Earnings call transcript: Simon Property Group Q2 2025 beats forecasts

Simon Property Group (SPG) reported its financial results for the second quarter of 2025, exceeding market expectations with an earnings per share (EPS) of $1.70 compared to the forecasted $1.55, marking a surprise of 9.68%. The company also reported revenue of $1.5 billion, surpassing the anticipated $1.38 billion, resulting in an 8.7% revenue surprise. Following the announcement, SPG’s stock rose 2.83% in after-hours trading, reflecting investor confidence in the company’s performance. According to InvestingPro, SPG maintains an impressive dividend yield of 5.12% and has maintained dividend payments for 32 consecutive years, demonstrating strong financial stability. The company’s overall financial health score is rated as "GOOD" by InvestingPro analysts.

Key Takeaways

• Simon Property Group exceeded EPS and revenue forecasts for Q2 2025.
• The stock price increased by 2.83% in after-hours trading.
• Occupancy rates for malls and outlets reached 96%.
• The company raised its full-year 2025 Real Estate FFO guidance.
• Ongoing development projects total $1 billion in net costs.

Company Performance

Simon Property Group demonstrated robust performance in Q2 2025, with a 4.1% growth in Real Estate Funds from Operations (FFO) per share, reaching $3.05. The company’s domestic property Net Operating Income (NOI) increased by 4.2% year-over-year, while the overall portfolio NOI grew by 4.7%. The company signed approximately 1,000 leases covering 3.6 million square feet, showcasing strong tenant demand. With a gross profit margin of 82.37% and return on equity of 73%, SPG continues to demonstrate operational excellence. For deeper insights into SPG’s financial metrics and exclusive analysis, consider exploring the comprehensive Pro Research Report available on InvestingPro.

Financial Highlights

• Revenue: $1.5 billion, up from the forecasted $1.38 billion.
• Earnings per share: $1.70, surpassing the forecast of $1.55.
• Real Estate FFO: $1.19 billion or $3.15 per share, reflecting an 8.6% growth.
• Mall and outlet occupancy: 96%, a 40 basis point increase year-over-year.

Earnings vs. Forecast

Simon Property Group’s actual EPS of $1.70 exceeded the forecasted $1.55, resulting in a 9.68% surprise. The company’s revenue of $1.5 billion also surpassed expectations by 8.7%. This performance indicates a positive trend compared to previous quarters, where the company has consistently met or exceeded market forecasts.

Market Reaction

Following the earnings announcement, SPG’s stock price increased by 2.83% in after-hours trading, closing at $161.68. This surge reflects the market’s positive sentiment towards the company’s strong financial performance and optimistic future guidance. The stock’s movement is significant as it approaches its 52-week high of $190.14, indicating investor confidence. Based on InvestingPro’s Fair Value analysis, SPG appears to be trading above its Fair Value, suggesting investors should carefully consider entry points. The platform offers 8 additional exclusive ProTips for SPG, helping investors make more informed decisions.

Outlook & Guidance

Simon Property Group raised its full-year 2025 Real Estate FFO guidance to between $12.45 and $12.65 per share. The company remains cautiously optimistic about the 2026 economic environment, anticipating a potential stabilization of tariff impacts. Ongoing development projects, including the full ownership acquisition of Brickell City Center, are expected to contribute to future growth. With an EBITDA of $4.45 billion in the last twelve months and a market capitalization of $61.67 billion, SPG maintains its position as a prominent player in the Retail REITs industry. Discover more detailed financial analysis and industry comparisons with a subscription to InvestingPro.

Executive Commentary

David Simon, CEO, emphasized the company’s strong retail demand and strategic acquisition approach, stating, "Retail demand is really unabated," and "Purchase price matters." He also highlighted the market’s mispricing of large enclosed shopping centers, reinforcing the company’s competitive position.

Risks and Challenges

• Economic uncertainty and tariff fluctuations could impact future performance.
• Limited international tourist impact may affect sales in border-adjacent assets.
• Geopolitical uncertainties could influence tenant demand and market conditions.

Q&A

During the earnings call, analysts inquired about the acquisition strategy for Brickell City Center and the potential impacts of geopolitical uncertainties. Executives addressed these concerns by highlighting the strong tenant demand and the resilience of shopping centers amidst ongoing economic challenges.

Full transcript - Simon Property Group (SPG) Q2 2025:

Conference Operator: Greetings. Welcome to Simon Property Group’s Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

It is now my pleasure to introduce Tom Ward, Senior Vice President, Investor Relations. Thank you, sir. You may begin.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group: Thank you, Sherry. Thank you for joining us this evening. Presenting on today’s call are David Simon, Chairman, Chief Executive Officer and President and Brian McDade, Chief Financial Officer. A quick reminder that statements made during this call may be deemed forward looking statements within the meaning of the Safe Harbor of the Private Securities Litigation Reform Act of 1995, and actual results may differ materially due to a variety of risks, uncertainties and other factors. We refer you to today’s press release and our SEC filings for a detailed discussion of the risk factors related to those forward looking statements.

Please note that this call includes information that may be accurate only as of today’s date. Reconciliations of non GAAP financial measures to the most directly comparable GAAP measures are included within the press release and the supplemental information in today’s Form eight ks filing. Both the press release and the supplemental information are available on our IR website at investors.simon.com. Our conference call this evening will be limited to one hour. For those who would like to participate in the question and answer session, we ask that you please respect your request to limit yourself to one question.

David Simon, Chairman, CEO and President, Simon Property Group: I am pleased to introduce David Simon. Good evening, everyone. Delivered robust financial and operational results yet again for the second quarter. Occupancy gains, increased shopper traffic, and higher retail sales volumes contributed to strong cash flow growth. We continue to enhance our retail real estate platforms through development, redevelopment, and acquisitions, including the purchase of our partner’s interest in Brickell City Center, a premier mixed use property in Miami and its rapidly growing central business district.

Our focus remains on creating long term value through disciplined investments and operational excellence that drive growth in cash flow, funds from operation, and dividends per share, which yet again we raised. I’m now going to turn it over to Brian, who will cover our second quarter results in more detail. Good evening, and thank you, David.

Brian McDade, Chief Financial Officer, Simon Property Group: Real estate FFO was $3.05 per share in the second quarter compared to $2.93 in the prior year, 4.1% growth. Domestic and international operations had a very good quarter and contributed $0.21 of growth, driven by a 5% increase in lease income. As anticipated, lower interest income and higher interest expense combined were a $07 drag year over year. Domestic property NOI increased 4.2% year over year for the quarter and 3.8% for the first half of the year. Portfolio NOI, which includes our international properties at constant currency, grew 4.7% for the quarter and 4.2% for the first half.

We signed approximately 1,000 leases for more than 3,600,000 square feet in the quarter, with approximately 30% of our leasing activity for the quarter on new deals. Nearly 90% of our leases expiring through 2025 are complete ahead of this time last year. The malls and premium outlets ended the second quarter at 96% occupancy, up 10 basis points sequentially and 40 basis points year over year. The mills achieved a record 99.3% occupancy, an increase of 90 basis points sequentially and 110 basis points from the prior year. Occupancy remained strong across the portfolio, overcoming retailer bankruptcies of approximately 1,800,000 square feet this quarter.

Average base minimum rent for the malls and outlets increased 1.3% year over year, and the mills increased 0.6%. Sales for malls and premium outlets per square foot were $736 for the quarter, and occupancy costs at the end of the quarter were 13.1%, flat sequentially from ’25. Second quarter funds from operation were $1,190,000,000 or $3.15 per share compared to $1,090,000,000 or $2.9 per share last year, 8.6% growth. Second quarter results include a $0.21 per share noncash after tax gain, primarily due to Catalyst Brands deconsolidation of Forever twenty one. In addition, better operational performance at Catalyst Brands compared to last year.

And lastly, adjustment on our exchangeable bonds due to the outperformance of Klepierre’s share price, which increased 8% during the second quarter. Now turning to development. At the end of the quarter, development projects were underway platforms with our share of net cost of $1,000,000,000 at a blended yield of 9%. Approximately 40% of net costs are for mixed use projects. As David mentioned, we acquired our partner’s interest in Brickell City Center.

Our $512,000,000 investment includes the retail and parking components as accretive. We now fully own and manage this highly productive center and look forward to enhancing operations with efficiencies in our leasing and management expertise to drive NOI growth. Turning to the balance sheet and liquidity. During the first half of the year, we completed 21 secondured loan transactions totaling approximately $3,800,000,000 The weighted average interest rate on these loans was 5.84%, and we ended the quarter with over $9,000,000,000 of liquidity. Turning to the dividend.

Today, we announced our dividend of $2.15 per share for the third quarter, a year over year increase of $0.10 or 4.9%. The dividend is payable September 30. Now moving on to guidance. We are increasing our full year 2025 real estate FFO guidance range to $12.45 to $12.65 per share compared to $12.24 last year. This is an increase of $05 at the bottom end of the range and $03 at the midpoint.

With that, thank you, and David and I are now available for your questions.

Conference Operator: Thank Our first question is from Jeff Spector with Bank of America. Please proceed.

Jeff Spector, Analyst, Bank of America: Great. Thank you. Given them first, I’ll keep it high level. Just given all the uncertainty, ICSE to today, I guess, you describe for us the leasing velocity you’re seeing, some of the demand maybe a peek into your last leasing meeting in terms of quantity, deal flow and quality of the deals, please? Thank you.

David Simon, Chairman, CEO and President, Simon Property Group: Unabated. So you’re right, Jeff, in the sense that the whole world and is uncertain. A lot of geopolitical stuff going on, obviously. A lot of domestic political stuff going on. New York City, thankfully, we’re not an investor in New York City.

But obviously, lot of political uncertainty in New York City. Tariff swings back and forth. Interest rate uncertainty. Can name it. However, you have unbelievable stewards that are us in particular that are able to manage that.

And in addition, retail demand is really unabated. And the physical shopping environment continues to be the place to be. So we’re quite bullish about what we’ve done, what we are doing, where we are going, despite all of the headlines that are out there. So unabated. And if you look at our 33 almost track record I guess not to segue, but to segue.

I kind of chuckle to myself in that some of our you read all these companies that are restructuring. Well, now they’re going to lease their properties better. Now they’re going to manage their balance sheet better. Now they’re going to bring in new management and be better. If you look at our particular little niche, we’ve had bankruptcies.

We’ve had people that have bought companies that have overpaid and had to restructure their operations. Wholesale management changes, restructuring of operations, this, that, and the other. There’s one group, one group that’s never done that. And that’s us. And all we’ve done is run our business appropriately.

And we’ll continue to do so. And it’s something that I think investors and analysts in particular, Jeff, should point that out. You’ve never read about a Simon Property Group restructuring. Yes, we had to do some certain drastic things to deal with COVID and to deal with the great financial crisis. But there’s been no restructuring of this company, only things that have benefited shareholders.

So the headline risks are out there. They’re real. The tenant demand is unavaded. Traffic’s up. Sales are holding their own.

And our properties are continuing to get better.

Hong Zhang, Analyst, JPMorgan: Great. Thank you.

David Simon, Chairman, CEO and President, Simon Property Group: Sure.

Conference Operator: Our next question is from Michael Griffin with Evercore ISI. Please proceed.

Michael Griffin, Analyst, Evercore ISI: Great. Thanks. Maybe just diving into that tenant demand piece a bit more. Probably seems like the national retailers and concepts have a greater footing or clarity around their real estate footprint needs. But for maybe some of those smaller tenants, maybe those mom and pop local concepts, are you still seeing strong demand from those as well?

David, you touched about kind of across the board demand, but just curious if you can kind of bifurcate those two pieces. Thank you.

David Simon, Chairman, CEO and President, Simon Property Group: Yeah. Yeah, you’re right. Last quarter, I did express my concern about that segment given how tariffs might affect them and their cost of goods. But they’re beating their plans so far this year. So it’s all systems go there.

I’m sure there’s trepidation, but I think they’re managing it as best they can. I still think the full story, obviously, the volatility has not been written. But we’re not seeing it in demand. And that particular business that is sensitive to monitor tops continues to perform well. We’re more optimistic about that segment than I was last quarter.

But like I said, it is something that we’re watching closely.

Michael Griffin, Analyst, Evercore ISI: Great. Thank you.

David Simon, Chairman, CEO and President, Simon Property Group: Sure.

Conference Operator: Our next question is from Caitlin Burrows with Goldman Sachs. Please proceed.

Caitlin Burrows, Analyst, Goldman Sachs: Hi, thanks. Maybe just on the acquisition side, you guys were active in the first half with acquisitions, which was exciting to see. So I was wondering if you could talk a little bit more about the upside you see at Brickell and then more broadly to what extent other acquisition opportunities seem to exist for Simon today, either from JV partners or otherwise?

David Simon, Chairman, CEO and President, Simon Property Group: Sure. Well, Brittle is a really good asset that long term will be great. Miami, I’m sure you’re familiar with it. We’re in the Central Business District. There’s no real retail that can be built in that.

Because of the traffic of Miami, it’s kind of its own submarket. And even though there’s a lot of retail generally in Miami, just because of the traffic and the population density and the tourism, it is really you can have a number of properties that flourish. And Central Business District, you see what Citadel is doing there. I still think you’ll see a continuation of New York and Chicago companies moving there. So the job prospects are great.

And Brinkley in itself feels and attracts a lot of international customers and tourism. It’s got the hotels. It’s got the nightlife. And we just think the asset’s going to get better and better. And there will be more development around it that will continue to fuel its growth.

And we bought it on a very accretive basis. We bought it at a higher cap rate than the strip centers that are being sold today. Strip centers that are subject to probably easier competition, easier to build. And Brickell, we bought it at below its replacement cost by far. It hasn’t even had its first rollovers of rents.

And again, I think we’ll do now this is our core business, So I think we’ll do better leasing and managing the assets. So we’re very excited about Brickell as we are with them all. And we’re working on a few other things that we’re able to do. And I mentioned this before. We’re working on some other interesting things that we’re able to do because we’ve never gone through a restructuring.

Oh, great. It’s great to buy them all because you haven’t bought anything in a decade. Well, that’s never been us. And so we’ll keep finding opportunities where we can grow our platform. But we’re going to be picky on what we buy and what we want to do.

But we’re able to do it because this company doesn’t need to sell a bunch of assets, doesn’t need to bring in a new management team, doesn’t need to downsize its platform. Doesn’t need to do it because it’s outperformed over a thirty plus year period that no one else has done. So we’re hopeful that a couple more things will get announced this year. They’ll be accretive. They’ll add to our platform.

And that we’ll be able to manage them better so we’ll be able to grow our cash flow.

Conference Operator: Thanks for all that.

David Simon, Chairman, CEO and President, Simon Property Group: Sure.

Conference Operator: Our next question is from Alexander Goldfarb with Piper Sandler. Please proceed.

Alexander Goldfarb, Analyst, Piper Sandler: Hey, good afternoon out there, David. Just continuing on actually

David Simon, Chairman, CEO and President, Simon Property Group: in New York City. That’s why I brought up the New York City comment.

Alexander Goldfarb, Analyst, Piper Sandler: Okay. Well, then you’re just down the train line from us here in Greenwich. So hopefully, you’re enjoying in the city. So a question, just following up on Caitlin’s question on externals. For quite a long time, you’ve been reiterating to us that you see more investment potential in your existing portfolio versus externally.

So if Tom will forgive me for a two parter. One, what is the return threshold, the gap that you need when you go externally versus ability to reinvest internally in your existing? And two, it does seem like we’re on the cusp of a mall transaction wave where capital is starting to flow back to malls across the spectrum. And just sort of curious if in your view, is going to set up like a repeat that we had in the, I guess, late 1990s, early 2000s when there were suddenly within a few years this massive mall trade. So wondering if you’re foreseeing that.

So that’s my two parter. Forgive me, Tom.

David Simon, Chairman, CEO and President, Simon Property Group: Well, you don’t have to ask for forgiveness from Tom. He’s a very nice man. We’ll give you a free pass, Alex. So look, I think a lot goes into acquisitions. And it’s not an eitheror thing.

I think we have, as you know, Alex, the balance sheet and the firepower to do both. And the development process, I. E, or the redevelopment process takes years to do. So take Bray and it was under buy the Sears store. We had to get approvals.

We had to build now we’re about to start on the multifamily. That’s over a three year process. So it’s not like suddenly the money just goes out day one. So we’ve never had this dilemma that you’re suggesting where it’s an eitheror. And I think from a math point of view, we look at it kind of the similar basis.

Are we buying it when we’re redeveloping or developing, are we creating net asset value. So if it’s a mall, is the redevelopment yield higher than where that asset might trade? And what does it do to the overall assets growth rate of cash flow? A lot goes into that, but that’s the basics. Then on an acquisition, it’s a little bit of the same thing with our expertise.

What does it do for the platform? Does it deepen our relationships with the retailers? Are we buying it under replacement costs? And when we look back, will it be accretive to NAV? So you have to take a little bit longer term view on that.

But it has not created this situation where we can’t do both. And so our goal is to continue to do both and to push to do both. And the reason we haven’t done as many acquisitions is we really have been product and price sensitive. And we’ll continue to be product and price sensitive because we can’t create NAV without focusing on the product and the price sensitivity. So I’m on the board of Apollo.

And not to quote Mark Rowan, but I’ll go ahead and quote him. Purchase price matters. So it does. And we’re very focused on that. So rest assured, when we buy something, we bet at the price, really bet So at the going to your next thing, I’m not sure about whether there’s going to be huge mall transactions.

I think you’ll have other players come in buying, maybe not necessarily quote A properties, but a lot of Bs. Because the reality is you can make you’re stable and you can create a nice arbitrage and manage them and lease them and improve them. And they’re a lot stickier than people believe because most malls Alex, I hate to break it to you but most enclosed malls are 30 to 50 years old. And yet, despite the media, the naysayers, they’ve and that’s not to say there hasn’t been a significant amount of obsolescence. But most of them are here today still fighting pretty good battle and despite a lot of things not going their way.

So I think there’ll be more trades, but I’m not sure it’ll just be this huge wave of transactions. Brian, you can weigh in if you want. But that’s kind of just some random rambling thoughts, Alex. You can comment. I will let Tom give you another pass.

You can comment on my comments while Brian is contemplating whether he will want to add anything to it. So your turn first, Alex.

Alexander Goldfarb, Analyst, Piper Sandler: No, I’m going to defer to others who want to ask. That was very thorough. Thank you, David.

Brian McDade, Chief Financial Officer, Simon Property Group: Brian, nothing that covered it.

Conference Operator: Our next question is from Craig Mailman with Citi. Please proceed.

Craig Mailman, Analyst, Citi: Hey, guys. Good evening. Wanted to maybe circle back on some of the themes of the earlier questions, David, just a lot happened in the last ninety days and last quarter. Your message was a little bit more realistic, I think, in the face of uncertainty. And Brian kind of focused us to the midpoint of guidance.

Fast forward ninety days, maybe there’s been a little bit less fallout than would have expected. You guys raised the low end. Would you still kind of point us to that midpoint of guidance? Maybe update us your views today of how you’re feeling about the macro? And are you concerned about any lingering effect of policy or geopolitical happenings kind of weighing on 2026 growth?

David Simon, Chairman, CEO and President, Simon Property Group: Well, I’ll let Brian kind of be less verbose than I was with Alex. I will say unquestionably, even though we raised the bottom end I mean, we’re still very cautious about the economic environment. We have to be, right? I mean, terrorists are a real cost to doing business. And they’re changing consistently, right?

The only consistent thing about tariffs is that they’ve been consistently changing, right? And it’s a cost to do business. Now ultimately, who pays that cost? Is it the consumer? First of all, it’s the domestic company that imports.

So they start with the cost payment. You can see it by Ford and a number of other companies. So it’s going to cost me $800,000,000 or $1,000,000,000 And then the next question is, can the suppliers chip in and then ultimately the consumer? And I think most companies are working that next step or two through. So in that scenario, is hard for us not to be cautious.

And obviously, from just pure retail, are they going to be more cautious on buying than they might not otherwise be for tariffs? At the same time, The US economic landscape looks I I don’t have to tell you how much money and capital is planning to be spent in The US. That’s a huge driver of GDP. I don’t think it will be all that’s out there, all that’s announced, but there’s going to be a huge driver of GDP growth, The ultimate ramifications of those investments are uncertain, but that’s several years down the road, I believe. So we’re optimistic about the growth profile of The US.

But there’s a lot of variabilities that all companies are dealing with. So again, I said I wouldn’t be long winded. It turns out that I was. So I think the bottom line is we’re being a little more cautious. I think ’26 actually, to me, might feel better only because by then you’ll know the tariffs.

The tariffs could be a one time cost. That time between the suppliers and the vendors or the importers, You’ve kind of figured out who’s going to pay for it. And it’ll surface, and then you’ll be able to go forward and operate the business. So I don’t think ’twenty six will have this kind of volatility from the tariff scenario. And it actually could look better.

Brian?

Brian McDade, Chief Financial Officer, Simon Property Group: Craig, I guess all I would add to that is as you look at kind of what we did for guidance, certainly looking back at our history, it is not we traditionally will bring up the bottom end of our range at this point in the year after seeing

David Simon, Chairman, CEO and President, Simon Property Group: the first six months. Occupancy is up, FFO is up.

Brian McDade, Chief Financial Officer, Simon Property Group: So I think we’re cautiously optimistic to David’s point for the balance of the year.

Craig Mailman, Analyst, Citi: Great. Thank you.

Conference Operator: Our next question is from Michael Goldsmith with UBS. Please proceed.

Craig Mailman, Analyst, Citi: Good afternoon. Thanks all for taking my question. David, I think you’ve mentioned increased shopper traffic on the call twice now. So are you able to quantify what you’re seeing? And is there any difference in the traffic growth between mall and outlet or any other way that you can segregate it with the goal of trying to understand if the consumer is if there’s any trends for the consumer at different price points?

David Simon, Chairman, CEO and President, Simon Property Group: Yeah. Our traffic is up 1.5%. So that’s the number. I would still we’re not operating on all cylinders. And where we see a little bit of sales and traffic weakness are border these assets are still great, so don’t get me wrong.

But generally, they provide pretty healthy sales growth. And right now, they’re relatively flat. But I would say the softness, at least based upon historical results, has been assets on and it doesn’t really matter whether it’s an outlet or a full price mall, but it’s assets that are on the border, north or south. Okay, it’s almost irrelevant whether it’s Canadian border or the Mexican border. And so from a sales and traffic point of view, we’re not hitting it on all cylinders because that freedom of going back and forth to shop or whatever is restricted.

And I would also say we’re not seeing the benefit that normally you might see from a weaker US dollar vis a vis the euro or certain other currencies as the international tourist is not growing or flatlining in terms of people the way you might see historically. So those kind of tourist oriented centers are not again, they’re great centers. So they have a high bar to achieve. But they’re not I’m hopefully being articulate, but they’re not outperforming like they always do for us. We’re kind of in line.

So therefore, we’re not, in my opinion, not performing at the highest level because those great properties, border North South tourism, are operating within the normal portfolio performance. Make sense? You understand what I’m saying?

Craig Mailman, Analyst, Citi: Absolutely. Thank you very much.

David Simon, Chairman, CEO and President, Simon Property Group: Thank you. Our

Conference Operator: next question is from Floris Van Dijkum with Ladenburg Thalmann. Please proceed.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group0: Hey, David. Thanks for taking the question. David, maybe if you could comment on last I think last quarter I asked about your S and O pipeline of being around 300 basis points. And as I look at your portfolio, your Mills assets are 99.3% leased or something like that. Is this getting to be the new normal on the supply constrained market?

I did notice your TRG assets saw a drop, but the rents were up markedly. Maybe if you can talk a little bit about where the greatest growth potential is in your view between the various segments of your portfolio? If you could maybe expand on that and then maybe talk update on the S and O pipeline as well, please.

Brian McDade, Chief Financial Officer, Simon Property Group: So Floris, I’ll start with the S and O. It’s three forty basis points at the end of

David Simon, Chairman, CEO and President, Simon Property Group: the quarter. As we think about and

Brian McDade, Chief Financial Officer, Simon Property Group: you’ve heard us talk about occupancy, it’s the optimization of that occupancy is where we’re kind of at in the quake cycle now. So it’s really finding merchandise mix and finding tenants that make the properties better.

David Simon, Chairman, CEO and President, Simon Property Group: And so there’ll be more of that replacement of existing tenants with new tenants going forward.

Brian McDade, Chief Financial Officer, Simon Property Group: It’s really going to drive the performance of the portfolio.

David Simon, Chairman, CEO and President, Simon Property Group: It’s across all of our

Brian McDade, Chief Financial Officer, Simon Property Group: asset classes. So the mill is still even in a high occupancy. The tenant demand is still strong, and we’re able to replace underperforming tenants. And I think you can say the same across the outlet in the mill businesses I mean, excuse me, the outlet in the mall businesses as well.

David Simon, Chairman, CEO and President, Simon Property Group: Yeah. And Talbot, TRG, no real it’s a smaller portfolio, so swing here and there has a bigger impact. Couple of Forever twenty one. So as Brian mentioned in the text, we lost 1.8 square feet in bankruptcy. 1.7 of that was Forever ’twenty one.

That has a bigger impact on a smaller portfolio. And that’s really what transpired at the TRG level.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group0: And in terms of occupancy, is 99 your goal now internally? Do you think you can get back to the other platforms as well?

David Simon, Chairman, CEO and President, Simon Property Group: I want every space reached out with the highest productive tenant. I think it’s an interesting tidbit, 99.3%. I don’t get excited about it one way or another. Our next quarter, it could be 99.5 or it could be 99.1. I think it’s neither here nor there.

Okay? The team’s doing a good job, though. I’ll give them a pat on the back.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group0: Thanks, David.

David Simon, Chairman, CEO and President, Simon Property Group: Thank you.

Conference Operator: Our next question is from Vince Tebow with Green Street Capital Markets. Please proceed.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group1: Hi, good afternoon. I was a bit surprised Simon was not more active acquiring JCPenney boxes from Copper Property Trust. Just big picture, can you discuss how you’re currently thinking about the importance of owning and controlling additional anchor boxes at your centers and how your appetite to acquire these may vary based on center quality, near term redevelopment prospects? Just love to pick your brain on that topic.

David Simon, Chairman, CEO and President, Simon Property Group: Yeah, well, again, this is complicated matters, so I’m not going to talk about it specifically. But it’s really up to catalyst. We don’t have any particular right to buy it. It’s really up to catalyst to mayor has a right to buy it. I’m not going to really get into that scenario.

What happens. We’ve been very active on buying boxes and redeveloping our centers. I think everybody knows that. But as I said earlier, purchase price matters. And we are very focused on paying the right price on any given particular scenario.

But again, you’ve got to be careful Vince going from what PropCo is selling to Simon Property Group. There’s a company called Catalyst that operates those stores. We’re a shareholder in it. And it’s a complex matter. And beyond that, other than to say, we’ve been very active in buying boxes since all the various restrictions that have not been going on.

But we’re going to pay the right price.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group1: Now that just maybe to summarize and confirm, is it kind of fair to summarize that it seems like there’s probably more complexities in this structure versus this is not an indication that Simon is less interested in buying anchor boxes or the appetite has changed. I mean, that’s kind of what I’ve read through. But I just want to kind of confirm that’s a fair categorization.

David Simon, Chairman, CEO and President, Simon Property Group: You can confirm. First of all,

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group0: it’s a related OpCo has

David Simon, Chairman, CEO and President, Simon Property Group: a relationship with Onco, which is We have no relationship. We signed the property group. Has no relationship with PropCo. None. So we have a relationship with cannabis because they’re in some cases, they’re a tenant to us.

In some cases, they’re not attendant to us. But they operate a JCPenney store in our malls. So you can’t go from whatever the name of that Copper retail. Copper retail to Simon Property. You can’t make that link and say, oh, Simon’s not interested in the boxes.

Would I be interested in all the boxes? No, not necessarily. Would I be interested in the Simon boxes? Potentially, sure. But then I would fall back and want the right prices.

You follow what I’m saying, Vince? You can’t go from there to Simon Property Group. There’s a step function in But the simple answer to your question is, not read you’re right. Do not read any intent from Simon Property Group due to that transaction. And we’ll see if it even closes.

Deals get announced, but they don’t close. Tariffs get announced, they don’t close. Let’s see what closes when and how, and we’ll take it from there.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group1: Great. Thank you. Appreciate all that color.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group: Thank you.

Conference Operator: Our next question is from Haendel Seat Just with Mizuho Securities. Please proceed.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group2: Hey, good evening out there. David, I guess I was intrigued by your commentary earlier that the cap rate for the particular asset was higher than recent open air strip asset cap rates. So I guess I’m curious if that’s more of a unique dynamic to this transaction because you were, I guess, the only logical bidder here or perhaps you have some additional color or thoughts you’d to share on the asset pricing for top quality models versus quality Open Air? And then any thoughts on what you see is the long term opportunity either from a mark to market or densification opportunity at Brickell? Thank you.

David Simon, Chairman, CEO and President, Simon Property Group: Yeah, I just think we’re great at finding opportunities. And we don’t participate rarely do we participate in auctions. Auctions get when our friends at Eastville or what are some of the other programs? When they run a process, man, they’re going to find usually, it’s pretty tough. We like to find opportunities.

And I have all the respect in the world for those guys who are doing their job. But we like to figure out how to do it without that. And I think the market does not recognize the value of something like Brickell. Brickell should have been sold at an auction at a higher price than what we paid. But the market is mispriced when it comes to high quality.

Brickell’s not even closed by age, structure, imagination. If the market misprices big retail in this case, it has a roof, has a moving roof, it’s got all sorts of stuff to it. But the market misprices, which is good for us because we can take advantage of it. And I’m letting the cat out of the bag, which is probably pretty stupid. But the market absolutely, unequivocally misprices big enclosed shopping centers.

Because if you look at the cash flow growth and the longevity, forget about But that’s fine with us, and it’s good for us.

Conference Operator: Our next question is from Ron Camden with Morgan Stanley. Please proceed.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group3: Hey, just coming back to domestic property NOI, I see 3.8% year to date. I think you talked about at least 3% for the year And then you made some interesting comments about how whether it’s tariff or the strong dollar may be holding back some of the centers. Just wondering if you could just comment on how you guys see that shaping for the rest of the year? And if there’s any way to quantify what sort of this headwind is doing to that number so we get a sense what a true run rate can be? Thanks.

David Simon, Chairman, CEO and President, Simon Property Group: Yeah, look, we’re outperforming our year to date even with the volatility of the tariffs that were announced in April, the consumer is holding on. We don’t update our guidance for content OI. There’s a lot that goes into it. But we’re very confident we’re going to beat that number and have a very strong year. And like I said, I think we see demand continues unabated.

Sales is always a little bit out of our control. But we’ll to see how that evolves. And we’re seeing pretty good sales results even up to today and pretty good back to school season. So we’ll see how the rest of this shakes out.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group3: Thanks so much.

Conference Operator: Sure. Our next question is from Linda Tassai with Jefferies. Please proceed.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group4: Hi. I think it was in response to Alex’s question earlier, you were discussing acquisitions in the context of deepening relationships with retailers. What are some of examples of this? Because I would think that you have a lot of negotiating power with the majority of retailers.

David Simon, Chairman, CEO and President, Simon Property Group: Well, really I mean, retailers have all the power because they can go across the street or close the store or go online, leave the market. But the more product you have available to them, the better the relationship. So it’s just a commercial relationship. IBM sells if Microsoft sells Outlook to a big company, they’re going to be able to sell a lot of products to that company. So it’s no different.

If we could talk about 20 things as opposed to three things, it just means we’ll have a longer meeting. And maybe and if they have confidence in our ability to deliver a good product, maybe we’ll have 21 things. But don’t kid yourself. These retailers have all the leverage because they can close stores and go across the street or leave the market or do their business online. We’re the one begging for the new business.

So I just think the more product you have, the better you are and the more likely you are to have more senior focus from that retailer, just like if you’re selling widgets. If have a bigger portfolio, you’re able to spend more time with the customer. That’s just commercial common sense. They have faith in our ability to deliver a good product and have confidence that we’ll operate the center appropriately. And that’s why we’re able to do a lot of repeat business.

There’s nothing more to that than that. But believe it, they got the leverage because they don’t have to operate the store.

Conference Operator: Thank you. Our next question is from Hong Zhang with JPMorgan. Please proceed.

Hong Zhang, Analyst, JPMorgan: Yeah. Hey, David. I mean, you’ve talked about how you expect Brickell to be great because people are moving from New York and Chicago over to the area. I guess, have you seen the opposite impact in your New York centers, say, Westchester or Roosevelt Field?

David Simon, Chairman, CEO and President, Simon Property Group: Well, first of all, Brickell is really, really good. This is not a troubled asset, right? So I just want make sure you understand that. Your second part?

Hong Zhang, Analyst, JPMorgan: I guess are you seeing a negative impact in your New York assets like Roosevelt Field and Westchester, if people are migrating outside of New York?

David Simon, Chairman, CEO and President, Simon Property Group: I don’t think it’s going to affect Long Island. I think New York City, I’d be nervous about.

Alexander Goldfarb, Analyst, Piper Sandler: Yeah, urban environment.

David Simon, Chairman, CEO and President, Simon Property Group: Yeah. I mean, do there’s a lot great stuff in New York City. But I think the suburbs by the way, we’ve seen the suburbs have a Renaissance primarily due to COVID. I think that the suburbs of New York City and suburban New Jersey, Jersey City, Long Island, Westchester County, all could benefit depending on what happens with the city. So I don’t know if it’s a New York issue.

Think it’s more of a New York City issue.

Hong Zhang, Analyst, JPMorgan: Got it. Thank you.

Conference Operator: Our next question is from Teo Okusanya with Deutsche Bank. Please proceed.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group5: Hi, yes. Good evening. I am curious about the secured loan transactions this quarter. Again, you guys have an A minus credit. A lot of your peers are kind of doing unsecured around 5%.

Curious why you guys decided the best thing to do was the secured loans at 5.84%. I don’t know whether that’s a duration change. Mortgage

David Simon, Chairman, CEO and President, Simon Property Group: finance. Yeah, that’s a mortgage fee.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group5: Yeah, the mortgage financing.

David Simon, Chairman, CEO and President, Simon Property Group: Yeah, it’s for the JV partner. So we wouldn’t want to use our balance sheet for a JV partner.

Brian McDade, Chief Financial Officer, Simon Property Group: I mean, ten year unsecured debt for us today is right around 5%. So on the unsecured market, we’re right on top of the market where others are issuing.

David Simon, Chairman, CEO and President, Simon Property Group: It should be I agree it should be 4%, by the way. I agree with President Trump. Interest rates should be lower.

Tom Ward, Senior Vice President, Investor Relations, Simon Property Group5: I hear you, David. Thank you.

David Simon, Chairman, CEO and President, Simon Property Group: Thank you.

Conference Operator: We have reached the end of our question and answer session. I would like to turn the floor back over to Chairman Dave Simon for closing remarks.

David Simon, Chairman, CEO and President, Simon Property Group: All right. Thank you. Hope you enjoyed our call. And I know Tom and Brian are available for all of us. Thank you.

Thank you.

Conference Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time and thank you for your participation.

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