SPG - Earnings call transcript Q4 2021 | Simon Property Group, Inc.

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Operator

Greetings and welcome to the Simon Property Group Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. President, Vice Senior Ward, Investor Relations. Tom ahead, go sir. Please

Tom Ward

our on thank Thank Litigation factors detailed call of only XXXX. date. Safe us be this joining be Officer, Good and within SEC measures filings factors. directly President. as is financial to today’s you Chief the relating call the most Chief and Brian Both website X-K may statements and quick actual you, today’s that evening made Harbor We supplemental the you differ to Also and today. available reminder Officer, Please refer Officer. for of at the includes information Simon, Adam discussion Chief and to our the information on forward-looking note for call measures materially Financial risk statements of other accurate Chairman, are during forward-looking risks, a McDade, deemed Hector. this Reform of Private David Executive may release results press the the investors.simon.com. Accounting today’s statements. are Presenting A the variety Reuille, those that that of information a Reconciliations comparable release filing. supplemental to are Form Securities release on of in And within uncertainties, call the IR and Act the may non-GAAP included due press GAAP meaning today’s and press of

will to hour. limited one be Our this evening conference call

that you Simon. to to the to participate question. introduce in David For question-and-answer limit I’m those we one request the like respect who ask pleased session, please yourself to would

David Simon

space difficult a year. platform productive and a gains, billion ‘XX The We $XX.XX cost, results from our investments robust, of quarter investments recorded the and a portfolio had sale funds a per our to share other from Fourth generated broad loss after-tax loss the in in fourth and results and extinguishment by sales, to $X.X nearly operations year. busy is testament with focus amount coherent And on occupancy Company interest. of an for strong debt had demand of billion spectrum structure, net smart $X.XX is of quarter in a our predevelopment very quarter for a or a off operation or from for We tenants management, a successful partially end year record these a Included was retail our results. We gain record share. were on operations, very $X.X coupled active on funds a $X.XX write-off per strategy. cost offset equity billion XXXX, are of of per share. $X.XX from relentless coming

to conclude excellent quarter had operations domestic year. Our another the

the Domestic fourth to the of quarter was and and was Our the sequentially increased XX% international and including increased NOI quarter that minimum the $XX.XX. points XX for TRG property of international quarter included year-over-year. the rent NOI I’m from basis XX.X% our quarter. in for XX.X% base year, XX.X% $X of variable operations NOI points end year-over-year if for occupancy basis at share Portfolio and an for outlet -- Mall you XX.X%, and improved properties. Average the rent. Add year. increase XXX our sorry, the

redevelopments. our for quarter. the XXXX and are lack given have done quarter X,XXX than Mall mall at the fourth for are and record This than per in Retail over continued year, significant sales square For fall. the on fourth the more components more hotels leases feet. tenth amount a and years. South XXXX foot business -- France of retail leasing million six of a particularly the activity densification new signed opening premium of the to costs up total the one sales this fall Construction for Phipps of opening compared in which developments on sales we with spring Japan, of X% Occupancy XX% and completion they’ve in at and in for foot and square the at UK $XXX obviously for the the results we for We reached Reported last the two ‘XX. practice reported years completed our of These highest opening year-end. facility. end up mills. the the tourism five were of in was opened will the outlet Normandie, outlet XX ‘XX. in fourth We continues of level sales the international Progress in impressive, NHL quarter XXXX densification of been $XXX Plaza outlet and headquarters year-over-year. per retail We five Korea. two XXXX, added XX.X% this lowest an open continues a

a redevelopment have will funded of We which significant cash from generated projects, internally our pipeline be flow.

SPARC require continues, our additional borrowings team it tremendous U.S. in and expands Group, Rue capability increase which own Rosen results, also its marketplace square and Let our terrific we Shop foot, was results points and customer line a sales The SPARC, no investments, and management a $XXX Groupe. acquisition they XXXX, great including Marc strengthened posted XXX drive we Gilt growth. also Outlet in me operating will continued Taubman XXXX Digital results other basis platform on ABG Occupancy Reebok JCPenney’s opportunity retail CIO JCPenney, with by investment their delevered Officer. RGG, balance year. XX% integration partner Chief his TRG, of Realty Premium to metrics Reported underwriting. There’s SPARC be footwear sheet, the a reach. operating were sportswear will Their sales XX%, investment the $X.X impressive. year-over-year. and and beat expertise. Group the increased in which growth Company growing, their for expect per to has and position turn new for develop SPARC CEO, as to RGG, Reebok credit. namely for is billion. produced liquidity our now which is

in stands $X total X.XX%. billion. $X.X delevered rate of $X XX been recent of years. amended billion grid Now, billion. turning and We and to billion credit balance more a lower completed by pricing We $X.X liquidity five offering, million revolving the interest for sheet. We’ve issued $X.XX And extended our debt than January with the notes active in with of We for at property notes, mortgages an at average of billion refinancing debt the our $X.X facility €XXX markets. the billion senior paid notes

share dividend, dividends turn the year-over-year $X.X Now, last to out Today, a of cash XX%. just we in to paid of increase billion This $X.XX a XX. we is per common dividend year. dividend payable March quarter, for stock on announced

through Now, for XXXX. guidance go just to

looking lease compared $X.XX $X.XX is our per $XX.XX extinguishment partially share. years When to investment guidance, approximately the in rent deferred our share $X.XX ‘XX. results. per is related by charges, items historical and ‘XX percentage at liability of ‘XX to related in Klépierre, per $XX.XX offset actual share included income approximately note tax FFO FFO Our per than a adjusted reversal $XX.XX share share $X.XX to it gain in gains gains settlement approximately FFO Approximately guidance to to at important following ‘XX increase compared brands. average. as authentic to the resulting and for in higher also debt prior significant of were in an These overage per of

and X%, up domestic all the following at NOI levels assumptions: euro guidance and no from yen future to strong JCPenney U.S. significant SPO, continued Reebok FFO on drag of in the continued to or activity. ‘XX property Our RGG, growth, SPARC integration a approximately to of investments growth and to muted the $X.XX international fund reflects versus compared $X.XX acquisition cost additional disposition dollar the and impact tourism,

the basically great reported want share. a XXXX. -- Simon our guidance our I per really back year. and bouncing a share, I team for knows, but per communities And $X.XX they with and every mistake think difficult -- analytic that in around tireless ‘XX Finally, was their ‘XX about I consistent day, the Tom we it, very work FFO was continue $XX.XX for which Make was think for community do no entire thank and shoppers after to retailers, to

and So, ‘XX growth that’s and we’re plans a heck of of Company, our our the a year. for future very excited I’m any for about questions. prospects ready

Operator

Evercore first Our Instructions] question Sakwa [Operator from comes line of Steve the with ISI.

Steve Sakwa

occupancy your guidance. I further leasing about just year the seeing. years. of the to then, the for or What XX into supplemental noticed that trends comment you used a the activity in that provide spread leasing at just sort how to expectations ‘XX? of on also the kind was the made million tying might additional least I on if in tie feet And are the Thanks. for being comment that information guess, record six there wasn’t And for I pricing you’re Thanks leasing the disclosure And kind could of last anymore. you detail gains? back you wondering that

David Simon

Sure.

So, Steve, tenants goal. lot new of business the a ‘XX is optimistic, I new with A about think we’re very leasing. of lot

occupancy retailers. -- years of increase COVID, the We been our with to And expect working compared been ‘XX. couple with last year-end to we’ve obviously obviously,

like to of that haven’t the we’d had we So, level quite pricing power see.

and to and And looking our a the strengthen for time. We’re But as we in we’re that between not bet continue that feel end. starting world from to clients. And we’ll bricks rental we standpoint. going to that win-wins us know, better our you see was over growth drive took mortar still

the no that importantly, real fact bet in because the there’s we you’ve on at produced the And in frankly, or that away got on account company. because bet. what rent, spreads. lot in done we the into try -- the industry spreads we portfolio a more why ‘XX, when are why percentage see we there. expectations. overage it. and of And We our historically deal renegotiations companies results believed that’s So, wanted sales doing we above retail have there’s came It is we’re demand that make very few the the and reasons haven’t achieving And made on we that of we right either one And But, uniformity. business. we our back to the our with to we it our COVID, that did with of about strength -- our taken that got estate to which of look

‘XX I we time see but got some we’re period. it. the activity, execute a think of going with And I’d say takes be new still the remiss we’ll stores open. all great while to now, of it So, to going stores ‘XX, there’s amount tremendous just see to in so get much to do that that not on a in

Operator

Burrows Our next Caitlin question from comes Goldman with Sachs.

Caitlin Burrows

just guess, additional any What $X.XX know ‘XX and And this the the can could question retailer background retailers on $X.XX and drag? the the a contribution through assumes causing David, more drag had contribution Maybe guide what investments that I what on impact it? mentioned ‘XX? future go year. kind includes from I part. is the driving for guidance what’s but of you to I that of guidance wondering just growth kind Realize was ‘XX it’s what’s in specifically if ‘XX. give you the that for in the you

David Simon

Yes. I future investments. about all is drag mean, the

little call, Rue La Gilt and we’re in a outlined we So, mode with a the shoppremiumoutlets.com. growth La but on bit

So, acquiring we’re customers.

three the technology but platforms marketplace building And to investment. out We’re those with great takes we’re and growth, sales serve marketing that growth more.

one it. of element So, that’s

second is, business. digital building is JCPenney it as beauty out The know, as well of you business as its element its

it month. ‘XX as to reduce earnings have with is We unique its finally, operation. close to belief the deals that now the consolidating -- in temporarily at SPARC closed bigger going will It’s going an end invest office brand the going we’re yet. doing that’s of in from these to operating opportunities, Reebok it’s the And then, just again, in hasn’t integration (sic) the create to going deal So the that. and the -- [‘XX]

We have excess real estate.

return much whatever investment through of work more that. to be have will we than for But ‘XX So, on the that all is. the

track payback to you So, I what all for they nickel, it have -- Difficulty] the penny got is That’s of same. we’re stuff businesses. track on very these the -- [Technical by XX mean, RGG future invest months. the But growth. seeing. They it

NOI In of that, investments, more less that same Caitlin, budgeting levels basically than mentioned. EBITDA, investments we’re platform our I these terms outside operational investments just other of or our for the other

Caitlin Burrows

Got it. quick thing. And just one

in You Reebok mentioned mean reduce Did will QX? you SPARC the integration earnings ‘XX.

David Simon

‘XX. sorry. I’m ‘XX. meant I

Operator

with Our Rich comes next Morgan question Hill from Stanley.

Rich Hill

moment. a for dividend the about talk to want I

for raised You’ve three it times. consecutive

previous I think flow you we’ve the maybe you why about get similar cash answer, to it’s despite Can a you you were in elaborate just up is were discussed I were, COVID? on here? and more XXXX, were in But being in where I to businesses. the mode well talking below you XXXX. in the recognize where where think, back past in increase free trajectory investing to there that growth to $X.XX dividend prior not in

David Simon

Yes. time that be expectation my over we’ll I those mean, again, would it levels. reach

just I abundance if think a at increase. an caution. it’s Q-over-Q, you of But it’s look XX%

historically raise as that’s sequentially, QX income. taxable flat percolate, I our with our is So know tend what do we it’s tend be measure But in tend income. taxable to not. area. And the we we to to earnings We

payout But historically. So, really I ratio think is we’re done low. we’ve what adopting our

expect to dividend I the increases. our hopefully liquidity that see strong. Our would continue And we’ll is

a increase Now, there to ‘XX was from dramatic ‘XX.

we’ll trend. positive hoping I’m very a continue So,

Rich Hill

one year, think I back to to -- last to guided you time to X.XX. more just X.XX question. guided initially this If And

up healthy really put You number a year. this

you -- give that’s close. pretty XX.XX to We’re see this would view any baked, would -- what Is that what could -- to this we as there we us that you surprise year the I’m ex not so could confidence XXXX? if sure more you that, see mentioned. or upside XXXX, in give like highlight one-timers just you than XXXX but -- speak, do the it

David Simon

still basically a X, rolled because that said we have never dependent sales years are years because we the we have right? COVID variable is the there than that So leases still think always more X not Well, have over some have sales look, ago. still oriented bake, we I big that would is on little

that we like little as don’t I’d to we good is So say we’re why more we’re a as -- cautious are. because

good -- I the And We’re they feel certainty think that. Obviously, so still predict immune sales. in we going and what’s we about not not hopeful today. the I’m world of with lot can’t economy when a -- very But retailers, on. that -- to there’s the -- to talk volatility we’re

see. wait terrific are terrific, off So, we building to have just ‘XX. But a we and

everything continue hopeful we’ll to -- see assuming together holds with so am we’ll our So, externally growth I that and on. -- produce economy the

So, I pretty there’s certainty, but we no feel good where about stand.

Operator

comes Bilerman with from Michael question Citi. Our next

Michael Bilerman

unique future. back but come lot just a of that the And David, that in of growth it you’re and you’re that year’s from investments to differentiated I ties wanted how also sort making? to sort to the getting this of these back forecast, earnings growth

but all You gave together. all couple pieces, different us a of a bit of time little they’re the

just making. off which for one but that you we just on of FFO of it XX, from other page if sup, that. I’m use the page these pivot includes but XX can now going includes includes your you’re and which But investments, at to of investments I Klépierre, sorry, all So, recognize -- maybe is look

$XXX about about at $X.XX. XXXX at looking million, You’re

together. coming You’ve made. investments. retailer what I’m that much to the $X.XX about both to of other trying $X.XX drag by, then how as for well of we investments to And are all $X.XX just investments now for are in thrown to sort are obviously these, gross, reconcile trying a that’s it netted share as guess, all the year, these range well being out from for these thinking put down I’m I Klépierre, $X.XX which $XX.XX but just is this

David Simon

de and up. mean, you it’s from investments what did really is But not to from The only or well. platform in NOI other straightforward. we includes include I we JCPenney would -- okay SPARC, platform HPS, pretty Well, of the minimis. investment RGG, Other did Klépierre, it just NOI or which our But ABG. investments clarify pick other hear -- is share small interest

hear that’s hear that. that just question? did line So, to did I clarify. you Guys,

Tom Ward

I didn’t hear past that.

David Simon

Does that help you? Okay.

Michael Bilerman

No.

to me I’ll try Let David. -- clear, be

David Simon

Michael, if office. the you went back to

Michael Bilerman

I’m in the office, David…

David Simon

don’t clearer, loud, happy or So, -- read it know, you and hear okay? this a might able You to text little I you can cannot sound we maybe if you. be out I’m

Michael Bilerman

my that Well, office. for I Is if How you, in better up the pick phone. about I’m David?

David Simon

yes. Slightly,

Michael Bilerman

right. I’ll XX, FFO the on I’m All take slightly. from list to everything, $XXX just million trying Well, you actually page $X.XX. right? But right? get, contribution,

So, that and in $XX.XX you earned trying I’m to what ‘XX. ‘XX million how just the triangulate to compares in

You’ve nuggets the investments. given a information, drag, it guidance of of actually couple but to us out what’s net to $X.XX in these $X.XX doesn’t for

David Simon

Well, surprise. no let’s again, effect of there’s the -- tax that,

all we’ve money Our investments. math sorry, is in I’m made very simple. these

Now an have make not to tax This is this. for money. we the from sources. to line from I make actually EBITDA They’re are other of we try the below and again, just NOI number this investments the -- These this footnote lose it’s attention investments other that there NOI like people all Klépierre platforms, NOI that you investments information. it. is, And pay corporate and -- and NOI. and is We to make Unlike your that That’s HBS and is show market. the kind the money. that other is described,

know guys don’t are else -- take I to the the happy question what So offline.

Michael Bilerman

stuff just David, Okay. I not is investments this the at with the looking of is That’s includes a was FFO from negative And NOI all coming the question, positive you’re making. all you’re investments, page that that right? Yes, David. a page. we where these this was great So of but the confusion -- not see FFO from Maybe doing. XX,

David Simon

impact. then to so obviously, through. lumped not. happy then you is pre-interest, together the NOI, and take includes But FFO That walk we’re And everything tax it’s Yes. again, it’s

Michael Bilerman

-- know, So, why that’s the question, no ambiguity. to that’s -- do that’s exactly there’s is we Well, right? now gotten we’ve the which number

David Simon

It’s EBIT.

But will so that be back it. walk you the forth. don’t through guys add happy So and we remember, on and to have so depreciation retailers

Tom Ward

connect We’ll offline, Michael.

Michael Bilerman

you value, this Your talk what transactions. and do can value that is platform David, the and opening How you shareholders? in unlocking release Okay. you focus of some through that on all and about year the for you’ve press just sitting this the comment generally? initiatives about done already want was to think Simon

David Simon

their Well, to can a right, have platforms I our to at our is time, think, that a monetize And need we’ll embedded grow. equity if see highlight to we’ve today. the is continuing given it’s or And but in they’re were these leader business. be value, multiples on to XXx market made mean, some market ascribing at than is investment, it ultimately, private cash investments. RGG, if us, level on what it look is the I on example more probably basis, continue valuing at to the external point here in SPARC, good we you market And great of the but it that frankly, a

Michael Bilerman

Right. we investment where positive And questions these all to things asked I’m that want. that of that ask more for to you’ve get that’s asking, the you get value trying that that by ascribe to disclosure to done are David, the community try

-- it’s that’s coming math, And good usually, but... place. I’m at from So good a

David Simon

having suggested hard the I hearing time negative you aren’t. a I’m never just comment. you. only That was

Okay.

that. about sorry you walk So, through to it. happy again, we’re But

So, it we’re understand can what doing. help you

Operator

with from next Our Bank. comes Derek question Deutsche Johnston

Derek Johnston

David, redev now retail pipeline in now. investment was abandon question I’ll peak. So, But at the its the ‘XX, $X.X billion XQ for pre-pandemic

really increase in modest just And Now, that’s $XXX a XQ. it’s from XQ. million

Should priorities acquisitions. investments, flow, FFO going cash buybacks? the no forward? talk you mentioned expect healthy some So, you priorities you and transformational, view we ramping clearly are record at do retailer You redevelopment, some more capital here? How about looking dividends, as how allocation very

David Simon

of ‘XX. is in news to the pipeline where our is Well, was good kind it back

anything But to. progress naturally, However, add prove that in until to steady we then, finished didn’t when start off. think and construction adding on ‘XX, we falls or or stuff, it this add really -- year. some in we I see we we’re we internally project about remember, And a So you’ll remember, only right?

to number that would to So, expect to able add be this we year.

didn’t you’ll that. in if mostly I’d and in and So, grow mixed it size disappointed see stature, be use.

existing number they’re one platforms still -- would RGG. going invest that’s SPARC we or still priority, we whether to say So, or have, the ABG we’re in that I our

So, we those invest are businesses of in a faith that and lot have those. continue to in, we’ll

that kind That’s a doing the important aspects -- investment of lot centers shopping We’re updating of of to in technology still do. continue we’ll our the us. to in

vie. been -- We no perfectly like with really quiet see of front, a but how take going our us. about look but it, la if then really we c’est that some in expect think fine build to midst feel we’re retail on I raise but the we’re Stay tuned. the and market have nicely, that’s of there’s necessarily And It’s acquisition at the the working And dividend. that’s something to a priced, another platform, We’ll in reasonably platform. transpires, we’ll portfolio. fits not not, through we good if We’ve opportunities. real kind

Operator

Goldfarb with Our next question Piper comes Alexander Sandler. from

Alex Goldfarb

torn and I’m you retailer so going I’m one, myself ahead. David. go the question restrain go Hey because to I first, guys Tom to I’m But gives question. to the had me two. back unless going just have one ask

made a guys your of headway lot You brands. on

added brands. retailer $XXX NOI, turnaround last of And you pretty EBITDA, you a from the seem year. whatever platform the of million guys to to it, have want call You quick

you of your much is insight better their such there, who more give with when true these they years have won’t versus a potential mention you have this and have negotiations does does two, you brands for you’re may there in tenants how And have? quickly that what been be negotiations what whereas order guys at the retailers, view you tenant to now the short telling out into table? restructure been informed a So surprise are that turned in but -- haven’t given number trying around, brands it you we one, of retailers successful

David Simon

Yes.

bought fast most in remember, But in on of turnaround, bankruptcy. yes. the say, these them which So, we I bankruptcy, would

our a lot from. working. excellent. know negotiation oversight good put comes between is the it that you out a or and retailers. got And to kind has how together performance of how from clean I’d of that’s at at management slate deal we So, SPARC ABG that a insight when SPG, integrate. and insight Their clear our They allows into that formula the team with absolutely no or to to we’ve issues relevance say all grow to you to gives our

could ask competitor question, as and So really how are might but like don’t that doesn’t unique that’s direct that you I the we don’t be there a Alex. it you -- because, -- each just see and flat and over they rents helpful, out. brand don’t that just because have is and necessarily a every No, place. would space know, we think different every mall market is is all

simple answer is So, that to no.

Alex Goldfarb

got Okay. move you a are allow And a second, Tom, of you or there will questions, lot on? me to

David Simon

He’s puppy look me. toward dog got a

based ahead. Go that, will you. you. on we allow Thank So,

Alex Goldfarb

and lot crime what’s for and they security in picture. all beef Obviously, the from the talking sense there. it’s and from a is to solve So, your this, obviously you local local on on to are talking up officials, and that view is to the industry sense out do realizing industry the finally of you the and these end? that going more big headlines to authorities is their retail need do is, My try question or

David Simon

avoid I are, though, as notch in good are this unfortunately, cannot look, we Well, top we happened. we think as what’s area,

we’re this. subject So, to all

I it it’s think -- an industry don’t issue. think I

the I believe And I And think a jurisdiction issue. is it’s turning. tide a nationwide local issue. it’s

and retailers over the X. all number of our obviously, is priority the this, are We safety consumers

much we as would it to immune to as not We’re like be.

operations center, a intelligent have center We deals sophisticated with that very this.

to everyone a think, address at this, can immune. but lot to all -- retailers, immune. level. local the all. it. I we’re I ask we’ve you the believe in into it’s we and Alex, do we X get hold to it If would stuff of as it’s But tell I of to we’re be me, at to you tolerated. don’t But I not national I things think a think to some impossible And accountable would I that that areas. got this industry don’t love number they want that have different area, be obviously, solve got just I this politics but avoid. we, and nation, think happening, these in cannot do where are it’s are think -- be don’t But the over kind of

and do we’re what hear all you we However, that of an ones multiple these dozens forwarded, the but of Alex, dozens we is excellent -- unfortunate deal some job, and to acts. don’t [ph] have consequences ones, we it’s from us, with

Operator

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

Juan Sanabria

hoping bit spreads about and little again. leasing ask Just to a rents

‘XX? quarter sequentially what will will you in the sunset that longer the for just When what number think the your the that’s And the you bottomed on Like at under talked base baseline ‘XX that end, being what’s expectation fourth or you And that is when kind on translate and from Do not thinking flat was guys of headed rent think quarter $X about disclosed? upwards re-leasing and are there. about I spread quite So, $XX. out? here? the number rent? But, now at in stabilized, you into or how maybe for the generated it’s that’s no sure spreads, for internally deals signed in expectation

David Simon

-- first all, Well, of focus we we growth. NOI on

to So, growth. that’s number we one, and have expect NOI

overage weren’t the -- that say the percentage I portfolio -- rent. averages. that’s maybe we does our not but or just base you’re include it’s clear, think not the to I’d minimum rent is $XX It first. -- you So somewhat

$XX. results, based $XX that that be on you would included If ‘XX

there. material it component, this just thought out. goes and Okay? show So, -- missing that’s I to try I point the to we to that question, relationship enough but don’t the And that $XX it to your listen carefully it is was

Juan Sanabria

when so, comes -- into that’s think that that $X $X assumption? X. Does you And number $X the do

David Simon

expiration. That’s function Yes. all lease of a

to they the expiring, to the to if minimum a have or rent capture in much rent an generated. rent tend we as base percent base someone raise we rent deal that’s minimum overage -- try overage we So, from or is that’s try raise the

you but it, do some of it. all get always don’t You of

it’s it up big So, over expire. when of their overage a leases function and but pick the it’s time, payers rent -- should really

Operator

from Our Floris comes next question Compass Point. with Van Dijkum

Floris Van Dijkum

I NOI David, there’s But mentioned been you -- business I’ve And of know be think slightly value just again, still might that obviously, here. you growth. joking... you in a the lot

David Simon

the By I. so way, do

Floris. I, do So

Okay?

Floris Van Dijkum

think a But help have -- trying No, the know get of me to no. you for value. I’m you that assumptions NOI X% there’s walk out. lot ‘XX. growth your again And you -- in that I the

your of -- X%. basically, have typically around If you leases have you in your fixed bumps

all a it get else stays, little but them, but or bit the But don’t stays occupancy everything shy for same. maybe. set the same all of of things spare, X% You you’re

You around NOI X.X% to growth. growth. get guiding for Yet only should X% X% you’re

David Simon

Yes.

in as real number. this very and think again, that But -- we there that is dealing well sophisticated simple. increases very that If levels have model. simple February, I and But us. -- we’re that’s that cost do and number. to we for a in are with tend sales on year, will answer above sales, it’s we The we’re to are cautious try be be really then, we overachieve

we just Obviously, security expenses instance, on wage janitorial. are So up with had inflation that. mean, a discussion for we Alex -- I have on based

our the So, we many ‘XX in We’ve expenses break just we real else. -- estate like for keeps up. ‘XX. on on ‘XX though closed got local estate were tax tax the cases front But no even expense and in everybody pressures have going months from real municipalities,

into a thought And about be the have process. just the some bake every trying thoughtful of unknown, we’re we little we’re number into relatively year to conservatism to that how percent to trying there sales with. going deal that overage then, and pressures bit is So,

Floris Van Dijkum

So through would mean, -- of recaptured lot be again a David, CAM. I but your just costs

at You’ve inflation. increases got that fixed CAM

would fixed that So you’re imply that CAM...

David Simon

No, adjusted. have no. We no, don’t CPI

Floris Van Dijkum

That’s right.

You bumps. have X%

X% You have bumps.

You’re right.

David Simon

Yes. And X%, But we lose goes we X% have up it we’re bumps. and going if X%. up

And clear So would pressure. I in. hopefully, little all of -- been again, and bit a it’s say so there’s again, But on the -- I front. factored margin mean, sales I’ve

Floris Van Dijkum

my at are million longer of market at area, David, your than of your when those feet a little portfolio of so one average your small average a leasing, What that go you’re off it? you Theoretically, go Is which you around I are should sort up at look in that full tenants, but can rent by year, specialty to -- or looked XX% on is of of which if head, tenants? that have touch X.X become maybe top leases are getting. way release, shop an right the rent leases $XX. they third temporary square to the at It’s happens that XXX%. So that

David Simon

did We a Yes. It’s think of for business. flex great Look, good very I opportunity our kind company. job. a a that’s

market. a We’re like the a number occupied. as of to is this tenants but of tenants permanent real We great stuff more are a still is for under have Floris, Company. to That’s still A that thing. that come important interesting happening community, the the that opportunity now. lot

anyone in much store comes it’s leasing in our would a midstream, In didn’t because, of remember, that ‘XX, venture third about in or got would and buy it back in sidelines, a space, quarter, short-term re-lease process. our by ‘XX first up better sat mall, lot to we predicted the retail I comes really on But quarter a call we the specialty that of what ‘XX, still quarter, say. business nine-month to We you leasing. have ‘XX all that have unbelievably opening we ‘XX. have start And way. a time than build of of as strong open six in a COVID, lot reinforce second as base, that out -- this in ‘XX, think still to So, we model. came and right? But by I’ll decimated it

and we but today, year excuse. I’ve say So, specialty, solely is would in it’s going to you, I But used an fall this more to ‘XX. But never it’s income, going all me, we’re that we a to -- retailers like anti where we continue never excuse. not to to given But as permanent in are I believe not have up lease as we as way transition generate away an still much the ‘XX. think. from

Now, I you it? well, add to did myself explain Would guys? Okay.

I’m sometimes inarticulate. So,

we where based ‘XX unbelievable be that’s the -- on be but Spectacular crap but So kicked a going how of mean was year. that’s an ‘XX. were. to was, like continue but -- -- we an is ‘XX again, year and out not excuse, to transition It I

Okay, Floris?

Operator

from Our Haendel next question comes St.

Mizuho. with Juste

Haendel St. Juste

David, I’ve OCR. got a question on

they you And we at we back earlier, while. or OCRs? near think the You XX.X%, a is how these mid in might OCRs something mentioned five OCRs levels? teen in And consider about term, level in of haven’t curious tenant to kind Thanks. today I’m to talked even back the OCR color where or go look get highest willing you ever mentioned conversations? that’s to some I any years. that on upper Are do guess pay important of

David Simon

is and an Look, which demand that we Yes. a overall business see as starting earlier up comment, little better. pricing the to power are more is the reflects it I goes think fact

put the So, in it’s policy we’ve bit good to results that trying want it than last couple our edge, little but of the producing don’t lumps seen taken last better retailers insurance them very the over portfolio. positive what just balance a are years. to We few we’re and over a And our we’ve on now years. the

it good we’ve it’s That’s to go. that all So, some is. got indicator room a

Haendel St. Juste

that event is percentage with rent can the out in lower event sales, earlier, make I if I And of the to shorter-term any upfront so were if you threshold, the you follow the or it COVID share. those during leases but thresholds, could don’t the in you’re still know with you that up. willing Are of doing past lower improving if mentioned rent doing of you now? or

David Simon

we they’re deal though, -- or in sorry, have not might case not It’s for I’m the we -- a they’re thing space, where past, essentially always in there’s a ready ‘XX in but there might here ‘XX. a ready

So the a in we retailer have space.

an talking Floris the a So, of for might well. that I lease while ‘XX. what And extension little we about with as finalize that’s was ‘XX bit be

Operator

Tibone next with Street. Vince Our Green from comes question

Vince Tibone

up the believe for baked of sales it tenant -- into exceed sales And want base likely Floris’ case to I on I actually have to a the a XXXX property seem current maybe what to -- is X% would you domestic repeated guidance. question. NOI. follow you get just sales levels, compared I guidance wanted levels you mentioned your decline better that that last would if in year. understanding sales

to trying get So, just be a little more would there helpful. color

David Simon

answer they in we are art the -- And why, And really sales we kept hopefully good rising if we to flat, it the simple up I expense compared they tenant. produce benefit know you we expenses Simple process this some And own it that’s planning sales, do have a late And robust their conservatism that. do do we’ll better, when thing that -- baked we year, it in do the year. okay? more comment of though, we The science. news, aside a sales earlier this we do I above versus but putting about like, do we NOI see it is people, in NOI ‘XX, retailers, an we if the to do I’d case talk see -- -- plan, positive. -- if tenant than some by growth. do always cost, our that. is portfolio But would it’s see -- number. but budgeting again, Actually, would we do Well, -- it’s don’t they -- it’s of in

Vince Tibone

Maybe misreading you’re fair case forecasting sales it I that’s to into the that that? of guidance, is or So, to be base say negative? am

David Simon

the around level, say would it’s flat. X% relatively I

Vince Tibone

rent could last was lease percentage much That’s try I’m what that How Like to overed rents I just helpful. curious quick was the component. overed for in If year? of terms one one more this squeeze Okay. in maybe there. like income? total for

David Simon

the but we use out. tourism we well, I had But that from what -- ask to do would don’t see international our of want a give when big do out, it I’ll point to from to big properties if to they not was percent guys say it view. give in that. we tend We We similar if would international

that Guys, away. really And right? is Okay. then, Okay? it went

years back to it’s were X, So, we where ago. of X maybe kind X,

Tom Ward

Hector, we one more for have question? time

Operator

Okay.

Morgan. Our JP with final question Mike Mueller comes from

Mike Mueller

in per year-over-year Rent one. lower in malls was mills. but foot was dynamic. the And driving what’s Hi. A outlets, quick the it square curious higher that

David Simon

didn’t Could repeat? sorry. for I’m second. I -- broke there up you a you

Mike Mueller

Yes.

mills foot for rent year-over-year, that’s for year-over-year. is and the down malls Your up but outlets per square

David Simon

the We Yes. that. the In shouldn’t of all boxes. the boxes. mills, the I all they include include all say include boxes. We

not the mall, space, interior just square the It’s department whereas in that’s store. the footage. every basically So, outlet it’s

been be -- increase. big that they very the very has may that’s driving So, have results we’re a tenants so But that and business there. the with healthy, few pleased

Operator

closing reached turn back we’ve And gentlemen, question-and-answer and session. to the the remarks. to I’d Ladies Chairman, Mr. like of the David call end Simon, for

David Simon

to Okay. know a looking few I you. there’s some that Thank answered. are questions still get

the today. and Tom available, thanks as of in well. am will be for So, participating Brian course, call I And

Operator

This today’s concludes conference.

at lines for your Thank time. this your disconnect participation. all you may You

Simon Property (SPG) 8 Feb 222021 Q4 Earnings call transcript