SPG - Earnings call transcript Q3 2020 | Simon Property Group, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter 2020 Simon Property Group Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today’s program is being recorded. to Vice host President, like Tom today’s I’d Senior Ward, Investor now, introduce for your program, And Relations. Please go ahead, sir.

Tom Ward

and today’s Officer. Simon, Financial Officer; Thank today. the call and Jonathan thank Adam McDade, for on all you, Chief Brian joining President. Presenting Also, on Chief Reuille, call Chairman, David and are is Executive Officer you us Chief Accounting

forward-looking of deemed of reminder begin, statements made Harbor may a within information X-K Please on information the website call meaning call the release quick and that included are Private available Reform comparable as forward-looking those investors.simon.com. we Litigation this within Before this financial and of only accurate directly our statements XXXX are statements. Securities Act the the that press be today’s Safe to during variety may risks, the information that refer includes supplemental results date. and of differ release Reconciliations Both GAAP for actual materially today’s the due measures non-GAAP note discussion release to factors and filing. at We the and to a relating the most may risk factors. detailed SEC filings supplemental measures a of Form other our the IR press uncertainties, today’s you of in press to of

one that For to allow those to opportunity who one so to and please you question-and-answer ask with our would in respect to participate. everyone we participate the you like yourself question to follow-up session, interest request limit the might question,

pleased to introduce For Simon. our David I’m prepared remarks,

David Simon

us joining Good you today. evening for thank and

tenant in continued Our results quarter reflect reopenings and this rent collections. progress

portfolio this nearly shoppers continued are across to properties retail and portfolio extended Collections U.S. shopping tenants improve. U.S. XX,XXX season. to holiday operating, retail our our and from our currently open have open of with welcoming year’s All

November net rents. of collected quarter XX% third build we of X, have As

release XX%. the increases quarter Second quarter amounts collection in XX% calculation, deferred to and laid The our out are this collection collections the percentages details our the evening. second clearly now issued press are of rate including in

addressing some they still to who have we’ve significant open contractual amounts though even and unfortunately in certain progress While national made operating. with collections, tenants, rent are are refusing pay larger we their unresolved

to turn results. our me Let

Third $X.XX we was with third the the am $XXX the million cash FFO quarter share. generated in quarter I for flow reported profitability per $XXX or solid million quarter. pleased and of

rent $X.XX ancillary by another Our by line quarter and primarily domestic approximately income, income in third the reduction however, the compared or per to $X.XX straight impacted caused then also per and a share due reduced well. operations quarter, share including from and and international property as $X.XX $X.XX disruption per of lease revenues litigation were the $X.XX QX COVID-XX of partially share initiatives or $X.XX cost diluted rents net operations expenses and base lower And negatively includes our to international per XXXX. share lease offset FFO our lower diluted by sales the from settlement $X.XX

income of a components the $X.X for gross million. presentation, today did decline as year-over-year last $XXX QX, a basis can granted. not provisions amortize We and losses, a to quarter is third recorded higher retail portfolio and we are domestic abatements abatement the due bankruptcies. in last note decrease million the Total $X.X of and change $XXX not primarily year, Page were decreased third and for the important XX% in quarter businesses, Now, approximately the the associated total abatements are billion at immensely let through the with were billion to was approximately on this negative tenant. It with COVID. majority The walk the of or company have who abatements thousands lease portfolio issued to both abatement NOI to reminder, NOI were supplement in of restaurant of context rent amounts share. the the did that period, tours, suffering primarily the like small from from in find business the with I granted for XX quarter credit entrepreneurs, any as following you following year-over-year me of – been which terms in of agreed on the the year local, which small The

as was the property centers a bankrupt and COVID as – rents our $XXX due in retailers, stores as to and due before from lease impact. XX% from decreases to minimum reopened revenues tenants lingering our local as million and lower of of mentioned I and local and well sales terminations the reduction were a as support volume, ancillary partially initiatives. cost $XXX lower you to by COVID, reimbursements. appreciated Sales-based leasing reduction short-term to reduction our of nearly were efforts their Our resoundingly additional tenants to million due offset These our

XXXX. Premium Now, metrics, and second down was from operating XXX outlet quarter at third the occupancy of points quarter basis XX.X% Mall

function All caused tenant essentially a which of of bankruptcies, that is reduction. XXX basis-point

month and that’s months, leases improving. square our base of The out that XXXX due compared sales pipeline. rent a for year-over-year we fallen pleased the spreads from number down and we calculation. two signed the prior and XX we XXX X.X% spread $XX.XX, period the rent had to of third was is are XXXX for primarily shopper have leasing volume in deals environment of mix quarter, of to total leases leasing In throughout were quarter, to million decline with significant to QX the and the report improve year average of feet, quarter-over-quarter the Our XX% each continue trailing sales third traffic up QX sequential nearly

portfolio. tenant been premium long with bankruptcies. to pleased has in Demand recent of are portfolio interest, across space differentiated become for strong for We has see as space available a our result our that a outlet really continued the spaces

to and including in with owes just who’s to we uncertain, few outlets long-term name both productive Ferrari, listening and more. Rick many our like to here, Allbirds to UGG, with a Prada, exciting new names let many, owe We are leading best and signing deals not brands, and We the executing and highly pop-up the brands. are want access

During the at started redevelopment a of on at Shops the Macy’s Men’s the we with the construction construction we at quarter, Shopping Bloomingdale of for RH store Store The and Mission also Center Stanford falls and resumed a mansion Viejo. former

diligent spend, net now cash Our focus news the with net $XXX XXXX, is right approved this our capital through million. all – projects on good funding

become continue to Brookfield, have over discipline community $XXX with billion, enhanced refinancing liquidity sales Company quarter-end We to pleased in borrowing certain Brands And that venture capacity believe, single investment. sales in believe the We real grow to on believe Brookfield reminder, and acquired platform, The billion into year, of extremely total CMBS to retail recognized bankruptcies. over return know, to sheet; code. and markets made debt and EBITDA anticipate Brand’s group. you of the Group acquire to at the turn company time, And acquired XX,XXX and Penney me buying community our maturities opportunity did and combined this We and the for net paper $X.X has passion, this company and diverse available very Spark, we We to and is we the in with credit concentrated return the moderate customer as as grow in and of the $X.X Penney that as commercial of Lucky in we’re to of end than $X.X $X.X we property in of we’re Group, week. million our to of do grow significant can is, in local pleased total been as the billion the intellectual period outstanding. we this our facility, Brooks remaining very J.C. billion, we consisting that, the XXX inclusive story a the third of and addressed with brands next J.C. EBITDA. important the country, was brands us and our focus a to in estate financial Authentic earn we to Penney’s good for investments capacity. category. community the are secure bringing fund cheaply and we’ll efforts. support $X aspirational will Section and asset over of say operations, which the a jobs a transaction in our can achieve time. the core balance let progress for in is a billion priced loan partner; active importantly, pre-COVID. Gardens cost our the more brand increasing Jersey return investor This been we a part operations, Both company we integrated out brand, investment. you as continue we’ve the serve believe billion. We’ve know our through a Spark base been Now, sales companies scheduled also the and loyal to such bankruptcy XX/XX in our recently under proud on of now, our of partnered the our the a we’re contract an a quarter, as to customer to joint global with $X.X going concern a of the And have have with Both of Authentic at significant has of all widely higher and mills short Brands securitization, in expect ownership, us, is including part will

finally, required distinct cannot levels, real I’m and balance overlooked we continued – has sure circumstances, flexibility, estate stock common sheet, environment industry Simon often the then dividends in constantly above a have changing. COVID. dividend result and are in questions, of financial that we I paid our advantages And to with colleagues my under their running cash. that thank covenants well debt for and withstood Our to not $X.XX our are it any want headroom been above We our significant our it well open before again retail in up trying the business

government We shutdowns. have withstood

federal withstood We especially state estate in of and health, taxes. real lack have

and we’re hurricanes we’re We cash with are to hump have and things unrest pleased up. and the civil elsewhere, flow Louisiana and for Northern generating I busting in colleagues thank California, my withstood looking want their fires and in

We’re for questions. ready

Operator

from bank the Instructions] [Operator comes Craig first Schmidt from question line Our of America. of

question, please. Your

Craig Schmidt

retailers cases thank closings, to and versus state mall from I opening local I you. standalone the of wonder and of orders regards the concerning COVID you’re closing particularly consistency possibility properties? governments, seeing if guess, orders demands the operated Great, store greater acceleration future store given mandated made or the on with

David Simon

the Well, enclosed malls I reopen. that the And right obviously right only is weekend. down shut treated that the of Again, I and over where being one think deal that situation but are now. to is essentially that Craig, what El is that we’re enclosed now Paso, will in cautious. asked have an recent, mall we been is unfairly with we hopeful only That’s the deal inconsistently, with we consumer listen, think happened

only decrease Our is XX%. quarter-over-quarter sales

It consumer no predicting actions, starting been deal to come very there’s with far mean it. guarantees, with I’ve frustrating. enable done continue, it, of They’re our – well shown often and state as they’ve state-by-state, that certainly people testament is the helpful take and and we back. obviously, it’s all city-by-city, day. and I as So, cuts, look is the They’ve we’re county-by-county. inconsistency, government on have, – as trend every level as protocols, when asked overlook a done It’s local wearing to will that and up this to and that work pay often to we’re been the – masks we’ve and but

seen the collections. improvement the – in collection You’ve

jurisdictions see anything. restrictions spreads think XX% have our I I what right deal if we way future centers that the obviously, types It’s we am basically hopeful – have our these that one if at an real than better. that. at you only – it giving the making we financials see don’t that kind retail moves going estate and outlets but like. further communities know, the up, the completely are our have and I why do taxes, and recognize is point more local be will any start outdoor yet that’s when we But item That’s the in of as I we’re with opposite. evidence relief line NOI taxes, We the they dedicated one know for performance you the no environment will all our are real to to near you other estate looked is, order, distribution communities that doing compared can can think to and warehouses I property and with. to portfolio deal it. – of to

Craig Schmidt

Great. we’ve Day. Labor or And store closing XXXX noticed quarter number in some then the wondering maybe, you occupancy the I’m the lower first expect just still if trough, cadence a XXXX? slowed follow-up, since as be has occupancy could in XQ do

David Simon

Well, it’ll – or bankruptcies function a we further I Craig. think be whether of that’ll not, have

are should few deal based mean, potential next – bankruptcies think it that with fine, be and I obviously, But I certainly we’ll that out we is have we’ll to that. there’s what have that the in on it but months. some is, happens, we’ll there when bankruptcies possible further

Craig Schmidt

you. Thank Okay.

David Simon

Sure.

Operator

you. Thank

rich Our next Stanley. from the Hill of question Morgan line comes from

please. question Your

Rich Hill

Thanks thank bridge you Hey, much the of good the first to evening, question. for all, my on rent David. collections. for very transparency taking

think and I top-notch that’s best-in-class.

you I strategy So, to ask it. doing a question thank want maybe, about portfolio. for your think and

is a quality portfolio diversified spectrum. One is of things retail that types of misunderstood I the Simon in across estate you you’re about property – the not own real think

over I’m side with comfortable as XX% the you – coming NOI really decade. your you curious outlets? XX% the portfolio less, you call other you having, to how about think Do total malls? maybe it more from want think want do your about like, you next COVID-XX, like do you want or So, about you on international? do your I��m portfolio, you of more are just of curious Do

David Simon

and and strong more moving you Listen, consumer. we’re a – direct retailers I brands business, know think toward outlet the the believer in especially, more to as and with

of an COVID so outdoor that be the well various lives. plays certainly to with And environment part the and I think our obviously, continues into that advantage much

are. So, like I we where

impact I or think, don’t those have over time NOI material portfolio, shed, usually assets a flow. cash non-core our will be our on

And shed like I properties. – probably of kind so we where we’ll are more some

is Asia now. outlet very that we international business is business that we’ve There’s there good. is I intriguing the strong. The value think outlet added, have in

by I grow but feel to going versus like by region, type certainly, to we’re and So, product of want that, – by diversity domestic kind by international. the

properties down open and though; our we They some So, good. international some results had were expansion. pretty were up new

the but a strong. that, bit, pretty but there’s they going it’s came core So, Europe. down now big hard to Obviously, way back see a number was in little on

direct outlets. to kinetic with important that So, Rue they’re really starting consumer some been folks more bunches La, restrictions, is by but helping I brands that the from I think through way, partners, an a going half it’s plays in think to business. the premium the and the well up. the and want La shop that both hour my be Gilt and a It’s outlet

actually is that fruition, this wood. going to on had to knock we hope I vision So, come

quality and at potentially, at real quality look going we’re But retail like property estate and that’s than I focus looking I are. big always more the – the quality the is there’s more be we estate. important to obsolescent type real So, where think I and

And is so think a best to best the I key going our the success of in owning the to future. be

Rich Hill

world, COVID-XX Yes. this me it helpful, really I on like best question the to looking is the quality. probably, that the and that on just was asking is is agnostic seems whatever other And reason – itself That’s just for type retailer the just it’s the you David. it

still Group early? fulfill – as or to is resonate So, I’m can think think footprint those retailers, their Simon about footprints, too as help and is they beginning Property that about curious it you how with

David Simon

it located? over No, is and somewhat the have serve you’ve – months the happened only no, competition guy six, And that be irrelevant kind it’s I today, somewhat for to we happened and way mean asset this that it across say want seven, the absolutely. completely. quality, of to is with mass. or trend in be the Does I doesn’t It’s mall last served? certainly it’s it’s what’s Is to they exists. would customer the by own the well exacerbated still the competed eight critical whether – retailers going no, mall – really, got streets that it’s always the

Rich Hill

more. David. forward Thanks, it. Got Look to chatting

David Simon

Sure.

Operator

Thank you.

of the Our comes Goldfarb line your please. from next Piper question, Alexander question from Sandler.

Alexander Goldfarb

Hey, good evening. How’s handy. Good evening and David? out there that

David Simon

We’re out – definitely out we’re here, man.

Okay.

Alexander Goldfarb

center Well of look, your health and biotech world. the

are the biotechs we everything So, that appreciate doing.

David Simon

team is in because vaccine, from Because I line, street just their my hope, we’re when us. across gets there first the Lilly

Okay.

see. we’ll So,

Alexander Goldfarb

excellent. Excellent,

the or and can to two breakout on people basis, collections So, basis, a gross see appreciate clarity, collections first do you that actually, the so it’s this want a provides on questions; again, if helpful. net

in abatements period the basically granted. mentioned were You’d the expensed

So, earnings think up, that, the ramp go-forward see million, on about we and fourth a a deferrals jumped impact as that a the much the of about the go-forward, we we or so get Simon. think $XXX we about how to does can for of quarter this and the trying should mean think should of asking just abatements basis, of how I’m quarter on fourth but not ramp of… I’m kind guidance, progression impact by the

David Simon

news cleverly. But air the asking – had very and up You’re vaccine, obviously, COVID I had but is the guidance spiking. is still is we listen, would, today worlds the in fact about everything this – positive the I for

way the abatement the and and between provisions, cases a including the guarantee COVID but say I’m can’t I abatements credit was trade the that listen, the all weren’t retailer, do, of us. won’t us. put to the that be almost what melded would vast to because number frankly, hope bankruptcies any more. don’t the local we hit I for a it’s busy, it, was. literally credit But prosper, took mean? legally us we sorry a a lease behind we’ve I the would I the are there XXX,XXX. though majority that an did big to look there’s extent, say does not provisions that, we that’s behind right two, So, credit we But mean, issue, people decent are we one, vast well think in sure those that but behind trade two And really over when abatements you’re aggressively sensitive if our And were; appropriate look in at hope That’s – and kind that that but that I clear, be new that and a two I it, what the went win-win and do as big of it’s that with P&L the QX serious of and that the right majority know at the to very front, that’s them confronted retailer would was today out in for I we do, I’m us, us. and bankruptcies. new loss hope together, that’s are very to thing – their way do. I would for deals abatements but we as frankly. is the permissions, way would have granted of required normal well to quarters to worst plight; want I Alex. it’s and to that those on the to stuff the we I QX, there’s the the numbers, little

Alexander Goldfarb

David, But your tenants. largely the were you local said Okay. abatements as earlier,

or So, either haven’t. made it they’ve they

So…

David Simon

did we it, of abatements to majority others. grant that said I

I a more what it’s than in that’s in abatements – And I like do. projecting behind that us. there’s in a the pretty to been we’ve QX and a we but lot is have had have have number hope QX, I that – So, in didn’t we’re said, We’ll but what together. terms that it’s QX lower of again, other there. that, big mean

Alexander Goldfarb

Okay.

the both XQ. with and in correct, approach the basically, of XQ you’ve taken hard so for So, abatements all

So hopefully, forward going is less.

I it. got Okay.

Aeropostale, did question, Lucky do the second on you’re Brand, you Brooks is front. going Brothers, Now David to The J.C. retailer Penney.

brand bankrupt is customer elements do at Because still give this away base, and is are come got core highlighted sauce? you to confidence can that core the brand. What the to back just be tangible that are to – in shopper not that that the when that feel totally bankruptcy, are elements loyal the you What the mean, sales; get it cheap it’s that you and is trouble had trouble look way. there, in what place we you be the the that’s substantially highlighted you hey, certainly ones, shopper – retailers in giving a and buying despite the something You can there’s retailers for what without like I profitable makes something secret we’ve enough, recover. feel anything really still customers can cheap. these we this

So, what gives confidence? it is that you that

David Simon

do, we’re all, of – buying don’t first Well underestimating we things cheap.

Okay, Alex.

paying that’s just It’s good of So, in and think always that names, the with footprint. has I the reduce profitability rent. profitability, and Listen, overhead all they the I reject ability sales that It estate won’t the brothers we a following. real the given problems They example. year with of a had do is name from brands, those ABG that great winning lot $X to we were marketing – single won’t great stores a formula. leases bad the a a but attacked then then this on brand get been regardless. special based to I and we’re got strangest Brooks had names stores, there, million do and it’s always, research create seeing the do out were name and

on of that very do ABG tell business where worth. a blow been business to research. spark this that’s discount. thing. that’ll right-size good billion I all suddenly just we very it, positive and judgment mean, EBITDA brands, base we’re of, will something much going a it’s behold, be been inventory overhead it’s you and – – We how but will have we’re and the one partner. In and investment platform, positive we we’ll a the a have to EBITDA worth, – have our leverage got make and we you this it’s license in. lot know stores. it end just style, and we positive that you of We bad get – out think aspect like a it I out you They it day partner We significant since great it’s and just off better addition at that, and lo can which better without has And my to for a I we we’ll we’re of paid the a know with together, source isn’t when the plus be going plus put have question. to out it. haven’t $X up making of buy profitable

Alexander Goldfarb

forward thinks… Whether you we look to

David Simon

my Well, partner number. but I’ll thinks more, you that a lot give

Alexander Goldfarb

to crystallized. forward dollars that and exit seeing look billion We the

David Simon

know we’ll a – don’t been been good, so anytime great why soon. that I I yes. don’t a investment, mean, exit I – it’s it’s

Alexander Goldfarb

Okay. Thank you.

Operator

Our next from the from line Sachs. question of Burrows Caitlin Goldman comes

question, Your please.

Caitlin Burrows

Alex’s more the medium-term Maybe, to just near up on on following Hi. then. question

support your core you the So, Simon’s guess be like to return to or and been meaningful or I expect this how business, you investments earn Do contribution impacting generally in is the by much, of inexpensive when, And if how near so, that it medium-term. itself? both? the the Simon’s to prices terms you’ve retailers mentioned that at in a earnings up own ends significant allowing have in investments

David Simon

think it’s the I It be Well, above. will profitable.

separate our what that item is line that? We X-K, have page in

Caitlin Burrows

XX?

David Simon

little little, not a because it’s little It’s business. that a but a only outline – our we little aspect bigger, to volatile the it separately. of getting But is bigger, it’s bigger, – obviously, than Caitlin, bit a thing, decided the more materially you’ll rent

to So, us you and payer can standalone – a they look own. a then is at on don’t rent contracted pay the Simon And forget, Spark it’s do Group a to it Property property. obviously, as its rent

operate we obviously, the of stores get the that’s have. with running we rent, cash benefit the business the of the So, benefit collected flow we get added the from then the from and that entity added

Caitlin Burrows

Okay. for will on most the metrics maybe, and dividend or know important XQ, dividend the that but establishing And board, of dividend to it’s be the the historical quarters? and dividends, what cash per given in I then FFO rate, share drivers current flow, the up XQ $X.XX future

David Simon

in I are think, to we sense just of listen, COVID. I with very the Well think respect the cautious dividend, still very,

I feel like least So, we worst for is us, once at that we, mean, sure. I don’t behind the but know

a bit I to be our may conservative way we’ll year. spend think pick redevelopment, So, or Obviously, you that. development that new down cap see continue a a in up little next

have think So, company. we’ll volatility what our in QX finish will it year. can’t reinstate from position balance I from as I that call, we and in and be I you we’re aspects like XXXX the reasonably we idea good from yet to year to we in trying give but rate And well, when income better cash I ahead we’ll that saw we’d next we the go in the in think real our and obviously, cash out we the run pretty generation we well, of our which to healthy flow of mean, if to COVID. QX, figure pickup dividend earnings taxable as a midst and were a got really deal of confident out and But explain there, a all paying but the the given a with you that when do our guidance, earnings expect through

Caitlin Burrows

Okay. Thank you.

David Simon

Sure.

Operator

Thank you.

Bilerman question, the of from comes Citi. Michael question please. next your Our line from

Michael Bilerman

pipeline. about Great, David. thank Good the little evening, leasing I you. a was can wondering you talk bit if

large the feet if going the leases. that more tenants sort you You’ve maybe on. granularity two anything, if leasing like. within it term about million bit some you that was accomplished just leasing square how us activity. renewal third I quarter, or much little new of that, for highlight about a to that And potential a talked for in with the give working current of can you new the [ph] us vacating that I more of the little provide space, a there’s for what that are bit pipeline you’re and is be maybe, in maybe and just very pipeline, can wondering is changing leasing also TIs or environment to And know differences don’t nature flavor vacant

David Simon

generally, that’s, to leases. that’s you really I’m box the say the and get of retailers a go number number brands. to I’m footprint more into higher going lease purpose outlet want. that But as in not the would activity. their seeing through the as better the call going of terms not have much not increased have I granularity of the – again, the to all not business, There’s changed. the of we’re the – really to a Well and want not TAs grow

that There’s also companies significantly. Eagle business American companies wanting footprint their Parkers has seeing and their well-known grow that to that’s their oriented wear kind growing you footprint like a internet of the others and the world We’re the that casual of footprint. then are growing see their retailer

XX I for deals works the in them. we’ve got think

the the would leases So, doing from back have our now, spaces say, we’re as we’re of renewals replacing the renewals that it’s a I initiation. across terminated mostly bankruptcies, and doing board got lot are of COVID – and part that we’re we

year. I we own aren’t lost in we obviously lot that’s – it’s retailer that I nervous next and obviously, a and made it’s all we extent sales, has and business, stuff we’ll venture in our and have cash combination the look, there’s But And because be brand it, renewals, hold just, with and estate nations see were I capacity judgement income, because again, think excess to mean, retailer them improvements lease renewals, we’ll that for new the will easy, the better income real of XXXX our So addressed of and deal abatement, COVID lot all of I may retail working flow XXXX Simon a flow, I think our a industry. shut traffic-driven. of and mean, down a cash the by did a – we

The out in trying doing we’ll is it, it’s and deals business rent get outlet definition that to to the all you, open we’re of doing a we’re support, over next a to are doing number – board, are looking and are convey we of no, historically; new sure the have guess, rebound are more there number but extent and had it’s percentage business that the has I but make the defined I stores. do are – there that’s only. better, to of all open their ones a have we the Michael, So, think and I your but footprint. we’ll to some grow are we a anchors a deals. have had just retailers we’re but think clearly bankruptcies, that we’ll what sales, of lead a lines. quarter, percent there and those along business, rent And not There granular floor closing

Michael Bilerman

sort but some helpful then you capital the And obviously, out don’t over, understand focus the deployment which may response call of maybe, transactions very opportunities question about real also be a a reduce has also estate. joint either buying further innovative previous a brand to their you’re high-quality buying want retailers, you they partners, That’s and transaction what high-quality big yours but wanted of may or retail, estate that’s they named there, venture from color. better to just real go to in that I these buying a in, of want on on and to have having talked been lot your as follow-up

fits of how all to So, I’m understand trying together. just this

David Simon

again, get I but I’m our you going to going and if we’re litigation and like you bargains – I’d situation; respect Well, tailwind look at Michael, not much got be obviously, really can it. not estate, quality not into is with – expense be of and to saw it But real going we’re – we to say it, there there’s out the had. that immensely to

else I the And front mean, see rest see because between spark not and to now nothing nothing clearly, the the to on what really be, Brooks transpires, we’re of There’s retail of but or the and so for year. that penney – closing asked right this. I want we’ll we’ve and also really, been lucky. that the want we

partner, their and we then a Brookfield team to at integrating and do is spark. turnaround. have So all to of And the about into Brooks work sustain amount lucky that tremendous business management obviously, penney

do in our we is properties, to front. lease full on, with them really shut We debt And right, right plate is hands deal. external, we’ve can that now, we’re down deal we won’t up company we going so anything haven’t our – that our that, because There our category. – we’ve can be Brian? on anything really amendments. it but do And at open done looked XX,XXX we full, obviously, testament the got can a penney,

Brian McDade

Yes.

David Simon

hasn’t rent, been collected that we’ve easy.

a easy. Okay. like rent check it they you that okay, said, It’s suddenly that hadn’t to not send I’m just going been

busy, obviously, brought – refinancings We’ve some pipeline the it done terms back So, redevelopment. a of up we’ve doing down I lot been there been shut just to on secured we’ve front. the about in development of extent. mean, we

we So, full, things the – all I with all us. I mean, that at of – have hands executing got we our are think unbelievably been been we’ve the thrown

really we’re this externally at So, moment. looking not

Michael Bilerman

Brian like now. less sounds It hair has

David Simon

of the he however, your being may between one you hair; and accuse by with Brian me here, Adam Tom thoughts. way, vantage the I’m – in point, on I only and the depending think

So, okay.

move Let’s on.

Michael Bilerman

Okay. Thanks.

Operator

you. Thank

line of Our Johnston next bank. question from comes from Derek the Deutsche

please. question, Your

Derek Johnston

changed? believe posting emerge you the we and Good and/or evening. still guys the merchandising approach Esports, earlier investments viable from do path to everyone. a be Hi how Soho forward PARM, do pinstripes, actually these and them has and or partnerships, Allied you House, Nobu in view Hotels, effect, pandemic pre-COVID as them

David Simon

wish Soho those the good and everything hit – hit and obviously great wish obviously we and ultimately, but – brand be Look, us, businesses, will gets No. stronger pandemic didn’t we a has and that question, but – online. hasn’t back

the and So, very the think. that they I a we some months actually ago, capitals new reality did of couple at price is comfortable in brought

opening the which and in listening, January PARM, [ph] a is, Woodbury’s Burlington think So, opening and out doubt at in Jeff we I and great. PARM. and year, I Burlington Soho I next we actually have dinner Woodbury if great but is had spring, he carried and Rosnick’s son my

encourage was PARM eat dinner. go really I’d chicken it there, everybody So, to good,

great a lifetime great brand, have think brand; the great will in survivor confidence be the that I in customer CEO, a entrepreneur, all it’s great I base. the world, industry.

So, don’t we way what’s I did, some like meaning a by pops those, I in we’ve I we’re and deals feel we’ll even think at though some, we pretty than think at large, had we’re think to MDs there, deals and the going good selling profit do venture changed little think businesses the spot. we recent think that’s don’t little I – in. came new got don’t I capital interest anymore. what we’re some our of – those come we’ll we’ve in but those the prices higher a some there’s – do into because

flywheel those out I that all are of okay. got swans of companies good grace just I anticipate, much to and feel all too too we all to black invested generally pretty fit all the and say think but we of of much creating. didn’t frankly think expect alive over. though. come But we’ve We the that They’ve – it, were we’ve black they’re I in, – them swans,

Derek Johnston

larger of hopes focused lifeline And that Will Forever Okay, brands, J. table? is they you mix on were to mentioned perhaps and made Authentic briefly with any the C. some know the at brands Penney Brothers, are on I recently remerchandising some additions merchandising XX. and investments? lucky, great. sales, Brooks accelerate sticking a drive

David Simon

absolutely. insight is Great answer and the

that in interesting intense a that the that that discussions control as ABG do Penney. going lot all that’s of home found we relationships our one either of will things a does, a find we combination with of as well is, those brands on. there’s think So direct-to-consumer that the products we or the crowd, And

expect matrix enhance as ABG would with vendor as we brands that the controls the So, well Penney to ours.

astute answer is So question. the and very, without very

Derek Johnston

you. Thank

Operator

you. Thank

Our next from from Mike Mueller JPMorgan. question the line comes of

question, Your please.

Mike Mueller

Thanks. the is reserve the rent rata pro quarter? uncollectable Can you tell us for that’s what minimum in

David Simon

sure. joint minimum The rent pro-rata our ventures? Not in

Mike Mueller

No. in quarter? The our pro is it rata, what pro the the uncollectable rata reserve, basis

David Simon

We’re doing basis, this gross we a because it. that’s on at look how really

Mike Mueller

sales how the you can about And or similar are different and outlets talk Okay. versus malls? the traffic at

David Simon

get the into average. the to don’t to I enclosed, an those continued necessarily outlets – board performing, it’s tourism, are the to continued ones outlet are but if are we’ve specifics, though, are to want seen does it outlets be our or across an that cater better. performing The What whether underperform

lack centers outlet, or at than because Universal both the enclosed Orlando, less are we enclosed Orlando, market in mall of much obviously, operating underperforming and it’s outlet in have whether there, capacity. the tourism that we full So, an Disney and have of with

Mike Mueller

it. Got

was That Okay. Thank you. it.

Operator

you. Thank

comes the Dijkum from from question next Floris of Our van line Compass Point.

Your question, please.

Floris van Dijkum

David. my Thanks question, for taking

David Simon

Sure.

Floris van Dijkum

an would at Brands; you with C. I to going Authentic suggested guys – J. had the on equal and what a bought? Brookfield step partner or same question they and the you into in Penney pricing yourself. deal they they’re step Would be price

David Simon

make. in but same we’ll do our the upon contribution equal both in the – see be will us not investment an they they based Brookfield partner, they’ll Yes. and price put

Floris van Dijkum

Great.

do about the and sounds brands their like? you bit the Penney – through J.C. little talked exclusively I Penney how having increasing so brands it And you private at their J.C. look Authentic Brands, outlets selling a particularly, mean, sales

David Simon

like but brands, control a of didn’t they I a Juicy have an Juicy not they’re And Couture they – say example. in as Well, – is that’s number exclusive, J.C. Couture Penney.

through now, that And will ABG I J.C. brands kinds end the to Penney store. think eventually, so distributing vendor Penney those department going matrix controls, we’re up of

for So, it’ll everybody. a be win-win

Floris van Dijkum

Maybe, question some particularly brands of as with relates Okay. the those well, my follow-up outlet to as business. it

your mentioned air. they’re outlet obviously well; open doing you quite So, business is

still can outlet restrictions. – reliant they think in about if don’t quite So, business you a to future? going tenant bit could forward going as Brands little Authentic apparel the you does now, is in talk right could business or the be Brands your same it Maybe, fit in a on and the how be they and tenant how large Authentic and a is outlet have

David Simon

used – we’re really, example, don’t partner not not is had be outlet with and operate but the they stores is take it. we We Simon by really; to don’t they Volcom in, own they operate now. necessarily Brands invested not of – our those don’t we’re brands But not a they’re it’s outlet I where Group they that stores, in stores itself, and but some in Volcom, but Kering Volcom. an IP investor Property then own they operates Authentic They portfolio. the that, do operations. Volcom is But part owned have mean, sold

that of are in for stores “stores.” years. they of outlets certain and ABG, – not property way but do that our intellectual will have that’s continue, operate an been they own operator So, that they do brands but do

So others. operate I And I’m brands they’ll again, was your and a sorry. have but we’re stores. ABG operator what of do does, Joe not store involved in operate those or either an potential. find their forgot do mean, I And think that number everything like it. question? I other

Floris van Dijkum

Yes.

apparel, of The other overtime? to severance changing you regards see question was David and do apparel the that the in –

David Simon

but sector with Look furnishing think, that doing lot a home lot I in we’re home seeing more all we’re and in furniture – more naming interest the folks. a the outlet names, furnishings generally, the and life deals without

the so And in that a speaking, business you’ve generally of pickup as seeing I think seen I think we’re well. lot outlet that as shift

Floris van Dijkum

you, Is lower it’s sales. center? do concern about at driving a you think the for the all traffic or have would that typically Those

David Simon

boxes, all right. I have driving little a RH. rather usually, think big so okay. that’s versus, That’s or have leaving concern about dress no barn an the a what I rent traffic. that it’s at those the about I’d that And all. are

it would to I kind rather so have us. that that think I available So, – says of trade-offs are

mix will less brands. some significantly of relevant end the better because improve, brands we’re to up for or the think some I the – reclaiming actually impact of the good going older

Floris van Dijkum

David. Thanks,

David Simon

Sure.

Operator

you. Thank

comes question Tsai line next Our from Jefferies. Linda from of the

Your question, please.

Linda Tsai

Hi.

your do to net understandably and leverage to debt but of how would is better sort target want XXXX? this to since XXXX. than a term much is you What expect NOI leverage overall trend you in Your peers,

David Simon

decrease, should right. debt-to-EBTIDA – should leverage our Well,

So, cash. generating we’re

ultimately, and – other so is sell indebtedness, we’re cash excess – spend modest our the development than reduce to sell dividend Our assets. we’ll and will go also

we’re easy still that going mean, very you not would to advantage – Brian, achieve, we’ve hasn’t I that. to to we’re our sheet. maintain an looking essentially want been anything? balance to hard not and add worked that’s So, I blow

Brian McDade

recoup just NOI given relative No. We don’t year, down the naturally come Linda, next year-over-year. of

down see periods will a So, with our expectation. normalistic or us level you is a come prior back consistent more to

Linda Tsai

And over albeit then assets would a would of for not will this Like, in Thanks. be shed, impact, what wait that stabilization the material in terms you some non-core timeframe happen? NOI?

David Simon

some respect impact, there’s because not projects, earth-shattering a not but material help I non-core fact, Well, mean, just try now it. but assets we mean, I this is we’re on the we’re big to us we’ll better, run – going to got have just to, do isn’t, and to I have that shed, going an it. – – asset won’t a going this – it’s not we’ve in won’t think to about we’re the company we’re see, – market. it’ll have it’s focus

Linda Tsai

collections the the XQ, or in term, Thanks. think one of you do improvements? neutral terms your in last would XX% just one, expect bigger will And in territory then this neutral stay in you

David Simon

to before hopeful be but October still Well, accounts you positive some would in similar something to hopefully, – we’re not will we progress just we bigger would I we as that happen I mentioned lot – and we’re that a hope that of QX. it in got I expect But better obviously, with. I’m have – made there.

up. then So, once jump it’ll that happens,

Linda Tsai

Thanks.

David Simon

Sure.

Operator

you. Thank

St. Haendel of Our next question comes from line the

from Juste Mizuho.

Your question, please.

Haendel St. Juste

taking for Hey, good evening. my question. Thanks

the I’m of I box And that specifically, space you’ve to able all commentary was you larger where you coming more Amazon? anchor Thanks. space; overall how at and to any David, curious the spreads it’s whether are bit now, a compared leasing? So could run the leased you rest for to from environment any of about talk hoping

David Simon

mixed in XX couple and Yes. I not, XX,XXX, lower opportunities. and to don’t shrink program Believe still not returns. looking new maybe, to up going store department to to the it the a going going the right they’re but it. manage going investment, plans stores, think it at going believe still future square is effort in undertaking. but feet the we’re not be of there’s to still that or have in – had XX look healthier mean, do not at use and with deals, we’re a boxes and bad believe we’ll going done. shop And community looking generally, the XX a the a companies we of space, deals talking retail we’re there’ll to – small we’re new that, having Obviously, footprint that the the not to to I to appropriate retail, towards think in are and XX,XX, we’re our I are XXX,XXX but build, make a to or there over, rush you’re be It’s to we be be to take boxes

space. Fact the matter don’t we lot and own we’re it certainly going of that not of there’s there’s So, the to the still it opportunity but to pay appropriate ask. a the release bid still a we between for is prices want, gap and

heart We’re operator will not a really estate but it’s survive. asking, be and not going were it to it’s of not to faint if they be But capital, to real were to it’s ask, – and great going and take would but they’re really bidding, going big for and to good but the be we bid gap, reprogrammed.

control. and two we’re will the that the to down had there. XXXX, do we’ll we’ll out had still is we we think probably Sears and it. anchors, store have XXX,XXX the but probably investment. we not So, still like small returns square going jumps two Brea, just a we But feet We’ll restaurants, have, of anchors on programmed but we the go a do probably something always costs do We’ll shops, appropriate this old

still portfolio decent So, stuff to for and box do demand to some just improve there’s box. on there’s still our

Haendel St. Juste

got you that or Amazon of if willing it. any it, That’s to say been able Got has specifically? with helpful. Are leasing

David Simon

you repeat please? it, I didn’t well. you hear Could

Haendel St. Juste

has any you’re I leasing or if curious Apologies. that been able was of willing Amazon. specifically share to with

David Simon

deal There have signed – no No. we Amazon. with

Haendel St. Juste

there cash sequentially a do a disproportionate Okay. anything Was in minus down quarter think you follow-up broadly, Thank more think and in on guess when another the I having the And trajectory quarter vaccine ongoing importantly, that trough spreads be negotiations near-term row. the having the in a XXX that during we and calculation lease pre-COVID leases build a of effectively to at X% you. second quarter, the will basis leasing you flow? how as do hand back during

David Simon

Yes.

I boxes some year spread think to really that out last we mixed, this rolled had is compared the year. because

down of Because box really wouldn’t quarter, up So, jump and I or out good year, I – really so a it’s rolled good we later. wouldn’t a this had we XX that’s in that and last months whether activity number lot it’s year it’s mix a not as this issue.

really more stat. a is you a in probably mixed base and it’s of So, our that which rents see issue could little more important increasing,

Haendel St. Juste

Okay.

David Simon

Okay.

Haendel St. Juste

Thank you.

David Simon

Sure.

Operator

Thank you.

Vince line the Our next Green comes question from of from Tibone Street.

Your question, please.

Vince Tibone

And at cause anchor Hi, movie theaters year, co-tenancy impact few your like to temporarily good on I questions could that is just a center? also financials when tenant have clauses more help a the related evening. trigger what any? this co-tenancy us have clauses, you can closed, had understand co-tenancy then an broadly, today, if

David Simon

immaterial, and let it be we in Very expect or me little be next and It’ll year don’t this meaningful say better. it restate material Vince, year. it to

Vince Tibone

Yes.

know temporary much. it’s this on is temporary front And Okay. to an potentially obtain that if then – the on that is hard point, like closed, I or what issue theater

David Simon

No, a question. no. appropriate more it’s

a may theater immaterial. it co-tenancy I at that boxes. closures remember at think, the one mills deal can’t affect the which one I of all one few of essentially of a of the for and It’s

Vince Tibone

clearly centers for the pace and you some the I’ll you then pursue control there, next that. story captured thinking and in redevelopment few let better about even you are order Penney, on your opportunities Okay. of to bullish you’re Thank of And years? there the but how potential future J.C. in

David Simon

today, I hasn’t not not was done it – approve which closed. but did hear. our it’s Well, yet. happened, did fact I And what there hearing in still to hear not a

complicated it’s gets split loans. it in what owns real between company later what Look, POSCO approved. the closed it operating estate sometime assuming the and in be month. It’ll the way. up So, It’s the hasn’t

We rights certain have to rights. assets. have Simon, being We, recapture

do. opportunity, we But I when will get guess we think how guys, to don’t patient So, for that be does us, but do the And year’s pressure that positioned that I Maybe it, don’t where the to Brookfield, most want eventually, going maybe thing there I business. I will, be to recapture to are the I’m sure I fairly soon. stabilized think do – stores and some really to we happens, important then the that’ll appropriately now properly risk, certainly do anytime I we probably And under that’s right know to next it about we’re future, negotiate, get maybe constituencies but really our what is with we Brookfield. it but will, involved. not just space. maybe, works, all it feel because but the an think you’re with are not not positioned

Vince Tibone

Okay. Thank for you that.

David Simon

Sure.

Operator

you. Thank

Our next Markets. question BMO Sanabria of comes Capital from from Juan the line

please. question, Your

Juan Sanabria

different is, traction or with assets they discussions with just most transpired. Hi, they and their you thanks of given grocers what wondering are how owns space to going kind controls? how how Simon the that’s are in for various attracted the strongly of format that time. COVID and seen the to I kind from performed Have in the different types of date was

David Simon

It’s reopened in grocer one still a Boca. specialty in

lease I made it well. that replace that We Just recently, announce can the know I grocer deal fairway great market fairway, grocer. signed in to a a we that with just week the very Nanuet that’s this doing don’t just

be can’t lifestyle center we great. think There’s really and we an of specialty XX bulk handful to – as It’s it come prepared I your did be of years. the specialty to are mammoth end we’re big that the there Boca be to I not grocers quality. ones, it It’s going next there’ll cap will over to in, opposed get is focused XX think couple way grocer deals. of and but a get the the did on no like of of kind XX, foods, So, what high-end sort is we the a in, one ones

not do foods, the out or there a I looking dining of place; but, that world prepared to same You category, I still of recently, have milk, Italy’s could guess comment the necessarily get with had business. a more you pick consumable. your specialty up grocer, are kind that’s a them of foods, prepared the special

So, I do to continue think grow. that’ll

Juan Sanabria

Great. And me. from a follow-up

at, some quality interest any the you what to given in or talked acquiring they’re assets, some of trying level? You about kind Westfield centers looked corporate retail. do Have at of high the

David Simon

No. doing they’re I mean, there report. they’re doing, what so nothing to

Juan Sanabria

you. Thank

Operator

you. Thank

Our Ki next of line from Truist. the question Bin comes Kim from

please. question, Your

Ki Bin Kim

you. Thank

a of You’ve wondering provide was NOI million on helpful any was bridge the number. last kind I call? the that you there’s to biggest $XXX provided can this portfolio just components if the that from it’s year? looking a year One of at big mentioned. And breakdown of you

David Simon

range. again, not helpful one a roughly as to split, abatements Well, – – but credit abatements be that range. between between combination, to abatements, are Is COVID in don’t and I kind going that Is between but mostly – – QX so provisions, it’s credit maybe, QX, I this it’s kind split this and speak routine, credit and that one-time it and it’s a it’s is in impact, that’s the which that as XX/XX XX/XX of The to said, and a view it’s bankruptcies if provisions How don’t are helpful? I of somewhere provisions. you, mostly know, bankruptcies. is of I

Ki Bin Kim

are that near-term And tenants corrupt being incorporating is. list the not It watch or bankrupt? not on you are

David Simon

else beyond Credit anything provisions associated include bankruptcy. with rent or lots prepetition of things a

Ki Bin Kim

comes from but just when the And of today negotiations? mentality of make in the curious. about to Pfizer, know it impact your any early, terms kind lease I does given it’s Okay. news vaccine just that

David Simon

mean, back I and to are that getting we today, before here and mean, and were had – up, really. here our better to listen, crap news the a we we’re and up we’re QX, lot dramatically our feeling collections our QX normal. business Not flows dealt I we’re I cash – with in of and and

all way this or two been sad mean, black and of it it’s – happened our – what’s – what’s swan for situation, people, the anyway. that what’s country that times deal in had we’ve maybe, to more the have to good it’s three But just obviously, trays peppermint headed solid of to fact, were little I the that? businesses with we is to So, just employees, beforehand of obviously, us there’s a see all

Brian McDade

Pep in the step.

David Simon

Pep in think just it’s the step, news. good I

should, I we Let’s listen hope can shutdowns we’ll and hopefully, now, it us, of face get should. more not into can not fine. that those to gives that’s it’s benefits COVID-oriented And we dealing shutdowns. to going get mostly some or – And our see beyond. XXXX – going and good. it That’s It done. we’re out that let’s hope hope client confidence from affect with because and impact it’s But

Ki Bin Kim

you. Thank Okay.

David Simon

Sure.

Operator

Thank you. program. This conclude question back any I’d Simon the today’s to of further edition David for like the hand does to remarks. program

David Simon

be Thank Okay. on you late night. and thanks a well. Monday for staying

Operator

your program. and This participation in Thank conference. today’s ladies the conclude does for you, gentlemen

disconnect. You day. may Good now

Simon Property (SPG) 10 Nov 202020 Q3 Earnings call transcript