Simon Property Group Q2 2025 Earnings Report

Simon Property Group EPS Results

• Actual EPS: $3.05
• Consensus EPS: $3.04
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $2.90

Simon Property Group Revenue Results

• Actual Revenue: $1.50 billion
• Expected Revenue: $1.40 billion
• Beat/Miss: Beat by +$103.33 million
• YoY Revenue Growth: +13.90%

Simon Property Group Announcement Details

• Quarter: Q2 2025
• Date: 8/4/2025
• Time: After Market Closes
• Conference Call Date: Monday, August 4, 2025
• Conference Call Time: 5:00PM ET

Simon Property Group (NYSE:SPG) is a leading global real estate investment trust (REIT) specializing in the ownership, development and management of premier retail real estate. The company’s portfolio encompasses regional malls, premium outlet centers, The Mills® properties and community/lifestyle centers, offering a diversified mix of shopping, dining and entertainment venues. As a fully integrated owner-operator, Simon Property Group oversees leasing, marketing, property management and capital improvements to enhance tenant performance and consumer experience.

Established in 1960 by Melvin Simon and Herbert Simon, the company grew through strategic acquisitions and development projects, ultimately completing its initial public offering in 1993. Headquartered in Indianapolis, Indiana, Simon Property Group has expanded its footprint across the United States and into key international markets, including Canada, Europe and Asia. Its global platform allows the company to partner with leading national and international retailers and adapt to evolving consumer preferences, from flagship department stores to specialty and experiential brands.

Simon Property Group’s management team is led by Chairman and Chief Executive Officer David E. Simon, who has overseen the company’s continued growth and diversification. Under his leadership, the firm has pursued selective development opportunities and joint ventures, broadened its digital and omnichannel capabilities, and maintained a focus on community engagement and sustainability initiatives. Through its integrated operating model and industry expertise, Simon Property Group aims to deliver long-term value for tenants, shoppers and investors alike.

Simon Property Group Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Real estate FFO rose to $3.05 per share (4.1% YoY) with portfolio NOI up 4.7%, driving 8.6% growth in Q2 FFO to $3.15 per share.
• Positive Sentiment: Occupancy reached 96% at malls and outlets (up 40 bps YoY) and a record 99.3% at Mills (up 110 bps YoY), despite 1.8M sq ft of tenant bankruptcies.
• Positive Sentiment: Full-year FFO guidance was raised to $12.45–$12.65 per share (up $0.05 at the low end), and the Q3 dividend was increased 4.9% to $2.15 per share.
• Positive Sentiment: Simon acquired its partner’s interest in Brickell City Center for $512M and has $1B of developments underway at a 9% blended yield, focusing on mixed-use growth.
• Neutral Sentiment: Management flagged tariff and currency headwinds, but shopper traffic grew 1.5% and retail demand remained “unabated” through Q2.

Presentation

[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.

[Operator]

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

[Thomas Ward, SVP - IR at 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.

[Thomas Ward, SVP - IR at Simon Property Group]

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. I am pleased to introduce David Simon.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[Brian McDade, EVP & CFO at Simon Property Group]

Good evening, and thank you, David.

[Brian McDade, EVP & CFO at 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.

[Brian McDade, EVP & CFO at Simon Property Group]

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.

[Brian McDade, EVP & CFO at Simon Property Group]

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.

[Brian McDade, EVP & CFO at Simon Property Group]

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.

[Brian McDade, EVP & CFO at Simon Property Group]

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.

[Brian McDade, EVP & CFO at Simon Property Group]

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.

[Brian McDade, EVP & CFO at Simon Property Group]

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

[Operator]

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

[Jeffrey Spector, Managing Director at 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 & President at 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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[Jeffrey Spector, Managing Director at Bank of America]

Great. Thank you.

[David Simon, Chairman, CEO & President at Simon Property Group]

Sure.

[Operator]

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

[Michael Griffin, Director at Evercore]

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?

[Michael Griffin, Director at Evercore]

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 & President at 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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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

[Michael Griffin, Director at Evercore]

Great. Thank you.

[David Simon, Chairman, CEO & President at Simon Property Group]

Sure.

[Operator]

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

[Caitlin Szczupak, Vice President at 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 & President at 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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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

[Caitlin Szczupak, Vice President at Goldman Sachs]

Thanks for all that.

[David Simon, Chairman, CEO & President at Simon Property Group]

Sure.

[Operator]

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

[Alexander Goldfarb, MD & Senior Research Analyst at Piper Sandler Companies]

Hey, good afternoon out there, David. Just continuing on actually

[David Simon, Chairman, CEO & President at Simon Property Group]

in New York City. That's why I brought up the New York City comment.

[Alexander Goldfarb, MD & Senior Research Analyst at Piper Sandler Companies]

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.

[Alexander Goldfarb, MD & Senior Research Analyst at Piper Sandler Companies]

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 & President at 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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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, MD & Senior Research Analyst at Piper Sandler Companies]

No, I'm going to defer to others who want to ask. That was very thorough. Thank you, David.

[Brian McDade, EVP & CFO at Simon Property Group]

Brian, nothing that covered it.

[Operator]

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

[Craig Mailman, Director & Equity Research Analyst at Citigroup]

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.

[Craig Mailman, Director & Equity Research Analyst at Citigroup]

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 & President at 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?

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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, EVP & CFO at 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 the first six months. Occupancy is up, FFO is up.

[Brian McDade, EVP & CFO at Simon Property Group]

So I think we're cautiously optimistic to David's point for the balance of the year.

[Craig Mailman, Director & Equity Research Analyst at Citigroup]

Great. Thank you.

[Operator]

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

[Michael Goldsmith, US REITs Analyst at UBS Group]

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 & President at 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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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?

[Michael Goldsmith, US REITs Analyst at UBS Group]

Absolutely. Thank you very much.

[David Simon, Chairman, CEO & President at Simon Property Group]

Thank you. Our

[Operator]

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

[Floris van Dijkum, MD & Equity Research at Ladenburg Thalmann & Co. Inc]

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?

[Floris van Dijkum, MD & Equity Research at Ladenburg Thalmann & Co. Inc]

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, EVP & CFO at Simon Property Group]

So Floris, I'll start with the S and O. It's three forty basis points at the end of the quarter. As we think about and 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.

[Brian McDade, EVP & CFO at Simon Property Group]

And so there'll be more of that replacement of existing tenants with new tenants going forward.

[Brian McDade, EVP & CFO at Simon Property Group]

It's really going to drive the performance of the portfolio. It's across all of our 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 & President at 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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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

[Floris van Dijkum, MD & Equity Research at Ladenburg Thalmann & Co. Inc]

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 & President at 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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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

[Floris van Dijkum, MD & Equity Research at Ladenburg Thalmann & Co. Inc]

Thanks, David.

[David Simon, Chairman, CEO & President at Simon Property Group]

Thank you.

[Operator]

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

[Vince Tibone, Managing Director and Head of US Industrial & Mall Research at Green Street Advisors, LLC]

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 & President at 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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[Vince Tibone, Managing Director and Head of US Industrial & Mall Research at Green Street Advisors, LLC]

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 & President at Simon Property Group]

You can confirm. First of all, it's a related OpCo has 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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[Vince Tibone, Managing Director and Head of US Industrial & Mall Research at Green Street Advisors, LLC]

Great. Thank you. Appreciate all that color.

[David Simon, Chairman, CEO & President at Simon Property Group]

Thank you.

[Operator]

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

[Haendel St. Juste, MD & Senior REIT Analyst at Mizuho Financial Group]

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 & President at 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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[Operator]

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

[Ronald Kamdem, MD & Head - US REITs and CRE Research at Morgan Stanley]

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 & President at 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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[Ronald Kamdem, MD & Head - US REITs and CRE Research at Morgan Stanley]

Thanks so much.

[Operator]

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

[Linda Tsai, Senior Analyst at Jefferies]

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 & President at 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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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.

[David Simon, Chairman, CEO & President at Simon Property Group]

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

[Operator]

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

[Hong Zhang, Analyst at JP Morgan]

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 & President at 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 at JP Morgan]

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 & President at Simon Property Group]

I don't think it's going to affect Long Island. I think New York City, I'd be nervous about. Yeah, urban environment.

[David Simon, Chairman, CEO & President at 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 at JP Morgan]

Got it. Thank you.

[Operator]

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

[Omotayo Okusanya, Managing Director - Head of US REIT Research at Deutsche Bank]

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%.

[Omotayo Okusanya, Managing Director - Head of US REIT Research at Deutsche Bank]

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 & President at Simon Property Group]

finance. Yeah, that's a mortgage fee.

[Omotayo Okusanya, Managing Director - Head of US REIT Research at Deutsche Bank]

Yeah, the mortgage financing.

[David Simon, Chairman, CEO & President at 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, EVP & CFO at 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 & President at 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.

[Omotayo Okusanya, Managing Director - Head of US REIT Research at Deutsche Bank]

I hear you, David. Thank you.

[David Simon, Chairman, CEO & President at Simon Property Group]

Thank you.

[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 & President at 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.

[Operator]

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

Participants

Executives

• Thomas Ward, SVP - IR
• David Simon, Chairman, CEO & President
• Brian McDade, EVP & CFO

Analysts

• Jeffrey Spector, Managing Director at Bank of America
• Michael Griffin, Director at Evercore
• Caitlin Szczupak, Vice President at Goldman Sachs
• Alexander Goldfarb, MD & Senior Research Analyst at Piper Sandler Companies
• Craig Mailman, Director & Equity Research Analyst at Citigroup
• Michael Goldsmith, US REITs Analyst at UBS Group
• Floris van Dijkum, MD & Equity Research at Ladenburg Thalmann & Co. Inc
• Vince Tibone, Managing Director and Head of US Industrial & Mall Research at Green Street Advisors, LLC
• Haendel St. Juste, MD & Senior REIT Analyst at Mizuho Financial Group
• Ronald Kamdem, MD & Head - US REITs and CRE Research at Morgan Stanley
• Linda Tsai, Senior Analyst at Jefferies
• Hong Zhang, Analyst at JP Morgan
• Omotayo Okusanya, Managing Director - Head of US REIT Research at Deutsche Bank