Simon Property Group Q2 2026 Earnings Report

Simon Property Group EPS Results

• Actual EPS: $1.49
• Consensus EPS: $1.64
• Beat/Miss: Missed by -$0.15
• One Year Ago EPS: $1.70

Simon Property Group Revenue Results

• Actual Revenue: $1.79 billion
• Expected Revenue: $1.61 billion
• Beat/Miss: Beat by +$178.50 million
• YoY Revenue Growth: +19.50%

Simon Property Group Announcement Details

• Quarter: Q2 2026
• Date: 8/10/2026
• Time: After Market Closes
• Conference Call Date: Monday, August 10, 2026
• Conference Call Time: 5:00PM ET

Simon Property Group (NYSE:SPG) (NYSE: SPG) is a publicly traded real estate investment trust (REIT) that owns, develops and manages retail real estate properties. Its core business activities include acquisition, development, leasing and property management of regional malls, outlet centers and mixed‑use retail destinations. The company operates retail brands that include high‑profile regional shopping centers and the Premium Outlets platform, and it provides services such as tenant leasing, marketing, property operations and capital projects to optimize asset performance.

Simon’s portfolio spans a broad mix of enclosed malls, open‑air centers, outlet properties and mixed‑use developments, and the company pursues redevelopment and repositioning to adapt properties to changing consumer and retail trends. The company has built its business through a combination of development, strategic acquisitions and joint ventures, and it operates properties across North America with a presence in international markets through outlet and partner arrangements. Its assets serve a wide range of national, regional and local retailers as well as entertainment and dining concepts aimed at driving foot traffic and shopper engagement.

Corporate strategy emphasizes active asset management, redevelopment of underperforming properties, and growth of outlet and mixed‑use formats that reflect evolving consumer preferences. The company is led by Chairman and Chief Executive Officer David Simon, and it works with institutional partners and capital markets to finance development and acquisitions. Simon Property Group’s operations center on maintaining high occupancy, enhancing the shopper experience and generating long‑term value through property-level improvements and portfolio optimization.

Simon Property Group Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Second-quarter domestic property NOI rose 8.5% and real estate FFO per share increased 7.9% year over year to $3.29, prompting the company to raise full-year 2026 FFO guidance to $13.20–$13.30 per share.
• Positive Sentiment: Leasing demand remained strong: Simon signed more than 1,200 leases covering 4.8 million square feet, with new-leasing rents up 17% and tenant allowances down 12% year to date. Occupancy held at 96% despite absorbing roughly 1 million square feet returned through Saks OFF 5TH’s bankruptcy.
• Positive Sentiment: Replacing Saks OFF 5TH locations is expected to substantially improve economics, with signed replacement leases for about half the space already generating more than $18 million in former annual rent versus approximately $44 million when fully leased; most of the benefit is expected in 2027.
• Positive Sentiment: Retailer sales and traffic accelerated, with comparable sales up 5.7% in the quarter, total sales volume up 7.6%, and July traffic up 3.6%. Management said strength was broad-based across malls, outlets, luxury, emerging brands, and younger-consumer categories.
• Negative Sentiment: Higher interest expense and lower interest income reduced year-over-year FFO by $0.06 per share, while roughly $4.5 billion of unsecured debt matures in the second half of 2027. Management expects to refinance successfully but acknowledged continued exposure to elevated interest rates.

Presentation

[Operator]

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

[Tom Ward, SVP of Investor Relations at Simon Property Group]

Thank you, Sherry, and thank you for joining us this evening. Presenting on today's call are Eli Simon, Chief Executive Officer, President, and Chief Operating Officer, and Brian McDade, Chief Financial Officer. A quick reminder that statements made during this call may be deemed forward-looking statements within the meaning of the Safe Harbor of the Private Securities Litigation Reform Act of 1995, and actual results may differ materially due to a variety of risks, uncertainties, and other factors. We refer you to today's press release and our SEC filings for a detailed discussion of the risk factors relating to those forward-looking statements. Please note that this call includes information that may be accurate only as of today's date. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included within the press release and the supplemental information in today's Form 8-K filing.

[Tom Ward, SVP of Investor Relations at Simon Property Group]

Both the press release and the supplemental information are available on our IR website at investors.simon.com. Our conference call this evening will be limited to one hour. For those who would like to participate in the question and answer session, we ask that you please respect our request to limit yourself to one question. I am pleased to introduce Eli Simon.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Good evening. We delivered excellent financial and operational results in the second quarter. Domestic property NOI and real estate FFO growth accelerated in the quarter to 8.5% and 7.9% respectively. This was driven by continued leasing demand, disciplined execution across all platforms, and contributions from recent acquisitions. Shopper traffic accelerated in the quarter, and retailer sales volume again grew solidly year-over-year, further evidence that our portfolio is well-positioned and our properties are the places where shoppers and tenants want to be. With our recently declared dividend, we will have paid out over $50 billion to shareholders since becoming a public company. Tenant demand continues to be widespread with no slowdown, drawing from a broad mix of established and emerging retailers across categories, platforms, and geographies.

[Eli Simon, CEO, President, and COO at Simon Property Group]

During the second quarter, we signed more than 1,200 leases totaling over 4.8 million square feet. The number of new deals signed in the quarter increased more than 20% compared to last year, and new deals represented approximately 28% of total leased square feet. Year to date through the second quarter, initial base minimum rents per square foot on new deals is up 17% year-over-year, while tenant allowance per square foot on new deals is down 12% year-over-year. We have completed more than 87% of our 2026 expirations and are ahead of where we were at this time last year as we continue to negotiate 2027 and 2028 expirations with many tenants. The pipeline of prospective deals continues to build, remaining well ahead of last year's pace, reflecting continued broad-based tenant demand. Moving on to retailer sales.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Malls and Premium Outlets were $838 per square foot, up 13.9%. Importantly, total sales volume increased 6.6% over the trailing 12 months and 7.6% in the quarter, with comparable sales growth of 5.7% for the second quarter. We continue to host unique activations that highlight the incredible value our portfolio offers. Our fifth annual national outlet shopping day produced another year of shopper traffic and retailer sales growth along with the more than 25% increase in retailer participation compared to last year, with Simon+ members enjoying exclusive rewards tied to the event. We also built on the momentum around the World Cup, running a coordinated activation strategy across our portfolio that featured fan experiences, watch parties, retailer collaborations, and community programming.

[Eli Simon, CEO, President, and COO at Simon Property Group]

The shopper and retailer response to these types of events underscores Simon's offering, the ability to turn major moments into large-scale real-world experiences that bring our consumers, brands, and communities together. Turning now to development and redevelopment activity. At the end of the quarter, we had development projects underway across all platforms with our share of the net cost totaling $1.07 billion at a blended yield of 9%. Approximately 50% of the net cost is for Mixed-Use projects. Looking ahead, we expect projects representing more than $600 million of additional net cost to start construction in the second half of this year. Our development pipeline remains robust with over $4 billion of projects, which we believe will generate attractive returns, enhance our properties, and support long-term growth in cash flow, FFO, and dividends per share.

[Eli Simon, CEO, President, and COO at Simon Property Group]

This is consistent with the results we have achieved on similar recently completed projects, such as Southdale Center in Edina, Minnesota, Brea Mall in Orange County, and Briarwood Mall in Ann Arbor, Michigan. Over the last four years, we have also committed more than $400 million to center enhancements that are either completed, underway, or recently approved, including common area upgrades, landscaping, lighting, and other amenities, creating a more elevated shopping experience. These enhancements are noticed and appreciated by our customers, and particularly by our retailers, who value a landlord committed to the long-term success of their stores and the communities we serve. We remain focused on these enhancements alongside our broader development activity, and our balance sheet allows us to continue reinvesting in our portfolio for years to come.

[Eli Simon, CEO, President, and COO at Simon Property Group]

With that, I will turn it over to Brian, who will review our financial results from the second quarter in more detail and provide an update on our outlook for the remainder of the year.

[Brian McDade, CFO at Simon Property Group]

Thank you, Eli. Real estate FFO was $1.25 billion, or $3.29 per share in the second quarter, compared to $1.15 billion or $3.05 per share in the prior year period, an increase of 7.9%. Domestic and international operations both performed well and contributed $0.29 of growth, driven by increased lease income, disciplined cost management, and contribution from acquisitions. As anticipated, higher interest expense and lower interest income combined were a $0.06 drag year-over-year. Reported FFO was $3.12 per share in the second quarter, compared to $3.15 per share in the prior year period, which included a $0.21 per share non-cash after-tax gain, primarily due to Catalyst Brands' deconsolidation of Forever 21. Domestic property NOI increased 8.5% year-over-year for the quarter and 7.6% for the first half of the year.

[Brian McDade, CFO at Simon Property Group]

Approximately 120 basis points of growth for both the second quarter and first half of the year were attributable to our acquisition of the remaining 12% interest in TRG. Portfolio NOI, which includes our International Properties at constant currency, grew at 8.3% for the quarter and 7.5% for the first half of the year. Malls and Premium Outlets occupancy at the end of the second quarter was 96%, flat compared to the first quarter and year-over-year, a result that reflects the depth of retail demand as we absorbed approximately 1 million square feet of retailer bankruptcy-related space returned during the quarter and successfully relet. The Mills occupancy was 98.8%. Average base minimum rent for the Malls and Premium Outlets increased 6.3% year-over-year, while ADR for The Mills increased 12.3%. Occupancy cost at the end of the quarter was 12.5%.

[Brian McDade, CFO at Simon Property Group]

Shifting to return of capital, today we announced our dividend of $2.25 per share for the third quarter, an increase of $0.10 or 4.7% year-over-year. The dividend is payable on September 30th to shareholders as of the record date. During the second quarter, we repurchased approximately 793,000 shares of common stock and approximately 238,000 limited partnership units for a $211 million investment at an average purchase price of $205.10 per share. On to the balance sheet. During the quarter, we completed eight secured loan transactions totaling $1.4 billion at a weighted average interest rate of 5.36%. We issued EUR 500 million of senior notes at a 3.65% rate for five years, and we closed on a $460 million five-year term loan priced at SOFR plus 70 basis points, the proceeds of which were used to repay $460 million drawn under our revolving credit facility.

[Brian McDade, CFO at Simon Property Group]

We ended the quarter with approximately EUR 9.3 billion in liquidity, and our balance sheet remains incredibly robust, with net debt to EBITDA below 5.0x and fixed charge coverage of 4.7x. This supports our strategy and our continued execution. Finally, on to 2026 guidance. Given our results for the first half of the year and our current view for the remainder of the year, we are increasing our full year 2026 real estate FFO guidance to a range of $13.20 to $13.30 per share. That compares to $12.73 last year and is an $0.08 increase at the midpoint compared to the range previously provided. Thank you, and we are now available for your questions.

[Operator]

Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. As a reminder, we ask that you please limit to one question. Our first question is from Caitlin Burrows with Goldman Sachs. Please proceed.

[Caitlin Burrows, Analyst at Goldman Sachs]

Hi, everyone. Good evening. I guess I am wondering if you can talk about TIs and cash flow growth. You did reference some of the pieces in the prepared remarks. If you look over a long time period, like the last 10 years, NOI and FFO growth have outpaced FAD growth. Year to date, it looks like actually FAD growth has outpaced NOI and FFO growth. Maybe that is a change in the trend or maybe the numbers move around. But wondering, can you discuss the outlook for TIs and what they are a function of? If the demand and leasing environment is so strong, do you expect to pull back on TIs and is reducing TIs a goal of yours? Thank you.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Sure. Thanks for the question, Caitlin. When I think about the, let us just talk about TIs first. That is a function of demand from the tenants and demand for the space and the supply of available space. Reality is we are having a ton of conversations with retailers. Our pipeline today is up 26%, I think it is, from this time last year, which is over 100 more deals. When we have those conversations, rent is a component of it, and TI is a component of it. There are certain times where it might be a tenant that we want to start a new relationship with, but we are concerned potentially about their credit or about their long-term viability. So maybe we will say, "Yeah, maybe it does not make sense to pay as much of a TI as what we might pay for someone else.

[Eli Simon, CEO, President, and COO at Simon Property Group]

We're more certain about what the performance could be. I think it's really a function of mix over the long run. The reality is supply and demand shows itself in two ways. It shows itself in rent growth, and it shows itself in TIs. Stepping back, as you look at funds available for distribution more broadly, I think for the year, we're up 9% or over 9% year to date. It's a focus of ours, right? Our focus is to grow cash flow growth, and part of the cash flow growth is from the FFO, and part of it is from the capital we spend. What I do want to highlight or reiterate, which I said in the prepared remarks, is we are reinvesting back into our centers in a big way, and that is noticeable from the consumers and really from the retailers.

[Eli Simon, CEO, President, and COO at Simon Property Group]

I've been to, I don't know, I think I've been to 12 states in the last three weeks and seen a bunch of our properties where we have done these transformations. What I've seen is new leases being signed there and new retailers coming to these centers because they see a landlord that has reinvested into that space. When you ask the general manager, what's the customer perception been, they say, "Well, we've had people come up and say, 'I didn't realize this center was still here, this center was still thriving.'" Our job is to continue to reinvest back into our centers and to make them better from the customer's perspective and from our retailer's perspective. Our job overall is to grow cash flow growth, grow dividends per share, and make our centers better, and we throw it all into the calculus.

[Eli Simon, CEO, President, and COO at Simon Property Group]

I think the results have been obviously very impressive so far, and we're looking forward to the future.

[Operator]

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

[Michael Griffin, Analyst at Evercore ISI]

Great, thanks. Eli, I appreciate your commentary around the leasing outlook. I am just wondering, as you kind of look ahead to really 2027 and beyond, you have got rents on inline shops, call it $60-$65. I realize you do not quote a mark-to-market on the portfolio, but can you give us a sense, as those leases are coming due, are you signing leases in the 70s, mid-70s? I am just curious about the trajectory and opportunity there in rent growth, given all the demand that you have really highlighted. Thank you.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Sure. If you look at year to date, I think we have signed new leases at $78, more or less. But what you have to focus on those leases coming due is a large number of them will renew. They are great tenants. We have great relationships with them. They are important for the center. Our renewals, historically speaking, and that is holding true now, is sort of in the mid-single digits. We will renew some, and we will replace some if we think that there are better retailers that can perform better and add more to the center. It is not as simple as saying, the $60, $65 goes to $78. But clearly, if you look at the trajectory of where new leases have been signed, obviously it is a positive story.

[Eli Simon, CEO, President, and COO at Simon Property Group]

The supply and demand story is positive, but it is not as simple as just saying, take the $60, $65 to $78. But I think really the focus is what is the right retailer for each space. There is no market rent really in our industry or how we think about it. It is what is the market rent for that tenant based on how they are going to perform and what they are going to do with the rest of the center. We think it is a positive story. I do not think it is quite the $65 to $78 in a year, but we look forward to continuing to upgrade the merchandise mix. In the pipeline, I think it is 483 deals, and a similar number of them are new deals or new tenants as we have done year to date, which is 28%.

[Eli Simon, CEO, President, and COO at Simon Property Group]

We feel very good about the pipeline, and it is our job to continue to execute and continue to grow it over time.

[Operator]

Our next question is from Samir Khanal with Bank of America. Please proceed.

[Samir Khanal, Analyst at Bank of America]

Thank you. Good afternoon, everybody. Eli, given that occupancy is at 96% today, I guess, where do you see the greatest opportunity to drive NOI and earnings growth? Clearly, there is a lot of momentum here. So help us think through about the key drivers of growth, let's call it over the next 12 to 18 months. Thanks.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Sure. First off, on occupancy, I think it is important to realize that we are at 96% occupied on the malls and mills. I am sorry, in malls and outlet portfolio. We got 1 million square feet space back in mid-May and are at the same occupancy level as we were at the end of the first quarter. I think that is pretty impressive. I think it speaks to the strength of the team and the strength of our portfolio. But when I think about the levers of growth, so to speak, occupancy does have a little bit more to go from here. I do not think we would ever be at 100%. We wouldn't want to be.

[Eli Simon, CEO, President, and COO at Simon Property Group]

We want the ability to move around tenants, but there obviously is a little bit more from a year. I think, honestly, above where we finished last year is the team's goal, and I think we will achieve that. The other piece, obviously, is re-tenanting, taking out lower performers who obviously pay lower rent and replacing them with new, better tenants that pay more rent. Given their increased productivity is obviously a focus. And the last piece is our development pipeline. We have $1 billion in the ground today. We have hopefully $600 million plus that will be approved and start by the end of the year. We are generating 9% return on those investments, which is obviously a very healthy number. And again, when we quote those numbers, that is only on the capital we are spending on those developments.

[Eli Simon, CEO, President, and COO at Simon Property Group]

But if you look at what we've done at Southdale, look at what we've done at Brea, look at Briarwood, there's significant benefit to the rest of the center when we do those developments that are not reflected in those returns. That's another avenue of growth for us. But it's really continuing to do what we've been doing, which I think we've obviously done a good job so far, but we have more to go. We're going to continue to reinvest into our centers and continue to upgrade the merchandise mix. But there's a lot of factors that go into our growth, but we feel pretty good about where we sit today.

[Operator]

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

[Michael Goldsmith, Analyst at UBS]

Good afternoon. Thanks a lot for taking my question. I think Brian, in his prepared remarks, talked about 1 million square feet of bankruptcy-related space coming back during the quarter. Can you outline who has been giving you back space? Can you just talk about, we've talked a little bit about the occupancy, and you've been able to keep that flat despite giving all that space back. Also talked about how leasing economics are being strong, but can you talk a little bit about the space that you got back, at what rents were they in? Are you seeing kind of similar to the overall new leasing on those boxes? Just trying to understand the economic uplift from replacing the space. Thanks.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Sure. The 1 million square feet, basically all of that were the Saks OFF 5THs, right? Obviously, a pretty public bankruptcy process, that again, we've leased, right? So we had effectively no skipping, no excuses for lower occupancy, right? We got back where we are. Again, as of the end of July, we're at 96.3%. So we are above where we were. But if you look at Saks, not dissimilar to what we talked about earlier this year, if you look at the boxes in the outlets, they were paying $18 million in rent. The deals we have signed today are already, which about half the space are already well in excess of that, and the rest are under discussions in near final deals. But we'll basically take the $18 million and turn it into $44 million.

[Eli Simon, CEO, President, and COO at Simon Property Group]

The only thing that, I'd say is not reflected in 2026, or I guess will be reflected in 2026, is that we got those boxes back, frankly, later than we thought we would. We didn't get them back until, I want to say it was May 15th or May 16th. By the time, again, we hustled, we got leases signed, getting leases signed now, but that's really going to be a 2027 story when those rents start hitting. Again, it's a good news story for us. But that's really the vast majority of that 1 million square feet are the Saks OFF 5THs, which, again, not surprising that we got them back. I think it's overall a good outcome. The replacements have been, I don't want to use names because I don't know what's been publicly said or not, but great retailers, blue-chip retailers.

[Eli Simon, CEO, President, and COO at Simon Property Group]

A number of expansions, frankly, that might have been elsewhere in the center, wanted more space, some carve-ups. But overall, very, very good demand that a lot of them actually had options over who to replace them with. But it turned out to be a good news story for us.

[Operator]

Our next question is from Greg McGinniss with Scotiabank. Please proceed.

[Greg McGinniss, Analyst at Scotiabank]

Hey, good afternoon. Similarly, along those lines of tenants that you're putting into the centers, you mentioned this substantial re-tenanting. Could you please provide some details on which tenants or categories you're adding to centers that seem to be resonating with consumers today versus those where you're looking to potentially limit exposure, and where you see the tenant watch list, where that sits today?

[Eli Simon, CEO, President, and COO at Simon Property Group]

Sure. So we are adding, frankly, across a variety of categories, across all geographies, across all platforms. I would say what is most exciting to me is our new and emerging brands, which are across a variety of sectors. It includes technology companies, athleisure, home, jewelry, very big in the Gen Z, the teen consumer. We are adding a ton of new brands there that are, in many cases, unique to the market, unique to our center, and really differentiates one of our properties where we add these types of tenants to other properties. These brands are coming from online, they are coming from Europe, they are coming from Asia, in the beauty space. A number of deals in the beauty space from Asian retailers are coming in the collectibles space. The leisure space obviously continues to grow with new entrants. That is very exciting.

[Eli Simon, CEO, President, and COO at Simon Property Group]

When you walk one of our centers, you see something new, you see something that is differentiated. I think it has resonated with customers. When we add these types of retailers, we see increased traffic, not just for the retailers we add, but for the retailers for the rest of the center. What that has led to, frankly, is if you go and look at some of the legacy players in these spaces where we are adding the new emerging brands, they are reinvesting into their stores. Their stores look so much better. Their merchandise looks better, and it is really a great symbiotic relationship, which we are very proud of. The other area of focus, I would say, would be in the restaurant space. We continue to upgrade the restaurants and continue to add restaurants.

[Eli Simon, CEO, President, and COO at Simon Property Group]

If you look, we have a number of high-profile developments and redevelopments that have started and will start over the next, call it, a year or so. We are going to add probably $400 million-$500 million of incremental restaurant sales from some of the biggest names out there on a regional, on a national basis. Again, that is something that we can continue to do to create a fresh environment, an exciting environment, and an environment that customers want to go to. So that is really the focus, but the demand is from a variety of categories, variety of retailers. On the watch list, it is in very good shape. Nothing close to material. Sort of normal course and the extent stuff happens, we handle in the ordinary course of business. It is actually an opportunity for us, Greg.

[Eli Simon, CEO, President, and COO at Simon Property Group]

The watch list is at its low point, but as we have said now, the recapture of space does provide us opportunity to bring in better merchants.

[Operator]

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

[Alexander Goldfarb, Analyst at Piper Sandler]

Hey, good evening out there. Eli, just wanted to go back on your Simon Brand Ventures. I think before you had said that, I think it delivers like $200 million and maybe there is a goal of like $800 million, but also you have 2 billion people who go through your global portfolio. Just want to get a better sense of, as you look to monetize the visitor count, is this something that you think is near term, like in the next call it 2 years, that we will see a material shift in this revenue increase, or this is something more of a longer-term initiative? I am just trying to get a handle on it. I mean, 2 billion is certainly a lot of people.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Thanks, Alex. I do not know if you have access to my emails, I guess. I have a draft press release that I guess I can say now, that will be launched in the next couple of weeks to launch Simon Media Network, to really, in a more broad way, take advantage of the first-party customer insights that we are getting. As you said, we have billions of visits a year, probably carrying over $100 billion in our domestic portfolio. There will be an announcement in the coming weeks. But yeah, we think there is a real opportunity here to take sort of our whole ecosystem of, we have obviously our digital footprint with Simon+, with ShopSimon, with Simon Search. Our in-house screen network, we have over 4,000 screens, the largest footprint of screens, I think, in the world, that we continue to invest in.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Now to take the data we are going to get into Simon Media Network and create something that is really, really interesting, both for our endemic brands, the retailers at our centers, but also for non-endemic brands who want access to our consumer, who has a high intent to shop and to shop a lot. It is something we are focused on. I do not know about the $200 million to $800 million. I hope it is that. I hope it is more than that, frankly. But it is a business that is growing at double digits, mid-teens percent year-over-year.

[Eli Simon, CEO, President, and COO at Simon Property Group]

We are investing into it. We are adding screens. We are adding touch points at our centers. One is because we can make a really good return and have a one to two-year payback period. But two is I think it looks good, frankly. I think when done right, I think it adds to our centers.

[Eli Simon, CEO, President, and COO at Simon Property Group]

We have our digital directories allow us to search for real-time inventory through Simon Search at our centers, which gets great usage. It's something that we are focused on, I'm focused on. We think there's a really big opportunity here. Clearly, malls, retail centers at large are having a cultural moment. People realize that they're not going away. Young people want to hang out here. There's an opportunity to, I think, really take advantage of that because we can provide to people who are looking to advertise something that really nobody else can. We're focused on it. Again, I don't know when. We think about this over the long term, but we think there's tremendous opportunity to really grow this business. Obviously, it's a great business today, but we really do think that there's an opportunity to make this business much bigger over time.

[Alexander Goldfarb, Analyst at Piper Sandler]

Thank you.

[Operator]

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

[Juan Sanabria, Analyst at BMO Capital Markets]

Hi, good afternoon. Hoping you could talk a little bit about your retention strategy. Are you looking to maybe pull that back given the strength, demand, and the ability to drive leasing spreads on new deals, particularly for inline tenants? If you could talk about kind of the spread between leased versus occupancy and how that shifted with the 1 million in bankruptcies noted and the lease-up of some of the space subsequently.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Sure. On the retention side, it is a space-by-space decision, that has so many different factors that go into it. It is a relationship with the tenant. It is what is the replacement? Not just rents, but are they adding to the center? It is a complicated story, but it is something we focus on. The team is obviously very focused on downtime, right? We still are running, yes, for long-term growth. We also obviously have to focus on cash flow in the intermediate term as well. I would not say it is materially changing.

[Eli Simon, CEO, President, and COO at Simon Property Group]

But to the extent that we think there is an opportunity to replace a tenant with someone who is going to perform better and add more to the center, add more traffic, and then obviously, the rent would be higher as well, we will look to do it, but it is not like we are going and making a blanket assumption or a blanket call on that. It is really space by space, tenant by tenant, center by center, is how we think about that.

[Juan Sanabria, Analyst at BMO Capital Markets]

On the-

[Eli Simon, CEO, President, and COO at Simon Property Group]

SNO.

[Juan Sanabria, Analyst at BMO Capital Markets]

SNO, yeah.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Juan, we are still trending around 310 basis points of signed but not open. Really that got backfilled by the 1 million square feet of leases. The open leases were backfilled with some of the work we have been doing since we recaptured the Saks OFF 5TH outlet business.

[Juan Sanabria, Analyst at BMO Capital Markets]

Thank you.

[Operator]

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

[Floris van Dijkum, Analyst at Ladenburg Thalmann]

Hey, guys. Thanks. Maybe, obviously, very strong NOI growth, even excluding the Taubman Realty Group, 7%+, and sales growth through the roof with 13%+. Maybe talk a little bit about the breadth of that sales growth, and talk Is this just your top 50 assets carrying the portfolio, or how is the rest of the portfolio doing, or what's the bifurcation between your top 50 or 100 assets versus the rest of the portfolio?

[Eli Simon, CEO, President, and COO at Simon Property Group]

Sure, Floris. It's definitely broader than the top 50, right? It's a pretty broad story. Frankly, the sales trends are pretty similar to what we talked about last quarter, that luxury remains very strong on the full price side for sure. On the outlet side, too, but some of the strength of the luxury, or tenants that just don't have outlets, obviously the jewelry side, the watch side, that remains very strong, continues to grow. No real sign of slowdown there. But if you look at the juniors brands, which is targeting sort of the Gen Z customer, we've had 16 straight months of positive comps there, which is pretty staggering, obviously, given all the macro noise out there.

[Eli Simon, CEO, President, and COO at Simon Property Group]

If you think about a customer group that could be hit, it would be that group, and that's continued to grow, both new retailers or new entrants in that space, but obviously the legacy retailers as well. Other trends are still holding. Restaurants, again, are a little bit softer than the rest of the portfolio. I think maybe that's economic based, but I think there's also other factors, right? Alcohol sales are down, so that's obviously something we can't control. But the story remains positive. Florida remains very strong, from Jacksonville and St. Johns, obviously the greater Miami area and Boca, over to Naples. Orlando's remained very strong. Even the Panhandle continues to grow. So that's been a good sign. The border's growing now, but a little bit less than the rest of the portfolio, which impacts the outlets more, right?

[Eli Simon, CEO, President, and COO at Simon Property Group]

Just given that we have more outlets on the borders than full price. A couple of the better outlets, again, are growing but a little bit slower than the overall, primarily due to the international travel, which, yes, it came here for the World Cup, but if you look at our outlet portfolio, Vegas is a key component of that. Orlando is a key component of that, which obviously both didn't have World Cup matches. But Orlando also coming off of 12 months of 10%-15% comp growth, so that naturally slowed down a little. But the reality is it's a broad-based story. That, yes, the luxury is very strong, no doubt. But this is not 10, 15 centers carrying. This is malls, this is outlets, this is mills. They're all positive comping. And traffic's up across all of them, too.

[Eli Simon, CEO, President, and COO at Simon Property Group]

That's a good news story, is obviously back to school has hit, I don't know, probably two-thirds of the country right now and then the remaining part as we speak. That's the good news. Then, we look to the holiday season from there.

[Floris van Dijkum, Analyst at Ladenburg Thalmann]

Thanks, Eli.

[Operator]

Our next question is from Rich Hightower with Barclays. Please proceed.

[Rich Hightower, Analyst at Barclays]

Yeah, good evening, guys. I was curious if you could give us an update on Taubman Realty Group, and I think last quarter, you sort of talked about the level of excitement there and some of the upside, and maybe just give us an update on where we stand there and when do you think that comp really starts to kind of normalize within the contribution to the whole, I guess?

[Eli Simon, CEO, President, and COO at Simon Property Group]

Sure. So we were as excited, more excited, continue to be excited, all of the above on Taubman Realty Group. The EBITDA margin, we have increased the EBITDA margin on those assets that we manage. Now, remember, there is a few of the assets that we do not manage as part of the portfolio. But the assets that we manage, we have increased the margin by 300 basis points this year, and I would say there is probably another couple of hundred basis points.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Sorry, 300 basis points. There is another couple hundred basis points to go, and that is everything from our purchasing, contracts, janitorial, cleaning. It is our parking, it is marketing, and sort of you name it, we are focused on it. Every dollar, we are incredibly focused on it. From a comp perspective, the 120 basis points Brian talked about, that is just surely we added 12% additional ownership, right? So that, it goes away in the next two quarters.

[Eli Simon, CEO, President, and COO at Simon Property Group]

That obviously goes away, right? Because then we will have owned the remaining interest for a year. Now, obviously, you get the deal at the end of October, so that narrows as the year goes on. But we think there is a lot of upside over time. Again, we did not make that deal for the next year, for the next quarter. We made that deal for the long term to own really, really, really good assets. Then to do what we do, which is upgrade the merchandise mix, reinvest into them. We have some really exciting stuff going on at Green Hills that hopefully we can announce sooner than later.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Putting significant amount of money into that center, both on a renovation, adding great tenants, really changing that center, sort of like what we did with Southdale and Edina, but in one of the best, if not the best market in the country. International Plaza, putting a significant renovation to start soon. Cherry Creek, we just finalized our renovation plans there, to continue to make the best asset in the market better. So it is a long-term story for us. The additional contribution from the 12% obviously goes away soon, but we look for those properties to have significant runway for growth into the future. We are very happy, and we are very excited about the opportunity with those assets.

[Rich Hightower, Analyst at Barclays]

Thank you.

[Operator]

Our next question is from Mike Mueller with JPMorgan. Please proceed.

[Mike Mueller, Analyst at JPMorgan]

Yeah, thanks. Hi. You have about $4.5 billion of unsecured debt coming due in 2H 2027, I think about $1.5 billion in cash. Can you talk about how you're thinking about those maturities in the cash today?

[Brian McDade, CFO at Simon Property Group]

Hey, Mike. It's Brian. Our focus is always on our balance sheet and preserving our liquidity. We're active across a variety of markets. We've done two deals in Europe in the past quarter. Certainly looking around the globe for interest opportunities. We've not yet accessed yen funding, but that certainly we're considering. There's a variety of other capital markets executions that are out there. So, we have flexibility. Certainly, tight spreads are incredibly tight, obviously pricing off a higher base rate, but ultimately, there is plenty of capital in the world today to refinance our debt. But certainly we're still going to be up against a raising interest rate environment or a higher interest rate environment. At the beginning of the year, we had guided towards $0.25-$0.30 of negativity of interest expense on this year.

[Brian McDade, CFO at Simon Property Group]

We're about $0.10 into it, so we've got about $0.20 to go for the balance of the year. That's under current interest rate kind of market environment. As we head into next year, to your point. So, we certainly are being proactive about our interest expense and managing it appropriately.

[Mike Mueller, Analyst at JPMorgan]

Thanks.

[Operator]

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

[Craig Mailman, Analyst at Citi]

Hey, guys. Eli, it's always helpful going through the development pipeline and what you guys, the opportunity you have there with the $4 billion, I guess. But as you look at the size of your company, right, $4 billion is 2%-4% of your total market cap. It's all very helpful and it's all value accretive, but is there a way to, I guess, create a step function in earnings growth from here? I know Brian was just talking about the liquidity you have, and you guys are searching the globe. Is there any type of opportunity above and beyond the continuing to fix the portfolio, drive earnings from there, to grow the platform further, and drive maybe that incremental growth above and beyond what malls and retail generally can deliver on a year in and year out basis?

[Eli Simon, CEO, President, and COO at Simon Property Group]

Sure. So there's definitely opportunity. It's something we're always focused on. The great thing about the balance sheet that Brian mentioned is that we can do, and will do, all of the above, to do development and continue to reinvest into our properties. We'll continue to evaluate buying back stock. We still love to own more of what we own, I guess, is the best way to say it, and we know the embedded growth profile, given that pipeline that you talked about. But we're also not going to do something just to do it. I think I said this last quarter, and it remains true, is we'll buy stuff and look at acquisitions that's accretive that we think we can operate better on our platform. But it has to be at the right price. We're not going to do something just to add scale.

[Eli Simon, CEO, President, and COO at Simon Property Group]

I don't think it's the right thing to do. But the reality is we have $9.3 billion of liquidity. We're in a business or in a balance sheet that's naturally de-leveraging, based upon our free cash flow generation. We'll continue to evaluate, and if there are opportunities, the great thing is we know we can execute. We have the team to execute it. You look at what we did with Brickell last year. Our year one yield there is over 100 basis points higher than our underwriting, and that's because we bought really, really, really good real estate at a good price, and also because we're operating it, we're leasing it very well, and we're laser focused on it. So we'll continue to do transactions like that, to the extent that they are out there, but we're not going to chase stuff.

[Eli Simon, CEO, President, and COO at Simon Property Group]

If others want to chase stuff, that's fine. We love our portfolio. We love the assets we own. We'll continue to reinvest in them and continue to make those assets better. If there are opportunities or when there are opportunities, we're ready to go, and we can move quick, and then add value that way. We look at it, and we've grown NOI 4%+ for the last four or five years now, I guess. We have $1 billion in the ground in development. We have $4 billion behind it and much, much more behind that we're actively working on, sort of the shadow part two, I guess. We're focused. We look to continue to grow cash flow, but we're going to do it smartly, and we're going to do it by adding great assets over time.

[Eli Simon, CEO, President, and COO at Simon Property Group]

If nothing is out there that we can transact on, that's fine. We'll do what we do and grow the cash flow of the existing assets.

[Craig Mailman, Analyst at Citi]

Great. Thank you.

[Operator]

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

[Vince Tibone, Analyst at Green Street]

Hi, good afternoon. Comparable tenant sales are up about 6% year to date, which is much stronger than the last few years. How should we think about potential upside to 2026 NOI and FFO growth from over rents if these strong sales trends continue for the rest of the year? If you could also touch on just kind of what's baked into guidance right now in terms of sales growth for the portfolio, that would be helpful.

[Eli Simon, CEO, President, and COO at Simon Property Group]

I would say we have seen no signs of a slowdown at all, frankly. In fact, traffic, which we have, traffic accelerated in July. I do not think anybody asked about traffic, but traffic was up 2%, I think, in the quarter and 3.6% in July. Good numbers, so I felt like we should say it. We have not seen any change in sales. I would say that sales are the one thing that we cannot control. Obviously, there is a lot of macro factors, geopolitical, political, right, with an election in a couple of months, that are out of our control. I would say when we think about the guidance, I think it is fair to say that if the sales trends continue, we will be above the range we guided. But the reality is, it is very hard to know how sales are going to perform.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Clearly, overage and sales based rent is back end weighted, obviously, as you go to the holiday season. The guidance effectively assumes a slowdown. If it stays like this, then we obviously will be above that range. But we do not really feel comfortable guiding at the same growth, just because it is something we cannot control. We can control leasing, we can control how we manage expenses, but we cannot control sales. Although there is nothing that we have seen that would suggest the slowdown is imminent, we thought it was prudent to guide with some sort of sales moderation. But again, very strong numbers. If you look for the six months, it is 6.3% comp growth. That is obviously very good. There are tougher comps in the back half of the year. The malls really started their more positive upward trajectory this time last year.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Those are a bit tougher comps too that we will see. But we are hopeful that the consumer is shown to be resilient. Obviously, stock market being at or near record highs is not insignificant. But that is sort of, I guess, the best way to summarize sales. I do not know, Brian, anything?

[Brian McDade, CFO at Simon Property Group]

No, I think you covered it well, Eli. Ultimately, we would expect if the current conditions continue, that will be a further contribution beyond our guidance for the year.

[Operator]

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

[Tayo Okusanya, Analyst at Deutsche Bank]

Hi, yes. Good afternoon. Quick question. Eli, you mentioned comments before about jewelry being very strong, and I guess everything you seem to read in the news is that diamond prices are going down and the younger generation is not buying diamonds and things like that. Just trying to understand a little bit better why that particular category is doing well, and if there are any categories in particular that you worry about saturation as well.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Sure. I would say the jewelry space, frankly, for jewelry and watches, it's coming from a variety of price points. It's clearly the luxury, the uber luxury that's just very honestly more demand than supply of those types of items. That allows prices to go up, and the consumer is there. There's also been a lot of new entrants into the space on sort of more of the, I guess, more affordable price points. So there's a lot of new entrants in this space that we're doing business with that have great looking stores, attract maybe that younger consumer. It's a category that's important for us. I think, again, these things go in cycles. They change over time. But for right now, that is a trend that we see, we're focused on.

[Eli Simon, CEO, President, and COO at Simon Property Group]

And so it's, can we continue and expand the relationships and expand the stores with some of the more established players in the luxury space that we have great relationships with and want to continue to do more and more business with. But also there's this new entrant, again, at a different price point, but that are creating really great stores, great environments, that they're focused on getting that younger consumer in an environment that is Instagrammable, right? For lack of a better word. So it's sort of how we view all of our leases, is that we want to go where the consumer goes, and we have a great team. We have boots on the ground across the country. We have a great team that's focused on new and emerging brands. So we go where the customers are and want to give them more of what they want.

[Eli Simon, CEO, President, and COO at Simon Property Group]

And so that's really what we're doing in that space.

[Brian McDade, CFO at Simon Property Group]

Tayo, I think you also see, just given the outperformance of the U.S. relative to the rest of the globe, that you continue to see luxury retailers bringing their product here, their newest and greatest product, because this is where the action is. So as long as that continues, we think that the trend line will hold.

[Tayo Okusanya, Analyst at Deutsche Bank]

Fair enough. Thank you.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Thank you.

[Operator]

Our last question is from Ronald Kamdem with Morgan Stanley. Please proceed.

[Ronald Kamdem, Analyst at Morgan Stanley]

Hey, great. I just had a quick one, just AI related. We are a couple of months into this journey now, and when you are thinking about your business as well as the retailer business, where do you think we are in terms of the adoption of these tools to better understanding where the customer is coming from and starting to see some tangible benefits? Is it still too early to see tangible results? Just curious, like how that has been going, both for your business and the retailers that you partner with. Thanks.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Sure. It is obviously early days. I do not know if it is the first inning, third inning, but it is definitely early days. I would say from the SPG perspective, I think we have made leaps and bounds strides over the past several months, and there is so much more we can do. So much more we can do with our data. We are seeing real efficiencies and insights from our, if you think about it, we have, I do not know, 29,000, 30,000 different leases, so many different REAs, so many different documents, and joint venture documents, loan documents, et cetera.

[Eli Simon, CEO, President, and COO at Simon Property Group]

We are seeing a lot we can do in that space to be quicker, to be more efficient. So much we can do on the marketing front. Again, we have hundreds of centers. So many different retailers, and so the ability to create imagery that is quicker, that looks better is meaningful for us.

[Eli Simon, CEO, President, and COO at Simon Property Group]

It's early days. I would say the retailers, again, same thing, right? From overhearing is that everyone's starting the journey, they're focused on it, but I don't think there's been a sea change in how anybody's operating. I think it's just stepping back bigger picture. I think it makes us more bullish on physical real estate, physical retail. I think, and we've seen it, the younger cohorts, the most excited to come to the mall, the most excited to shop in the mall. As individual websites tend to become harder to navigate to from individual retailers, the physical real estate, the ability to have their brand representation becomes more and more important. So that leads to more money being reinvested into the stores, creating a better, more unique experience. So we think it's great for us long term.

[Eli Simon, CEO, President, and COO at Simon Property Group]

But as far as adoption and anything like that, it's obviously early days. We do, as I mentioned earlier, with the Simon Media Network, AI will be a big component of that and our ability to sort through our data better, right? Which is a lot as you can imagine with billions of visits a year and hundreds of billions, $100+ billion in sales. It's a lot of data, a lot of leases, a lot of tenants. So there's a lot we can do there to be with our Simon Media Network, and related entities that's really getting up and running. But overall, we look at this as great for us long term. Our job is to continue to make our properties where retailers want to be and where customers want to be. That's really what we're focused on.

[Ronald Kamdem, Analyst at Morgan Stanley]

Great. Thanks so much.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Thank you.

[Operator]

We have reached the end of our question and answer session. I would like to turn the call back over to Eli for closing remarks.

[Eli Simon, CEO, President, and COO at Simon Property Group]

Thank you, everybody, for your questions, and have a great week.

[Operator]

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

Participants

Executives

• Tom Ward, SVP of Investor Relations
• Eli Simon, CEO, President, and COO
• Brian McDade, CFO

Analysts

• Caitlin Burrows, Analyst at Goldman Sachs
• Michael Griffin, Analyst at Evercore ISI
• Samir Khanal, Analyst at Bank of America
• Michael Goldsmith, Analyst at UBS
• Greg McGinniss, Analyst at Scotiabank
• Alexander Goldfarb, Analyst at Piper Sandler
• Juan Sanabria, Analyst at BMO Capital Markets
• Floris van Dijkum, Analyst at Ladenburg Thalmann
• Rich Hightower, Analyst at Barclays
• Mike Mueller, Analyst at JPMorgan
• Craig Mailman, Analyst at Citi
• Vince Tibone, Analyst at Green Street
• Tayo Okusanya, Analyst at Deutsche Bank
• Ronald Kamdem, Analyst at Morgan Stanley