Simon Property Group, Inc. Q4 FY2025 earnings call

David Simon mentioned strong financial and operational results in Q4, including excellent leasing, $2B in high-quality retail property acquisitions, over 20 major redevelopment projects, and opening a new premium outlet in Indonesia. Eli Simon discussed 2025 acquisitions, strong retailer demand with over 1,300 leases totaling over 4.4M sq ft in Q4 and over 4,600 leases for over 17M sq ft for the year, and 2026 development plans including notable retail and mixed-use projects coming online and new projects beginning construction. Brian McDade covered Q4 results, balance sheet details, and 2026 guidance.

Real estate funds from operation was $4.8 billion, or $12.73 per share. Domestic and international operations performed well. Domestic property NOI growth was 4.8% year over year for the quarter and 4.4% for the year. Portfolio NOI (including international properties at constant currency) grew 5.1% for the quarter and 4.7% for the year. Malls and premium outlets ended the year at 96.4% occupancy, mills at 99.2%. Average base minimum rents increased 4.7% year over year in malls and premium outlets. Retailer sales per square foot for mall and premium outlets were $799 per square foot for the year, SPG only portfolio up 2% year over year. Total sales volumes grew ~4% in fourth quarter and 3% for full year. Occupancy cost at end of year was 12.7%.

Expect real estate FFOs of $13 to $13.25 per share with a midpoint of $13.13. Guidance range assumes domestic property NOI growth of at least 3% and higher net interest expense of 25 to 30¢ per share versus 2025.

Tariffs are putting pressure on retailers, which could be a headwind. Uncertainty around Supreme Court rulings on tariffs and their impact on retailers.

Q: On leasing side, detail on rents for new and renewal leases and pipeline comparison; A: New rents on leases are $55 per square foot, pipeline up ~15% over last year.

Q: Early observations on Simon Plus loyalty program; A: Early days, pleased with adoption, focus on membership acquisition and engagement.

Q: Thoughts on tenant credit and bad debt; A: Tariffs are a headwind, putting pressure on retailers, more cautious, but retail demand is still strong.

Q: Incremental NOI/FFO from projects stabilizing; A: Expect about $30M contribution in 2026 from completed projects.

Q: View on other revenue levers offsetting tariff disruption; A: Traffic and sales are up, can replace less productive retailers with more productive ones, bullish on economy despite tariffs.

Q: Tenor of conversations with retailers on class a vs class b; A: Pricing is asset driven, getting easier to lease class b, job is to enhance quality of properties.

Q: Factors driving FFO per share guidance range; A: Similar to business running, sales growth and ancillary businesses could drive outperformance.

Q: Domestic property NOI guidance and impact of 2025 acquisitions; A: Projecting 3% comp NOI growth, deals are early days, integration is ongoing.

Q: Percentage of S&O pipeline in luxury vs traditional retailers; A: Not in majority, quality over quantity, replacing tenants and filling vacant space.

Q: Deal flow globally in 2026; A: Look for brand accretive, expertise add, right price properties, excited about redevelopment pipeline.

Q: Redevelopments: Relocating retailers or drawing new; A: Usually bringing new entrants, but also relocating some existing.

Q: Occupancy for 2026 vs 2025 across formats; A: Expect some upward opportunity across platforms.

Q: Institutional appetite for higher productivity malls; A: Partner by partner, status quo.

Q: Luxury leasing demand and sales productivity; A: Dependent on company and brand, some growing, some cautious, steady as she goes.

Q: Anchor boxes and capital investments; A: Can reimagine real estate, early days, spectrum of uses.

Q: Exchangeable euro debt and DACs; A: Issued shares to satisfy bond, made good trade with Saks Global, wrote off investment.