving to be a lucrative part of its business.

Simon noted Monday, however, that the company’s gains during the quarter, driven chiefly by higher rental income and lowered operating expenses, were offset somewhat by a lower contribution from its OPIs.

“2021 was a great year for our retailers,” he said. “However, in 2022, Forever 21 and JCPenney were affected by inflationary pressures, and consumers reducing their spend.”

Later in the call, Simon said he was optimistic about 2023, noting that he routinely asks leasing agents about a drop in demand.

“It’s not really happened,” he said. “So, we feel good about that. Demand continues to be generally very strong.”

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