- Simon Property Group is re-leasing more than 1 million square feet vacated by Saks Fifth Avenue at rents 144% above what the bankrupt retailer had been paying.
- The REIT projects replacing $18M in annual Saks base rents with $44M from new tenants — adding roughly $26M in net operating income as leases are executed and tenants open.
- The re-leasing spread signals that Saks’ Chapter 11 exit may be unlocking value for Class A mall landlords by clearing anchor rents that had been below market for years.
Simon Property Group is turning one of the retail sector’s most prominent bankruptcies into a leasing windfall, as reported by Bisnow. The REIT expects to convert the $18 million in annual rent it lost from Saks Global’s Chapter 11 filing into $44 million — a 144% increase — by re-leasing the 1 million square feet vacated across its mall portfolio. “We’ll basically take the $18M and turn it into $44M,” CEO Eli Simon told analysts on the Q2 2026 earnings call.
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How Saks Arrived Here
Saks Global filed for bankruptcy in mid-January 2026 after failing to service debt taken on during its $2.7 billion acquisition of Neiman Marcus in 2024. The conglomerate took on $2 billion in debt and missed a $100 million debt service payment in December. It exited bankruptcy in June under a new name — Exemplar Luxury Group — having reduced its debt by nearly 75% and cut its store count by two-thirds, from roughly 150 locations to 49.
The Details
Simon has already leased roughly half of the 1 million square feet vacated by Saks and has recovered more than the $18 million it was collecting annually before the closures. Initial base rent from new leases rose 17% year-over-year through the second quarter, per Simon’s Q2 2026 earnings report. The remaining space is under active discussion and near final deals, Simon told analysts. The re-leasing math — $18 million becoming $44 million — reflects both the strength of Simon’s mall portfolio and the degree to which Saks was a below-market tenant.
A Tale of Two Segments
Not all of Simon’s retail-related exposure is performing as well. The REIT’s retail investment segment — which includes stakes in Catalyst Brands and e-commerce company Rue Gilt Groupe — recorded a nearly $53 million net operating loss in the first half of 2026. Net operating income from that segment dropped 24% in Q2 to $31.8 million, a reminder that owning equity stakes in struggling retailers carries a fundamentally different risk profile than owning the real estate beneath them.
Why It Matters
The Saks re-leasing outcome reinforces a dynamic that has reshaped the mall REIT investment thesis over the past several years: vacancy from struggling legacy anchors is often an opportunity for premium landlords to rotate into higher-rent, more relevant tenants. Simon’s ability to achieve a 144% rent increase on 1 million square feet of anchor space underscores the gap between in-place rents on legacy leases and what the market will now bear. For mall REITs with weaker credit tenants on long-term below-market leases, forced turnover is not necessarily bad news.
What’s Next
Simon expects to complete re-leasing on the remaining Saks-vacated space shortly, based on the CEO’s characterization of deals as near final. The broader question is whether the re-leasing premium holds as new tenants cycle into the space — and whether Exemplar Luxury Group’s significantly reduced footprint stabilizes or continues to contract, creating further vacancy events for Simon and other premium mall operators.
