Q2 2024 Simon Property Group Inc Earnings Call

Speaker Change: Greetings. Welcome to Simon Property Group's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Operator: At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Tom Ward, Senior Vice President of Investor Relations. Thank you. You may begin.

Tom Ward: Thank you, Shuri. And thank you all 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 1985, and actual results may differ materially due to a variety of risks, uncertainties, and other factors.

Speaker Change: Please note this conference is being recorded. I will now turn the conference over to Tom Ward, Senior Vice President of Investor Relations. Thank you. You may begin.

Speaker Change: Thank you, Sheree, and thank you all for joining us this evening.

Speaker Change: Presenting on today's call are David Simon, Chairman, Chief Executive Officer and President, and Brian McDade, Chief Financial Officer.

Tom Ward: We refer you to today's press release and our SEC filings for a detailed discussion of the risk factors, but we're going to do this for the sake of, 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 included in today's form in court filing. Both the press release and the supplemental information are available on our IR website at investors.simon.com.

Speaker Change: 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 1985, and actual results may differ materially due to a variety of risks, uncertainties, and other factors.

Speaker Change: We refer you to today's press release and our SEC filings for a detailed discussion of the risk factors relating to those scores and statements.

Speaker Change: Please note that this call includes information that may be accurate only as of today's date.

Speaker Change: 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 in case filing.

Speaker Change: Both the press release and supplemental information are available on our IR website at investors.simon.com.

Tom Ward: 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 accept the request to limit yourself to one question. I'm pleased to introduce David Simon. Good evening.

Speaker Change: Our topic for 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 the request to limit yourself to one question. I'm pleased to introduce David Simon. Good evening, everyone. I'm pleased with our financial...

David Simon: Good evening, everyone. I'm pleased with our financial and operational performance in the second quarter. We are seeing increased leasing volumes, occupancy gains, shopper traffic, and retail sales volumes resulting in the company's highest level of real estate NOI for the second quarter in our company's history. Demand for our space from a broad spectrum of tenants is strong and steady. Our company is focused on creating value through unique and disciplined investment activities that will continue to deliver long-term growth and cash flow, funds from operations, and dividends, as you've seen by our recent increase in our dividend per share, and importantly, make our properties better for the communities in which they operate. I'm now going to turn the call over to Brian, who will cover our second quarter results and the full year guidance in more detail. Thank you, David.

David Simon: and Operational Performance in the second quarter.

Speaker Change: We are seeing increased leasing volumes, occupancy gains, shopper traffic.

Speaker Change: and retail sales volumes, resulting in the company's highest level of real estate NOI for the second quarter in our company's history. Demand for our space...

Speaker Change: From a broad spectrum of tenets of strong and steady.

Speaker Change: Our company is focused on creating value through unique and disciplined investment activities.

Speaker Change: That will continue to deliver long-term growth in cash flow, funds from operations, and dividends, as you've seen by our recent increase in our dividend per share, and importantly make our properties

Speaker Change: better for the communities in which they operate. I'm now going to turn the call over to Brian , who will cover our second quarter results and the full year guidance in more detail.

Brian Mcdade: Second quarter funds from operations were $1.09 billion, or $2.90 per share, compared to $1,800,000,000, or $2.88 per share last year. SFO from our real estate business was $2.93 per share in the second quarter, compared to $2.81 in the prior year, a 4.3% growth. Domestic and international operations had a very good quarter and contributed $0.12 of growth. As a reminder, the prior year included a non-cash gain of $0.07 from investment activity related to ADG. Domestic NOI increased 5.2% year-over-year for the quarter. Continued leasing momentum, resilient consumer spending, and operational excellence delivered results exceeding our plan for the quarter.

Brian Mcdade: Thank you, David.

Brian: Second quarter funds from operations were $1.09 billion or $2.90 per share compared to $1,800,000,000

Brian: For $2.88 per share last year, SFO from our real estate business was $2.93 per share in the second quarter compared to $2.81 in the prior year, a 4.3% growth.

Brian: Domestic and international operations had a very good quarter and contributed $0.12 of growth. As a reminder, the prior year included a non-cash gain of $0.07 from investment activity related to ADG.

Brian: Domestic NOI increased 5.2% year-over-year for the quarter. Continued leasing momentum, resilient consumer spending, and operational excellence delivered results exceeding our plan for the quarter.

Brian Mcdade: Portfolio NOI, which includes our international properties at constant currency.

Brian Mcdade: Currency, which is 4.8% for the quarter. Malls and outlet occupancy at the end of the second quarter was 95.6 percent, an increase of 90 basis points compared to the prior year. The mills occupancy was 98.2 percent. Average base minimum rent for malls and outlets increased 3% year over year, and the mills increased 3.9%. As David mentioned, leasing momentum continued across the portfolio. We signed more than 1,400 leases for approximately 4.8 million square feet in a quarter. Approximately 30% of our leasing activity in the second quarter was New Deal volume.

Brian: Portfolio NOI, which includes our international properties at constant currency, who is 4.8% for the quarter.

Brian: Malls and outlet occupancy at the end of the second quarter was 95.6 percent, an increase of 90 basis points compared to the prior year. The mills occupancy was 98.2 percent.

Brian: Average base minimum rent for malls and outlets increased 3% year-over-year and the mills increased 3.9%.

Brian: As David mentioned, leasing momentum continued across the portfolio. We signed more than 1,400 leases for approximately 4.8 million square feet in a quarter. Approximately 30% of our leasing activity in the second quarter was New Deal volume.

Brian Mcdade: Our traffic in the second quarter was up 5% compared to last year. And importantly, total sales volumes increased approximately 2% year over year. Reported retailer sales per square foot in the second quarter were $741 for the mall and premium outlets combined.

David Simon: Our traffic in the second quarter was up 5% compared to last year, and importantly, total sales volumes increased approximately 2% year over year.

David Simon: Reported retailer sales per square foot in the second quarter was $741 for the mall and premium outlets combined.

Brian Mcdade: We hosted our third annual National Outlet Shopping Day in June, and it was very successful for shoppers and participating retailers. More than 3 million shoppers visited our premium outlets and mill centers over the shopping weekend. Feedback from shoppers and retailers following the event has been great. Since launching this unique event three years ago, participating retailer and shop momentum has built each year, with more than 475 retailers this year. And we look forward to an even bigger event next year.

David Simon: We hosted our third annual National Outlet Shopping Day in June , and it was very successful for shoppers and participating retailers.

David Simon: More than 3 million shoppers visit our premium outlets and mill centers over the shopping weekend.

David Simon: Feedback from shoppers and retailers following the event has been great.

David Simon: Since launching this unique event three years ago, participating retailer and shop momentum has built each year, with more than 475 retailers this year, and we look forward to an even bigger event next year.

Brian Mcdade: Our occupancy cost at the end of the second quarter was 12.7%. Turning to new development and redevelopment, we will open our Tulsa Premium Outlets on August 15th at 100% lease, and we will also open a significant expansion to Busan Premium Outlets in South Korea this fall. We also started construction in the quarter on our first phase of a new luxury residential development at Northgate Station. This project will include 234 units and add other elements that further transform Northgate into the ultimate live, work, skate, stay, and shop destination.

Speaker Change: Our occupancy cost at the end of the second quarter was 12.7 percent.

Speaker Change: Turning to new development and redevelopment. We will open our Tulsa Premium Outlets on August 15th at 100% lease and we will also open a significant expansion to Busan Premium Outlets in South Korea this fall.

Speaker Change: We also started construction in the quarter on our first phase of a new luxury residential development at Northgate Station.

Speaker Change: This project will include 234 units and adds other elements that further transforms Northgate into the ultimate live, work, escape, stay, and shop destination.

Brian Mcdade: At the end of the quarter, new development and redevelopment projects were underway across all platforms, in the U.S. and internationally, with our share of net cost of $1.1 billion and a blended yield of 8%. Now to the balance sheet. We completed the refinancing of 10 property mortgages during the first half of the year for a total of approximately $1.1 billion and an average rate of 6.36%. We ended the quarter with approximately $11.2 billion of liquidity. Turning to the dividend, today we announced our dividend of $2.05 per share for the third quarter, a year-over-year increase of 7.9%. The dividend is payable on September 30th.

Speaker Change: At the end of the quarter, new development and redevelopment projects were underway across all platforms, in the U.S. and internationally, with our share of net cost of $1.1 billion and a blended yield of 8%.

Speaker Change: Now to the balance sheet. We completed the refinancing of 10 property mortgages during the first half of the year for a total of approximately $1.1 billion and an average rate of 6.36%.

Speaker Change: We ended the quarter with approximately $11.2 billion of liquidity.

Speaker Change: Turning to the dividend, today we announced our dividend of $2.05 per share for the third quarter, a year-over-year increase of 7.9%. The dividend is payable on September 30th.

Brian Mcdade: And now, finally, for guidance. We are increasing our full year 2024 guidance range to between $12.80 and $12.90 per share compared to $12.51 last year. This is an increase of $0.05 at the bottom end of the range and $0.02 at the midpoint and reflects overcoming approximately $0.15 per share from certain retailer restructurings, lower lease settlement, and land sales income this year. With that, that concludes our prepared remarks. Thank you, and David and I are now available for your questions.

Speaker Change: And now finally for guidance. We are increasing our full year 2024 guidance range to $12.80 to $12.90 per share, compared to $12.51 last year.

Speaker Change: This is an increase of $0.05 at the bottom end of the range and $0.02 at the midpoint and reflects overcoming approximately $0.15 per share from certain retailer restructurings, lower lease settlement, and land sales income this year.

Speaker Change: With that, that concludes our prepared remarks. Thank you and David and I are now available for your questions.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Jeff Spector with Bank of America. Please proceed.

Speaker Change: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Our first question is from Jeff Spector with Bank of America. Please proceed.

Jeff Spector: Great. Good afternoon, and congratulations on the quarter. Thank you, John.

Jeff Spector: Great. Good afternoon and congratulations on the quarter.

Jeff Spector: My first question, and I guess my only question at this point unless I circle back in, is, I guess let's focus on the consumer. Given your service to the consumer across various formats from malls to premium outlets to mills, what are your latest thoughts on the consumer today? Clearly, the market is panicking that we may see a consumer-led recession. And maybe you could tie it to what you're seeing from retailers and how they're acting today. Thank you. Sure, Jeff.

Speaker Change: Thank you, Jeffords.

Jeff Spector: Yep, my first question, I guess my only question at this point, unless I circle back in, I guess let's focus on the consumer, giving you services to the consumer across various formats, from the malls to premium outlets to mills.

Speaker Change: You know, what is your latest thoughts on the consumer today? Clearly the market is panicking that we may see a consumer-led recession and maybe if you could tie it to you know, what you're seeing from retailers and how they're acting today. Thank you.

David Simon: I'll take that. So, look, I think we've been pretty consistent for well over a year that the lower income consumer has been under pressure for quite some time, primarily because of inflation that has affected them. That continues to be the case. They are, You know, very focused on managing their bills and discretionary Expenditures have been obviously not where we'd like to see them. We're optimistic that we're going to cycle out of that for the lower-end consumer, given the inflation picture that we see now, which is relatively monotonous. But it's way too early, Jeff.

David Simon: Sure, Jeff. This is David.

Speaker Change: Sure, Jeff. This is David. I'll take that. So, look, I think we've been pretty consistent for well over a year.

Speaker Change: that the lower-income consumer

Speaker Change: has been under pressure.

Speaker Change: for quite some time, primarily because of

Speaker Change: inflation that's affected them. So that continues to be the case. They are...

Speaker Change: You know, very focused on.

Speaker Change: you know, managing their bills and discretionary expenditures have been obviously not where we'd like to see them. So

Speaker Change: We're optimistic that we're going to cycle out of that for the lower-end consumer, given the inflation picture that we see now, which is relatively benign.

David Simon: We haven't seen a slowdown in the higher-end consumer. Obviously, you know, the market is unknown. You know, in an interesting point, we have not seen the wealth impact at all impact the higher end consumer.

Speaker Change: It's way too early, Jeff. We haven't seen a slowdown in the higher-end consumer. Obviously, you know, the market is...

David Simon: So you know, we're still pretty sanguine about it. I think, you know, as you know, we kind of budgeted at the beginning of the year for flat sales. We're a little bit above that. So we've got a little bit of a cushion, but the higher end or the better end consumer, I think, is in a good spot; their liquidity is in a decent spot. So we don't expect anything dramatic. But obviously, you know, they're going to take their cue from what's going to happen in the overall market and what the employment picture looks like.

Jeff Spector: So, you know, we're still pretty sanguine about it. I think, you know, as you know, we kind of budgeted at the beginning of the year flat sales. We're a little bit above that.

Speaker Change: I think is in a good spot, their liquidity is in a decent spot, so we don't expect anything dramatic, but obviously, you know, they're going to take their cue from, you know, what's going to happen in the overall market.

David Simon: In summary, I think we're going to see a more positive cycle in the lower-end consumer, and I think the higher-end consumer will stay as she goes currently. Jeff, you can always ask another question, but, you know, Tom Ward has put a pretty tough restriction on people, but we'll leave it. No, thank you. I'll be respectful. Thank you. Thanks, Jeff. Our next question is from Samir Khanal with Evercore ISI. Please proceed. Hi David.

Speaker Change: and what the employment picture looks like. So in summary, I think we're going to cycle more positive in the lower end consumer and I think the higher end consumer steady as she goes currently.

Jeff Spector: Jeff, you can always ask another question, but, you know, Tom Ward has put a, you know, a pretty tough restriction on people, but we'll leave it at that. No, thank you. I'll be respectful. Thank you.

Samir Khanal: Our next question is from Samir Khanal with Evercore ISI. Please proceed. Hi David.

Jeff Spector: Thank you.

Speaker Change: Our next question is from Samir Khanal with Evercore ISI. Please proceed.

Samir Kunal: Hi David, I guess what are you seeing in terms of leasing or pricing power? I mean are you seeing any tenants?

Samir Khanal: taking a bit of a pause or taking a bit longer to sign new leases given what's happened with the macro. And I guess any color on July would be also helpful in terms of traffic or sales. Thanks.

David Simon: Yeah, I don't I don't have color in July. We don't really get those numbers until August 20th, which is my birthday, by the way, but usually 20 days after the month.

Speaker Change: Yeah, I don't have color on July . We don't really get those numbers.

Speaker Change: Until August 20th, which is my birthday by the way, but usually 20 days after the month.

David Simon: So, no early returns on that. So. We had a GIL committee meeting, Brian, a week ago, and what I am told, I don't participate in these meetings because, You know, I would probably be disrupted. But what I am told, it was the best.

Speaker Change: So no early, no early returns on that.

Speaker Change: We had a GILD committee meeting, Brian , a week ago, and what I am told, I don't participate in these because

Speaker Change: You know, I would probably be disrupted, but what I am told, it was the best

David Simon: New Deal Committee meeting we've had ever. So, I think what we're seeing is demand and what I said earlier in my opening remarks. Demand is strong and steady, not abating. It's really unabated. Obviously, you know, retailers, and so are we, we're all sensitive to economic conditions. So as those develop, we have to be sensitive to them. But as we currently speak, we have a great deal of committee, and the team's working, you know, on all cylinders. So, you know, that's kind of the news from the front.

Speaker Change: New Deal Committee meeting we've had ever.

Speaker Change: So, I think...

Speaker Change: You know, what we're seeing is demand and what I said earlier in my opening remarks.

Speaker Change: Demand is strong and steady, not abating. It's really unabated. Obviously, you know,

Speaker Change: Retailers and so are we. We're all sensitive to economic conditions, so as those develop, we have to be sensitive to them. But as we currently speak, we had a great deal of committee.

Speaker Change: And the team's working, you know, all cylinders. So, you know, that's kind of the news from the front.

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

Speaker Change: Thank you. Sure.

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

Caitlin Burrows: Hi everyone. Maybe just following up on the retailer demand side. Portfolio occupancy has increased nicely over the last year. It sounds like leasing remains strong. You just mentioned the Best New Deal Committee.

Caitlin Burrows: Hi everyone, maybe just following up on that retailer demand side, so portfolio occupancy has increased nicely over the last year it sounds like.

Caitlin Burrows: Leasing remains strong. You just mentioned the Best New Deal Committee. So, that would support further occupancy increases. I'm just wondering versus the current 95.6%, how much further upside do you think you have, or is there some reason to expect

Brian Mcdade: So that would support further occupancy increases. I'm just wondering, versus the current 95.6%, how much further upside do you think you have? Or is there some reason to expect this rate of increase cannot or cannot not continue?

Speaker Change: This rate of increase can or cannot continue going forward.

Speaker Change: Hey Caitlin, it's Brian . I think we're pretty comfortable thinking that we're going to end the year north of 96%. Certainly still a little bit of noise out there, but given the robust demands in the type of environment we're in, we think we're north of 96% by the end of the year.

David Simon: Hey Caitlin, it's Brian. I think we're pretty comfortable thinking that we're going to end the year north of 96%. Certainly, there is still a little bit of noise out there, but given the robust demand in the type of environment we're in, we think we're north of 96%. And again, I'm sorry. I was just going to ask you that. Obviously, it's also not just the occupancy number; it's also replacing retailers that are performing with better retailers. So it's a mixed issue too, which the team is very much focused on.

Speaker Change: And again, I'm sorry, I was just going to add that I think, obviously,

Speaker Change: You know, it's also not just the occupancy number, it's also replacing retailers that aren't performing with better retailers. So it's a mixed issue too, which the team is very much focused on.

Brian Mcdade: Go ahead. Yeah. I was just going to say the bigger picture, like Brian you just mentioned, north of 96. Is there any reason to think, maybe based on what David said, that's kind of a ceiling, or there could still be control?

Speaker Change: I was just going to say bigger picture like Brian you just mentioned north of 96 is there any reason to think maybe based on what David said that's kind of a ceiling or there could still be continued upside potential?

Brian Mcdade: Well, I'd be cautious. And, you know, that's a pretty good number for us. You're in what was the last year? Tom knows every number.

Uran: Well, I'd be cautious and, you know, that's a pretty good number for us. Uran, what was the rule last year?

Tom Ward: It's a pretty good increase from last year. 95.8. Not that good. So, maybe.

Uran: [inaudible]

Uran: Tom knows every number, but he's fumbling, so it's a pretty good increase from last year. 95.8. 95.8, not that good then, so maybe, maybe there's upside.

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

Speaker Change: Okay, thank you. Thanks.

Speaker Change: Our next question is from Alex Goldfarb with Paper Sandler. Please proceed.

Alex Goldfarb: Uh, hey, uh... Good afternoon, and David, it's certainly good to hear you on the call. I hope, hope that the recovery and all the stuff is going well.

Alex Goldfarb: Ah, hey, uh...

Alex Goldfarb: Good afternoon, David. Certainly good to hear you on the call. Hope the recovery and all this stuff is going well.

David Simon: Just a question for you, big picture, you know, Jeff kicked it off, and a number of my peers have all asked the same question, but as we look at the environment today, certainly, there's a lot less retail availability. There's been a big shake-up, not only among the retailers themselves, but also the landlords, and certainly, you know, the cost for new development has gone through the roof. So as you look at the picture today, you know, with the economic concerns, but also at the same time that the tenants seem to be in better capital positions, are you as worried today when you see weak economic data, and does that impact the way you think about expanding, putting money to work, and how the leasing conversations are going?

Alex Goldfarb: Just...

Alex Goldfarb: Question for you, big picture, you know, Jeff kicked it off in a number of

Speaker Change: of, you know, my peers have all asked the same question, but...

Speaker Change: As we look at the environment today, certainly there's a lot less retail availability. There's been a big shakeup, not only among the retailers themselves, but also the landlords.

Speaker Change: and certainly, uh...

Speaker Change: You know cost for new development has gone through the roof. So as you look at the picture today You know with the economic concerns, but also at the same time that the tenants seem to be in better capital positions

Speaker Change: Are you as worried today when you see weak economic data, and does that impact the way you think about expanding, putting money to work, and how the leasing conversations are going?

David Simon: Or do you think that we're in a better situation or a worse situation? Like, how do you judge where we are now, just given that the environment seems to be different than it has been over the past few decades?

Speaker Change: or do you think that we're in a better situation or worse situation? Like how do you how do you judge where we are now just given that the environment seems to be different than it has been over the past few decades?

David Simon: Well, thank you, Alex, for the thoughts, and let me just answer your question. So, I frankly think that, listen, it sounds like I'm talking about our book, which obviously you would expect us to do, but we have never been better positioned. So, if we do... I don't look at the current uncertainty and even a potential recession. No one wants to go through that.

Speaker Change: Well, thank you, Alex, for the thoughts, and let me just answer your question.

Speaker Change: I frankly think that you know listen it sounds like I'm you know talking you know our book which obviously you would expect us to do but we have never been better positioned

Speaker Change: So, if we do...

Speaker Change: So I don't look at the, you know, the current uncertainty and even a potential recession.

David Simon: But given our position, I think we're in an absolute, unequivocal position to improve and better our company. So, you know, again, we don't want to go through a recession, but if we do, the gap between us and everybody else just gets bigger and bigger. Our gap, you know, if you look at kind of where we started 30 years ago and that's where we are today, the gap is pretty damn big. It will all be in there. And that's a testament to, you know, the team and everybody else.

Speaker Change: No one wants to go through that, but given how we're positioned,

Speaker Change: You know, I think we're...

Speaker Change: in an absolute unequivocal position to...

Speaker Change: improve and better our company so

Speaker Change: Again, we don't want to go through a recession, but if we do, the gap between us and everybody else just gets bigger and bigger.

Speaker Change: Our gap, you know, if you look at kind of where we started 30 years ago, and that's where we are today.

Speaker Change: The gap is pretty damn big.

David Simon: So and honestly, I'm not looking at, It could, you know, a potential recession or tough market as, on any basis, to slow down. You know, look at an example. We just started construction in North Bay on Building 234 part of this. You know, we expect to do another phase of that probably in the next nine months. As we go through the pricing process, so... from our standpoint, we're not slowing down. And if the economy slows dramatically, the gap between us and, you know, just about everybody else will only get bigger. And that gives us opportunities to do some interesting stuff.

Speaker Change: You know, all we did there, um, and that's a testament to, you know, the team and everybody else. So, um, uh, and, and honestly, I'm not looking at...

Speaker Change: it could

Speaker Change: You know, potential recession or tough market as...

Speaker Change: On any basis to slow down, you know, look at an example, we just started construction in Northgate, building 234 apartments. You know, we expect to do another phase of that probably in the next nine months.

Speaker Change: As we go through the pricing, so...

Speaker Change: From our standpoint, we're not slowing down, and if the economy slows dramatically,

Speaker Change: The gap between us and, you know, just about everybody else will only get bigger, and that's, you know, that gives us opportunities to do some interesting stuff.

David Simon: And you see the same confidence from your retailer and from your partners.

Speaker Change: And you see the same confidence from your retailer, from your partners, your tenants, or their waffling.

David Simon: I think the better retailers... that we have a number of retailers that are in really good financial standing, and I think they take a longer view just like we do. Not everyone, but I would tell you the majority of who we're doing new business with are definitely taking a longer-term view. So they're looking to gain sales and market share as well. We're certainly not on the defensive. You know, into the kind of turmoil over the last few weeks.

Speaker Change: I think the better retailers...

Speaker Change: We have a number of retailers that are in really good financial standing and I think they take a longer view just like we do.

Speaker Change: Not everyone, but...

Speaker Change: I would tell you the majority of who we're doing...

Speaker Change: New Business with is definitely taking a longer term view.

Speaker Change: So they're looking to gain sales and market share as well. So we're certainly not on the defensive.

Speaker Change: You know, into the, kind of the turmoil over the last few weeks.

David Simon: And if anything, we'll step up our investment activity, but not foolishly. I mean, we'll do it like we do everything else. But we don't, we don't see it as a reason to reign in at this time.

Speaker Change: And, if anything, we'll step up our investment activity, but not, you know, foolishly. I mean, we'll do it like we do everything else.

Speaker Change: But we don't see it as a reason to rein in at this point.

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

Speaker Change: Thank you.

Speaker Change: Thank you.

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

Michael Goldsmith: Good afternoon. Thanks a lot for taking my question. You continue to drive nice NOI growth driven by both occupancy gains and higher rents. Now, you know, we talked a little bit on the call about, you know, occupancy potentially approaching the potential ceiling. So do you see increasing pricing power with that to maybe offset that? I'm just trying to get a better understanding of how the algorithm kind of looks in the coming quarters.

Michael Goldsmith: Good afternoon. Thanks a lot for taking my question. You continue to drive nice NOI growth driven by both occupancy gains and higher rents. Now, you know, we've talked a little bit on the call about, you know, occupancy potentially approaching a potential ceiling. So do you see increasing pricing power with that to maybe?

Speaker Change: I'm just trying to get a better understanding of how the algorithm kind of looks in the coming quarters.

David Simon: Well, again, occupancy is, you know, like any statistic you want. And again, to be clear, we do think we'll increase our The bigger opportunity for us is, again, to continue to increase and better the next. So, um... And that drives, obviously, the better the mix, the higher the sales, the higher the sales. You know, the more likelihood that you're going to have higher risk. So that's the big focus as we, you know, continue to merchandise our properties. Brian, I don't know if you want to add anything to it.

Speaker Change: Well, again, occupancy is, you know, like any statistic you want. And again, to be clear, we do think we'll increase our occupancy.

Speaker Change: The bigger opportunity for us is, again, to

Speaker Change: continue to increase and better the next

Speaker Change: So, um...

Speaker Change: And that drives, obviously, the better the mix, the higher the sales, the higher the sales.

Speaker Change: You know, the more likelihood that you're going to have higher rents.

Speaker Change: So that's the big focus as we, you know, continue to merchandise our properties. Brian , I don't know if you want to add anything to that.

Brian Mcdade: Yeah, Michael, look, we continue to see price and power, you know, roughly, rents are similar where we've seen escalation to high.

Brian: Yeah, Michael, look, we continue to see price and power, you know, roughly rents are similar where we've seen in escalation to last year. We talked about rents in the 70s for new deals.

Brian: That's continuing, and as we find more and more retails and updates and bids, it drives demand, and it ultimately drives our pricing power, so there's going to be a recurrent theme here relative to that.

Michael Goldsmith: Thank you very much. Good luck in the back half.

Craig Mailman: Our next question is from Craig Mailman with Citigroup. Please proceed.

Speaker Change: Thank you very much. Good luck in the back half.

Speaker Change: Our next question is from Craig Mailman with Citigroup. Please proceed.

Craig Mailman: Hey guys, I'm maybe shifting gears a bit.

Craig Mailman: Unknown Speaker To the balance sheet and just the rate environment here, just your thoughts generally with, you know, a 3, 8, 10 year, if that's at all changing your view on kind of the upcoming debt maturities in the back half of the year and how to fund those versus how much cash to keep on hand versus David, maybe your commentary about, you know, the gap between you and others, your ability to be on the offensive to make investments now that, you know, if we do go into recession, by the time they're done, you're kind

Craig Mailman: Hey guys, maybe shifting gears a bit to the balance sheet and just the rate environment here. Just your thoughts generally with, you know, a 3-8-10 year.

Speaker Change: If that's at all changing your view on...

Speaker Change: debt maturities in the back half of the year and how to fund those, versus how much cash to

Speaker Change: [inaudible]

Craig Mailman: On the other side of it, you're well positioned. So I'm just fine.

Craig Mailman: I'm just kind of curious. I know it's a broader question, but just how...

Craig Mailman: You know, the kind of softening rate environment here; does that change anything you're doing or how you want to be positioned on the margins?

Speaker Change: I'm kind of curious, I know it's a broader question, but just how...

Speaker Change: You know the kind of the softening rate environment here, does that change anything you're doing or how you want to be positioned on the margin?

Brian Mcdade: Craig is Brian.

Brian Mcdade: One day doesn't really change our financing plans for the year. We're sitting on $3.1 billion of cash. We have $1.9 billion in maturities in the back half of the year. The current plan is still to refinance those out with cash on hand. But to the extent we work to see opportunity to do so...

Speaker Change: Craig, it's Brian . You know, look, one day doesn't really change our financing plans for the year.

Craig Mailman: We're sitting on $3.1 billion of cash. We have $1.9 billion in maturities in the back half of the year. Current plan is still to refinance those out with cash on hand, but to the extent we work to see opportunity to do alternatively or the market opened up with tight spreads.

Brian Mcdade: Alternatively, or if the market opens up with tight spreads, you know, certainly we could access the market in the back half of the year as well.

David Simon: www.larryweaver.com Yeah, and I would just say, look, we got $11 billion in liquidity, you know, from obviously a lower interest rate environment. It increases our earnings potential. There's all sorts of things associated with a lower interest rate environment, but by and large, that's beneficial to real estate.

Craig Mailman: Certainly, we could access the market in about half a year as well, but no current plans to do so at present.

Speaker Change: Yeah, and I would just say, look, we've got $11 billion in liquidity, so...

Speaker Change: You know...

Speaker Change: Obviously a lower interest rate environment.

Speaker Change: increase our earnings potential.

Speaker Change: There's all sorts of things associated with a lower interest rate environment, but by and large, that's beneficial to real estate.

David Simon: So, you know, if that's the case, it's going to be better than what we planned initially for this year and what we're thinking for next year. So, now that's, that's good news. In a nutshell, but again, remember, we got, you know, we're not living, you know, mortgage to mortgage. We're a different kind of company. So, you know, we don't we don't have the holy, holy, you know, holy Toledo. It's gonna say another word, holy Toledo, we can't refinance our mortgage. So, so anyway, so, so, but by and large, as rates go lower, that's. You know, that's what's better for this company.

Speaker Change: So, you know, if that's the case, that's going to be better than what we planned initially for this year and what we're thinking for next year. So, um...

Speaker Change: You know, that's good news in a nutshell, but again, remember, we got, you know, we're not, we're not living...

Speaker Change: you know mortgage to mortgage we're a different kind of company so you know we don't we don't have the holy holy you know holy Toledo it's going to say another word holy Toledo we can't refinance refinance this mortgage

Speaker Change: So, so anyway, so, so, but by and large, if rates go lower, that's, you know, that's, that's better for this company.

Juan Sanabria: Our next question is from Juan Sanabria with BMO Capital Markets. Please proceed.

Speaker Change: Our next question is from Juan Sanabria with BMO Capital Markets. Please proceed.

Juan Sanabria: Thanks for the time, and David, I hope your recovery is going well as well.

Juan Sinabria: Thanks for the time. And David, I hope your recovery is going well as well. Just curious on the investment front, you clearly sound more bullish or wanting to invest more capital in DEV and REDEV.

David Simon: I think on the investment front, you clearly sound more bullish or wanting to invest more capital and develop and redev, but just curious about external acquisitions with the statement that you said that you're only going to kind of widen the gap between yourself and others with that.

Juan Sinabria: But just curious about external acquisitions.

Speaker Change: With the statement that you said that you're only going to kind of widen the gap between yourself and others, would that make you want to wait because there's going to be a better spread down the road between your performance and those of others, or not necessarily?

David Simon: Transcription by Transcription Outsourcing, LLC.

David Simon: Transcribed by https://otter.ai Well, it's good. It's a good question. And you know, that's when I would just say judgment comes into play. I mean, we have been, As you know, right because if there was any material, we'd disclose it. We haven't, um..., really done anything external for quite some time. And we're going to just be, you know, looking at quality stuff where we can add value that's appropriately priced. And up until this point,

Speaker Change: Well, it's a good question, and that's when I would just say judgment comes into play. I mean, we have been...

Speaker Change: As you know, right, because if there was any material, we'd disclose it. We haven't really done anything external for quite some time.

Speaker Change: And we're going to just be...

Speaker Change: You know, looking at quality stuff where we can add value that's appropriately priced.

David Simon: You know, Frankly, we haven't found it yet. But that doesn't mean that we're discouraged. You know, but we'll keep doing that because that is an element of what this company is good at. And, you know, we would like to add quality where we can add value at the right price. And if it's not at the right price, or if it's not at the right quality, you know, there's just nothing here for us to do.

Speaker Change: And up until this point, frankly, we haven't found it. So that doesn't mean that we're discouraged.

Speaker Change: You know, but we'll keep...

Speaker Change: You know, doing that, because that is an element of what this company is good at, and, you know, we would like to add quality where we could add value at the right price, and if it's not at the right price,

Speaker Change: Or if it's not at the right quality, you know, there's just nothing here for us to do. We're not, we're basically out of the portfolio business.

David Simon: We're not, we're basically out of the portfolio business. So, you know, as far as I can see, I mean, things change, but I just don't see buying another big portfolio that we'd have to, you know, swap off a handful of properties. So we're really going to be selective. And, again, it's going to be at the right place. And if we can't get it at the right price, then we've got plenty to do, and that's, you know, we'll keep our liquidity and keep doing what we're doing.

Speaker Change: So, you know, that as far as I can see, I mean, you know, things change, but I just don't see us buying.

Speaker Change: You know another big portfolio that

Speaker Change: You know, we'd have to, you know, swap off a handful of properties. So we're really going to be selective.

Ronald Kamdem: Our next question is from Ronald Kamden with Morgan Stanley. Please proceed.

Speaker Change: Thank you. Sure.

Speaker Change: Our next question is from Ronald Kamden with Morgan Stanley . Please proceed.

Ronald Kamdem: Great. Best wishes to you, David, as well. But, Mike, just a quick one for me, just could we double-click on some of the strengths that you talked about in the portfolio, maybe breaking it down between maybe malls versus outlets or some of the tourist centers as well? It would be helpful.

Ronald Camden: Great. Best wishes to you, David, as well. But just a quick one for me, just could we double-click on some of the strengths that you talked about in the portfolio, maybe breaking it down between maybe malls versus outlets or some of the tourist centers as well would be helpful.

Brian Mcdade: Well, Ron, I think you're seeing broad-based demand across all of our platforms, so it's difficult to kind of give you an individual kind of thumbnail of it. But, you know, certainly we see an over-index in our outlet business, certainly towards international tourism. That's going to be very strong for us.

Ronald Camden: Well, Ron, I think you're seeing broad-based demand across all of our platforms.

Speaker Change: So it's difficult to kind of give you a...

Speaker Change: not an individual kind of thumbnail, certainly we see, we over-index in our business towards international tourism, that's very strong.

Brian Mcdade: That's a driving factor kind of in our outlet business results. But, you know, certainly retailers are doing business across all three formats. You heard me say Mills has the highest occupancy ever. So, the demand is broad-based from all retailers across all three major platforms.

Speaker Change: For us, that's a driving factor, kind of in our own business results, but...

Speaker Change: You know, certainly, you know, retailers are doing business across all three formats, you know, you heard me say, Millshead, Tizox, and Sievers, so, you know, the demand is broad-based from all retailers across all three major platforms of ours.

Speaker Change: It's kind of interesting, I just don't think there's like a...

David Simon: Yeah, it's kind of interesting. I just don't think there's like a Unique, Transcripts provided by Transcription Outsourcing, LLC.

Speaker Change: unique trend you know so it's not yeah it's not Florida or Texas

David Simon: It's not outlets or malls, it's not enclosed versus outdoors. It's really very property specific. And I would say that, you know, the quality and the good stuff is getting better, and it's almost. You know, our traffic, which is, you know, is a good indicator, was pretty much..., you know, across the board.

Speaker Change: It's not outlets or malls, it's not enclosed versus outdoors.

Speaker Change: It's really very property specific.

Speaker Change: And I would say that, you know, the quality and the good stuff is getting better and it's almost

Speaker Change: Unknown Speaker Our traffic, which is, you know, is a good indicator was pretty much, you know, across the board, so I, I think there's no unique

David Simon: So I think there's no uniqueness Unlike COVID where, You know, when you came out of COVID, it was Florida, you know, kind of a smile state and whatever. I think it's, it's really property specific. You know, and it's not, you know, so you could have a, you know, a great property in X, Y, Z city and a not so good one in X, Y, Z city, and they're a tale of, you know, two stories.

Speaker Change: Unlike COVID where, you know, when you came out of COVID, it was Florida, you know, kind of the smile states and whatever. I think it's really property specific.

Speaker Change: Nam, Nam

Speaker Change: You know, and it's not, you know, so you could have a, you know, a great property in X, Y, Z, X, Y, Z city.

Speaker Change: And that's a good one in XYZ City.

David Simon: So I really think the, I really think it's property specific, and I don't think there's any one particular trend to focus on at least in this quarter. I might have a better sense of it by year end and see how things shake out, but not right now.

Speaker Change: and they're a tale of two stories, so I really think it's property specific and I don't think there's any one particular trend to focus on, at least in this quarter.

Speaker Change: You might have a better sense of it by year end and see how things shake out, but not right now.

Haendel Juste: Our next question is from Haendel Juste with Missouho Securities. Please proceed.

Speaker Change: Great, thank you.

Speaker Change: Our next question is from Haendel Juste with Missouho Securities. Please proceed.

Haendel Juste: Hi, thank you, and David as well. I wanted to wish you best wishes and hopes for a speedy recovery. My question tonight is, I wanted to go back to the strong and broad-based demand you mentioned you're seeing for space across the portfolios. Hoping you could provide a bit more color on the size of the backlog of leases that are coming online, maybe some color on the timing of that, and is there also any update you can provide on the 3% or at least 3% domestic NOI growth from last quarter for the core. Thanks.

Haendel Juste: Hi, thank you, and David as well, I wanted to wish you best wishes and hopes for a speedy recovery here.

Haendel Juste: My question tonight is, I wanted to go back to the strong and broad-based demand you mentioned you're seeing for space across the portfolio. I was hoping you could provide a bit more color on the size of the backlog of leases that are coming online and maybe some color on the timing of that. And is there also any update you can provide on the 3% or the at least 3% domestic NOI growth?

Brian Mcdade: Hey Haendel, it's Brian. As we think about demand, you know,

Speaker Change: from last quarter for the Corps. Thanks.

Brian Mcdade: We've got a signed but not opened pipeline of about 300 basis points. You heard David talk about mixed, and so we are moving some tenants around.

Speaker Change: Haendel, it's Brian . As we think about demand, you know, we've got a signed-but-not-open pipeline of about 300 basis points.

Brian Mcdade: So that's not all just added to it, but we felt we were coming out of the bottom of that for sure. But that's just a further indication of the work that our team has done in the demand for space to have a 300 basis point pipeline signed but not yet opened for us. So really, that defines or gives you a really good sense of the breadth of what's out there for us as far as demand for space is concerned.

Speaker Change: You heard David talk about mix, and so we are moving some tenants around, so that's not all just added to the equation.

Speaker Change: There will be some coming out of the bottom of that for sure, but that's just a further indication of the work that our team has done in demand for space to have a 300-basis point sign but not open pipeline for us.

Speaker Change: So really kind of that defines or kind of really gives you a really good sense of the breadth of what's out there for us as far as demand for space.

Brian Mcdade: 3% at least, at least 3%. As you know, we don't update that as we go. We set it at the beginning of the year, Haendel, and try to do our best to exceed that number which we have thus far.

Speaker Change: As you know, we don't update that as we go, we establish it at the beginning of the year, Haendel, and try to do our best to exceed that number which we have thus far.

Vince Tibone: Our next question is from Vince Tibone with Green Street. Please proceed.

Handel: Got it. Thank you.

Handel: Our next question is from Vince Tibone with Green Street. Please proceed.

Vince Tibone: Hi, good evening. How much do you think changes in the stock market impact consumer spending at the higher end, just from your, you know, experience over the years? Like, at what point does stock market volatility really start impacting consumer behavior and consumer sales?

Vince T-Bone: Hi, good evening. How much do you think changes in the stock market impacts consumer spending at the higher end? Just from your experience over the years, at what point does stock market volatility really start impacting consumer behavior and consumer sales?

David Simon: I think it's more, you know; I wish I had an algorithm.

Speaker Change: I think it's more, you know, I wish I had an algorithm, I don't, but I'm sure we could get AI to do something for us. I would, my history would suggest

David Simon: But I'm sure we could get AI to do something for us. As my history would suggest, short-term fluctuations mean absolutely nothing. But over time, you know, if you had a down market for, you know, six or nine months, you're going to rein in consumer spending. So, I do think it's going to have to take, you know, the downward trend or the negative volatility is not going to really impact the consumer in the next, you know, short period of time, but if you see it for, you know, several months, then I would expect us to see some slowdown in consumer spending.

Speaker Change: Short-term fluctuations mean absolutely nothing.

David Simon: So, you know, it does take time to see, but I think that, you know, consumers are used to seeing some volatility. And they have some probably built-in gains that they never thought they would have had, right?

David Simon: So, you know, when companies get valued at trillions, you know, I remember when, you know, $50 billion market cap was there. When companies get valued at trillions of dollars, you know, and that's a lot of retail. I hope those retail investors are smart enough to sell and then spend the money in our malls. I mean, that would be a good cycle for us. Okay.

Vince Tibone: So I think even if these levels were in pretty good shape, if you have kind of a longer, longer downturn, and you know, it's realistic to think that consumer spending is going to be random. But offsetting that obviously will be, you know, low inflation, lower interest rates. And, you know, and, you know, you could potentially see a scenario that we dealt with pre-COVID. Right. So it's Now, there's a lot of variability out there. I love you, and but I don't think short-term fluctuation is going to have a

Speaker Change: There's a lot of variability out there with us.

Yeah.

Speaker Change: But I don't think short term fluctuation you're going to have a sort of an immediate impact.

Vince Tibone: It makes sense. If I could maybe ask one quick follow-up along those lines, like just how should we think about the sensitivity of Simon's cash flows to tenant sales? I mean, with all the COVID changes, seems like most of that's unwinded at this point. But kind of just Yeah, are there any guideposts you can share of like how much rent or how much of your total revenue is made up of overdue and percentage rents or just how much, you know, volatility is there in your business from, you know, tenant sales.

Speaker Change: I think it makes sense if I could maybe ask just one quick follow up along those lines like just how should we think about the sensitivity of Simon's cash flows to tenant sales I mean, with all kind of Covid changes. It seems like most of that's unwind. It at this point, but kind of just yeah is there any guidepost you can share of like how much rent.

Speaker Change: Or how much of your total route revenue rather is made up of overage in percentage rents or just how much.

Speaker Change: Volatility there on your business from a tenant sales.

Brian Mcdade: Yeah, look, I...

Speaker Change: Yeah well.

David Simon: Brian may have a number. I would just say, big picture, a lot less coming out of COVID, but probably higher than pre-COVID. So I don't know what percent that is. Brian, if you don't, well, we could probably give that number to you, but it's certainly a lot less than when we started in COVID, but higher than, you know, probably pre-COVID. We'll follow up offline, Vince.

Brian: Brian May have a number I would you say.

Brian: Picture, a lot less coming out of COVID-19, but higher probably than <unk>.

Brian: And.

So I don't know what percent that is Brian you know well, we could probably give that number to you but but.

Brian: It's certainly a lot less.

Brian: When we started in COVID-19, but but higher than you know probably pre COVID-19.

Speaker Change: Then I will follow up offline events.

Vince Tibone: Great. I appreciate the time. Thank you. Thank you.

Brian: Great. Appreciate the time. Thank you. Thank you.

Brian: Our next question is from Greg Mcginniss with Scotiabank. Please proceed.

Unknown Speaker: Hey, good afternoon. David, we share a birthday.

Greg Mcginniss: Hey, good afternoon, David we share birthday, so I'm pretty excited about that for my question.

Unknown Speaker: So I'm pretty excited about that. For my question: How old are you going to be? I really want to share that. Oh no, no, no.

Speaker Change: How long are you going to do it.

David Simon: No I don't really want to answer that.

David Simon:

Speaker Change: So we noticed that the overall same store NOI growth this quarter was healthy and but largely driven by the consolidated portfolio.

Speaker Change: International and why it was down 1% year over year JV revenues down about 4% versus last year is there anything in particular, that's impacting the international and J B assets. This quarter and do you expect to see those return to year over year growth in the back half.

Greg Mcginniss: Greg, from an international perspective,

Speaker Change: Greg It from an international perspective, Greg last year, we did recognize a one time performance fee in our Mcarthur Glen business Third party managed capital there. So that did not pay this year. So that's why you see a decline in that line item.

Greg Mcginniss: National Perspective, Greg, last year we didn't recognize a one-time performance in our McCarthy-Blunt Third-party managed capital there, so that did not repeat this year.

David Simon: So that's why you see a decline in that line item. That will normalize itself just by sheer operation going forward. Okay, yeah, I would just say our international labs, both in Asia and in Europe, are pretty much on plan, if not a little bit better. Clay Pierre, as you know, reported last week on better resolution.

Greg Mcginniss: That will normalize itself just by sheer operation going forward.

Greg Mcginniss: Okay.

Greg Mcginniss: Our international assets.

Greg Mcginniss:

Greg Mcginniss: Both in Asia and in Europe are pretty much.

Greg Mcginniss: On plan, if not a little bit better.

Greg Mcginniss: So.

Clay: Clay peers reported last week.

Clay: Better results and you know there.

David Simon: And, you know, they're, you know, obviously, nicely positioned going forward. And I, you know, Europe and Asia are where there are some movements in the different countries. Japan is experiencing extraordinary growth because of the yen, a couple other markets are flat, but generally speaking, International has got, as Brian mentioned, good comp and wine growth this year, and pretty much on budget.

Clay: Obviously nicely position.

Clay: Going forward in it.

Clay: Europe and Asia as we there are some movements in the different countries.

Clay: Japan average extraordinary growth.

Clay: Yeah.

Clay: A couple of other markets flat to generally speaking.

Clay: International.

Clay: Scott. This is Brian mentioned, good comp NOI growth this year and pretty much on budget.

Clay: Yeah.

Speaker Change: Okay. Thank you very much.

Clay: Sure.

Floris van Dijkum: Our next question is from Floris Van Dijkum with Compass Point. Please proceed.

Speaker Change: Our next question is from Floris Van <unk> with Compass point. Please proceed.

Floris van Dijkum: Hey, thanks. Glad to hear you're doing well, David. You sound great.

Speaker Change: Hey, thanks.

Speaker Change: Glad to hear you're doing well, David you sound great.

David Simon: Question on value retail. I know you guys own a stake in that. It's sold at an incredibly low cap rate to Catterton, who I think is the investment arm of LVMH. Could you maybe talk about, and I think that it's a different market, obviously, but if you could talk about, you know, the cap rate environment in Europe versus here, and maybe also the long-term nature of some of these big luxury brands, and do you see them putting money to work at those kinds of cap I mean, I guess they have already opened on Fifth Avenue.

Speaker Change: Question on value retail I know you guys own a stake in that it sold at an incredibly <unk>.

Speaker Change: Low cap rates.

Speaker Change: To Patterson, who I think is the investment arm of Lv MH could you maybe talk about maybe and I think that's it's a different market, obviously, but if you could talk about the.

Speaker Change: <unk>.

Speaker Change: The cap rates.

Speaker Change: Environment in Europe versus here and maybe also the.

Speaker Change: The long term nature of some of these big luxury brands and do you see them, putting money to work at those kinds of cap rates.

Speaker Change: I mean, I guess, they have already young and on fifth Avenue, but in the mall business as well and in the U S. In your view.

David Simon: Well, let me thank you. Let me try to unpack that a little bit.

Speaker Change #100: Well, let me thank.

Speaker Change #101: Thank you.

Speaker Change #102: Let me try to unpack that a little okay. So far.

David Simon: Okay, so Uh, Floris, let me, uh, I would say, first of all, Elkhatta's a very smart investor. Value Retail is a unique structure, so I don't think you can look through their investment that was at a significant discount to NAV to get to a cap rate without really [inaudible] intimate inside knowledge which you know, which you and I don't have. Okay.

Speaker Change #102: Of course, let me.

Speaker Change #102: I would say first of all.

Speaker Change #102: Parents and very smart investors.

Speaker Change #102: And.

Speaker Change #102:

Speaker Change #103: [noise] value retail.

Speaker Change #103: Unique structure. So I don't think you can look.

Speaker Change #103: Through there.

Speaker Change #103: The investment that was at a significant discount to NAV, we could get to a cap rate.

Speaker Change #103: Without really.

Speaker Change #103: Having.

Speaker Change #103: Intimate inside knowledge, which.

David Simon: But, but they're very smart investors. And I don't, I don't think this is a, So that's the first point I'd like to make just on that, on that question. Second, I think, you know, I think, again, it depends on what brands you're talking about, whether it's luxury or, you know, higher end or whatever, better, moderate, you know, every retailer is different. Everyone's looking, you know, to increase their sales.

Speaker Change #104: You know, which you were and I don't have okay.

Speaker Change #104: But.

Speaker Change #104: But they're very smart investors and I don't I don't think this is a.

Speaker Change #104: So that's the that's the first.

Speaker Change #104: The point I'd like to make just on that on that on that question.

David Simon: And every brand is different. So you cannot paint a luxury investor with one broad stroke. So, and even within some of the larger groups, their brands are different. You know, you may have one brand growing, another shrinking, what have you. I don't expect it. And again, Elkhaven is also owned by the principals of Elkhaven, so it's not just the group. I don't think... There is a trend for them to suddenly invest gobs of money in retail real estate. But you know, I could be wrong. You know, and, you know, I think it really depends on each brand and what their strategy is.

Speaker Change #104: Second as I say.

Speaker Change #104: No I think.

Speaker Change #105: Again, it depends on what brand you're talking about whether it's luxury or.

Speaker Change #105: Uh huh.

Speaker Change #105: Higher end or whatever.

Speaker Change #107: Or moderate.

Speaker Change #108: Every retailer is different everyone's looking.

Speaker Change #109: You know to incur.

Speaker Change #109: Increased their sales.

Speaker Change #109: And every brand is different so you cannot see the luxury and.

Speaker Change #110: Investor by one broad strokes.

Speaker Change #109: So.

Speaker Change #109: Even within some of the larger groups their brands are different.

Speaker Change #109: You may have one brand growing one.

Speaker Change #109: Shrinking.

Speaker Change #111: What have you I don't expect.

Speaker Change #109: And again.

Speaker Change #109: A L. Catterton is also owned by the principles of cabinet and so it's not just.

Speaker Change #109: The group I don't think.

Speaker Change #109: There is a trend for them to suddenly.

Speaker Change #109: Invest got somebody in retail real estate.

Speaker Change #109: But I could be wrong.

Speaker Change #109: And.

Speaker Change #112: I think it really depends on on each brand and what their strategy is.

David Simon: And if I may follow up, how are your discussions going with your institutional partners here in the US in the mall business? Are they, are those partners happy? And would you, are there opportunities for you to maybe buy some of them out? Or are they pretty comfortable owning some of those top malls that you typically JV with them?

Speaker Change #113: And if I may a follow up I mean are you how are your discussions going with your institutional partners here in the U S. In the mall business or are they are those partners happy.

Speaker Change #114: And would you are there opportunities for you to to maybe buy some of them out or are they pretty comfortable owning some of those those top malls that you typically JV with them.

David Simon: Well, I would say overall that we hope that our relationships with our institutional partners are excellent. And again, it's, there's, Very hard to paint a broad brush. I would say, by and large, most are very complementary, very happy to be our partners. You know, there's always an asset here or there that may not fit with them long term. But I would say, generally speaking, it's kind of business as usual with our institutional investors. Thanks, David. Sure. Our next question...

Speaker Change #115: Well I would say overall, we hope in our relationships with our institutional partners.

Speaker Change #114: Excellent.

Speaker Change #116: And again, it's his germs.

Speaker Change #116: Very hard to paint a broad brush.

Speaker Change #116: I would say by and large most are very.

Speaker Change #116: Complementary very happy to be our partner.

Speaker Change #116: You know, there's always an asset here or there that.

Speaker Change #116: It may not fit with the long term.

Speaker Change #116: But I would say generally.

Speaker Change #116:

Speaker Change #117: Business as usual with our institutional investors.

David Simon: Thanks, David.

David Simon: Sure.

Linda Tsai: Our next question is from Linda Tsai with Jeffreys. Please proceed. Hi, good afternoon.

David Simon: Our next.

Speaker Change #118: Question is from Linda Tsai with Jefferies. Please proceed.

Linda Tsai: Linda, most of that's going to be back-end waited, it'll be a little bit this year, most of it will really manifest itself next year, just given where we are in the year and how retailers traditionally position their store fleet to get most of it open before back-to-school holidays, so most of it's going to be back-end waited for next year, or front end ways different actors, and Would This Sign But Not Oc Down Year-on-Year from where you sit today? It's really difficult to predict what's going to happen, you know, 12 months from now, Linda.

Linda Tsai: Hi, good afternoon.

Linda Tsai: On the a 300 basis points of signed but not occupied what does that represent some dollars, what's the timing of that coming online.

Speaker Change #120: And would you expect us to compress going into next year.

Linda most of that's going to be backend weighted to there'll be a little bit. This year. Most of it will really manifest itself next year, just given where we are in the year.

And how retailers traditionally positioning your store fleet to get most of the open before back to school holiday. So most of it is going to be back end weighted for next year.

Speaker Change #120: Or front end weighted for next year excuse me.

Speaker Change #121: And would the signed but not occupied be down year on year at the end of next year from where you sit today.

Speaker Change #122: Really difficult to predict what's going to happen in 12 months from now or so.

Linda Tsai: So, you know, it is what it is right now. You know, ultimately, as we continue to kind of move through, we've seen some consistency in that number and some increase, right? We were talking about about 200 basis points a year ago, so you see an increase over the past 12 months to get to 300 basis points for that. Thanks. And what's that represent in dollars? I don't have that number in front of me right now.

Speaker Change #123: It is what it is right now you know ultimately as we continue to kind of move through we've seen some consistency in that number and some increase right when you're talking about just about 200 basis points a year ago. So you've seen an increase over the past 12 months to get to 300 basis points.

Speaker Change #123: Thanks.

Speaker Change #123: <unk> represented in dollars.

Speaker Change #123: I don't have that number in front of me here.

Linda Tsai: Yeah, that's usually not something that we're, you know, that's something we're not going to really disclose, because then you would add all the leases up and annualize the number, but it's a big number. Great, thank you. Thank you. Our next question is from Mike Mueller with J.P. Morgan.

Speaker Change #124: Yes, that's usually not something there weren't.

Speaker Change #124: That's something we're not going to.

Andrew: Really disclose because then it all leases up and Andrew.

Andrew: Annualize that number, but it's a big number.

Speaker Change #126: Great. Thank you.

Speaker Change #126: Hugh.

Mike Mueller: Our next question is from Mike Mueller with J.P. Morgan. Please proceed.

Speaker Change #126: Our next question is from Mike Mueller with Jpmorgan. Please proceed.

Mike Mueller: Yes, Hi, David we're glad you're on the call as well.

Mike Mueller: For the question <unk> year over year base rent growth it looks like it was over 8% effect in the second quarter can you talk about what's driving that growth.

Mike Mueller: It's just a mix of the deals that they're doing at the assets they're doing Michael, so they're doing some better.

Speaker Change #128: It's just a mix of the deals that they're doing it at the assets, they're doing Michael so they're doing some better leasing at their better assets and that's really coming through the average rents for that period of time.

Mike Mueller: So they're doing some better leasing at their better assets, and that's really coming through the average rent for that period of time. You know, not every space is created equal; not every asset is created equal. So they're seeing great wins if they've got assets that have the best prices. And it's on a small portfolio, so you're getting a bigger percentage. You know, it's a smaller portfolio, a much smaller portfolio than ours, so you're just getting a bigger percentage jump.

Speaker Change #129: Not every state is created equal and not every asset is created equal so theyre seeing great wins that they have assets that have the best pricing.

Speaker Change #129: And it's not a small portfolio, so you're getting a bigger percentage.

Speaker Change #129: Smaller portfolio, a much smaller portfolio than ours, because you're just getting a bigger percentage of gel permit.

Speaker Change #130: Got it okay. Thank you.

Ki-Bin Kim: Our next question is from Ki-Bin Kim with Truist Securities. Please proceed.

Kebin Kim: Our next question is from key bin Kim with truly Securities. Please proceed.

Ki-Bin Kim: Thank you. And it's good to see you sounding better, David.

Speaker Change #132: Thank you and could you see you sounding better David.

Speaker Change #133: So just curious if there was a consumer downturn could you discuss how your portfolio might perform today versus a few years ago.

David Simon: So, just curious, if there was a consumer downturn, could you discuss how your portfolio might perform today versus a few years ago? I realize the tendency might have changed significantly over the years, you know, towards less apparel, more services, restaurants, or other uses. And trying to look at this from a sales sensitivity standpoint versus maybe a credit sensitivity standpoint, because I can understand those two things might be different.

Speaker Change #134: I realize the tendency might have changed significantly over the years.

Speaker Change #135: Towards less apparel more services restaurants or other uses.

Speaker Change #136: And kind of look at this from a sale of sensitivity standpoint.

Speaker Change #136: Versus maybe a credit sensitivity standpoint, because I can understand those two things might be different.

David Simon: Yeah, sure, I'll take a shot at it. So, I mean, historical... recessionary times. And again, we're not in that camp just yet. I mean, you call me, and you know, two months we might be, but I would say our NOI cash flow tends to flatten out. You know, it's very obviously there are so many variables that go into it, but you know, uh, and I hate still talking about Covid, but we really didn't see other recessions really didn't see cash flow from the properties go down and flatten.

Speaker Change #136: Yeah.

Speaker Change #137: Sure I'll take a shot at it so.

Historical.

Speaker Change #138: Recessionary times and again, we're not we're not in that camp.

Speaker Change #139: Yeah, I mean, you called me in two months, when we might be but.

I would say, our NOI cash flow tends to flatten out.

Speaker Change #139: It's very obviously theres, so many variables that go into it but no and no.

Speaker Change #139: Still talking about Covid, but.

Speaker Change #139: No we really didn't see other.

Speaker Change #139: Recessions really didn't see.

Speaker Change #139: Cash flow from our properties go down and flattened.

David Simon: I would think, not knowing exactly what kind of recession it is and how hard and how deep and all that other stuff, it would be hard to give you a number other than to say, History would indicate that our cash flow was relatively flat. We weathered pretty nicely, you know, because, you know, what happens is... 10 staffers, you know; big ticket items tend to go on the back burner.

Speaker Change #140: I would think not knowing exactly.

Speaker Change #140: If and what kind of recession.

Speaker Change #140: Our deep and all that other stuff.

OSB hard.

Speaker Change #140: To give you a number other than to say.

Speaker Change #141: History would indicate.

Speaker Change #142: Our cash flow was relatively flat, we weathered pretty nicely.

Speaker Change #143: Because you know what happens is.

Speaker Change #143: Tends to happen is it kitchen items tend to go on the back burner.

David Simon: And, you know, we, you know, the stuff that we sell has to maintain itself. So that would be the best guess at this point, but it is almost impossible without kind of knowing exactly what kind of market we're in. But again, we're not, we're not, we're not in that camp yet. And, you know, we might be later on in the year or whenever, but I would think our cash flows would be relatively flat, assuming it's, you know, It's hard to say what a typical recession is anymore, but, you know, I would say that's probably the best guess at this point.

Speaker Change #143: And.

Speaker Change #143: And you know to stuff that we sell all of our properties.

Speaker Change #143: It's to maintain itself so that won't be less.

Speaker Change #143: You know guess at this point, but it is almost impossible.

Speaker Change #144: Without kind of knowing exactly.

Speaker Change #144: What kind of what kind of market.

Speaker Change #145: Yeah, we're not we're not we're not in that camp yet.

Speaker Change #145: And you know we might be later on in the year or whenever but but.

Speaker Change #145: I would think our cash flows would be relatively <unk>.

Speaker Change #145: And assuming it's.

Speaker Change #146: Uh huh.

Speaker Change #146: It's hard to say, what a typical recession anymore, but no.

Speaker Change #146: I would say that's probably the best guess at this point.

David Simon: Okay. Thank you David.

David Simon: Sure.

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

Speaker Change #147: Our next question is from Caitlin Burrows with Goldman Sachs. Please proceed.

Caitlin Burrows: Hi again, this has been a very efficient call. I guess maybe on retailer bankruptcies. Express and Route 21 were retail bankruptcies in 2024. And I'm guessing you have had exposure from a rent perspective to additional smaller ones also that maybe aren't as obvious. So could you comment on how the outcomes of the 2024 bankruptcies on Simon's Financials have ended up versus your expectations and then give a broader update on the current watch list and going forward?

Caitlin Burrows: Hi, again this has been a very efficient call I guess, maybe on retailer bankruptcies Express and route 21, where a retailer bankruptcies of 2024 and I'm guessing you have had exposure from a.

Speaker Change #148: Rent perspective.

Perspective, two additional smaller ones also that maybe aren't as obvious so could you comment on how the outcomes of the 2020 for bankruptcies.

Speaker Change #149: Women's financials have ended up versus your expectations, and then give a broader update on the current watch list going forward.

David Simon: Well, I'll just say, you know, in Brian's Uh, remarks. We definitely have a decent impact from the retail restrictions. I mean, also, we have a little lower lease element income and a little lower land sales than we had budgeted. But if you put those three categories together, it's about 15 cents that we had planned on being there that aren't there this year. So, you know, obviously, we factored in the express restructurings and, you know, RU and so on.

Well I'll just say you know.

Brian: And Brian.

Brian: Remarks, you know.

Brian: We definitely have a.

D a.

Speaker Change #150: A decent impact from the retail restructuring.

Speaker Change #150: Also we have a little longer lease settlement income a little lower.

Speaker Change #150: Our land sales than we had budgeted.

Speaker Change #150: But if you put those three categories together its about 15 cents.

Speaker Change #150: That.

Speaker Change #151: His plan on being there that arent there this year.

Speaker Change #151: So you know obviously, we factored in the express restructurings and we don't rule and so on so those numbers are reflective of our new guidance.

David Simon: So, those numbers are reflective of our new guidance. You know, it doesn't it doesn't reflect, you know, there's a material new one coming up, but we don't we haven't, you know, we don't know of anyone that's on the road. So Brian, you can add whatever you want to add. Yeah, the watchlist, you know, continues to be relatively flat. Those things that have happened, we had a thought that they would, and it's planned ahead. We don't really see much on the horizon at this point. There are no new additions to the watchlist at this point.

Speaker Change #152: It doesn't it doesn't reflect.

Speaker Change #151: <unk>.

Speaker Change #151: Material, new one coming up but we don't we haven't we don't know of anyone that's.

Speaker Change #151: That's on the road. So Brian you can add whatever you want to add Yeah Watch list you know it continues to be relatively flat that those things that have happened we had a thought it would and as planned ahead.

Brian: Don't really see much on the horizon at this point no new additions to the watch list.

Speaker Change #151: Yeah.

Caitlin Burrows: Got it, and then maybe one more if I could, just the contribution to the portfolio from the retailers. I think your latest comment was for a flattish contribution in the 24th, so just wondering if there was any update on that and maybe your visibility or confidence in the back half of the year.

Speaker Change #153: Got it and then maybe one more if I could just the contribution to the portfolio from the retailers I think your latest comment was for flattish contribution in 'twenty. Four. So just wondering if there was any update to that and maybe like your visibility or confidence in the back half of the year.

David Simon: Well, look, I think we continue to work through it. You know, if you look at the whole Penny, Spark, RGG, Jamestown, we basically have around 200 million plus or minus EBITDA. In that kind of OPI bucket now that AVG is out, and it'll be plus or minus a couple of cents here or there. So, because again, we have accounting, you've got lots of depreciation, you know, if you don't have it, you don't get it back.

Speaker Change #154: Well I look I think we continue.

Speaker Change #155: You got to work through it.

Speaker Change #156: If you look at that whole.

Speaker Change #156: Hum.

Penni Spark: Penni Spark RG G Jamestown, where we basically have around 200 million plus or minus even to us.

Speaker Change #156:

Speaker Change #156: And then kind of OPI bucket now.

Speaker Change #157: GE is out.

Speaker Change #156:

Speaker Change #156: And it will be.

Speaker Change #156: Plus or minus a couple of cents here or there so because again.

Speaker Change #156: Never counting.

Speaker Change #156: Got lots of depreciation.

Speaker Change #159: You don't have you don't add that back.

David Simon: And the brands within Spark. The lower income consumer continues, you know, to fight through a tough market for that consumer. So there's not a lot of new news other than the team at Sparks working very hard. The, you know, the new stuff that they're buying is working, but, you know, it continues to be, you know, a very competitive marketplace.

Speaker Change #160: And the brands within spark.

Speaker Change #160: The lower income consumer continue.

Speaker Change #160: To fight through.

Speaker Change #160: A tough market for that consumer so there's not.

Speaker Change #160: A lot of new news other than.

Speaker Change #160: The team as parks working very hard.

Speaker Change #160: The new stuff that they're buying.

Speaker Change #160: It's working.

Speaker Change #160: But it continues to be.

Speaker Change #160: We are very competitive in the marketplace.

Speaker Change #161: Okay. Thanks.

David Simon: Thank you. Thank you.

Thanks, Kevin.

David Simon: I think this wraps it up. Say to everybody, thank you. I got a lot of well wishes during this tough time for me, and I'm, you know, working on it and appreciate all your support. And, you know, we'll talk in the near future. Thank you. Thank you. This will conclude today's conference. You may disconnect your lines at this time.

Speaker Change #162: I think this wraps it up let me just.

Speaker Change #163: Say to everybody. Thank you I've got a lot of well wishes.

Speaker Change #162:

Speaker Change #162: During this tough time for me and.

Speaker Change #162: We're working at it and.

Speaker Change #162: I appreciate all your support.

Speaker Change #162: And you know, we'll talk in the near future. 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.

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Speaker Change #164: Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Speaker Change #164: Yeah.

[music].

Speaker Change #164: Yes.

Speaker Change #164: [music].

Speaker Change #164: Okay.