Shortage of tenants for US department stores
The world's biggest mall operator, Simon Property Group, is bracing itself for the impact of consolidation in the US department store market. It owns about 167 stores that are due to close and analysts believe only about 40 per cent of these have tenants lined up to take the store space over.

Despite the uncertain outlook, Simon posted fourth-quarter funds from operations - a key operating measure for real estate investment funds - up 9 per cent to US$433.2 million (£247.9 million). Operating profits were up 7.5 per cent.

However, Simon, which owns 286 US properties, 51 European shopping centres, five outlet centres in Japan and one in Mexico, is facing a slowdown in consumer spending and weakening investor interest in yield-producing instruments, such as Real Estate Investment Trusts (Reits), as higher interest rates make safer government bonds more attractive.

Reits are a tax-efficient funding mechanism used widely in US retailing, and are to be introduced in the UK. However, the property industry this week called on the Government to delay their introduction over concerns on a number of rules, which many believe could ruin their appeal.

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