What Simon Property Group (SPG) Said on Its Q3 Earnings Call

Key Points

• Simon Property Group raised its 2026 real estate FFO guidance to $13.30–$13.40 per share, a 10-cent increase; the midpoint implies about 5% growth from 2025.
• Third-quarter real estate FFO rose to $3.37 per share, while mall and Premium Outlet occupancy reached 96.5%. Retailer sales per square foot increased 14.8%, and the company reported a leasing pipeline 30% larger than a year earlier.
• The company expects its University Village acquisition to close in the fourth quarter and be modestly accretive next year. It declared a $2.30 dividend and said it will continue share repurchases when prices and market conditions are attractive.

Simon Property Group NYSE: SPG raised its full-year 2026 real estate funds from operations guidance after reporting third-quarter growth in property income, leasing and retailer sales.

The mall and outlet owner now expects real estate FFO of $13.30 to $13.40 per share for the year, up $0.10 from its previous range. Chief Financial Officer Brian McDade said the midpoint implies approximately 5% growth from $12.73 per share in 2025.

Chief Executive Officer Eli Simon also discussed the company’s pending acquisition of University Village in Seattle and said it expects to continue repurchasing shares when market conditions and pricing are attractive.

Higher Property Income and Leasing Activity

Third-quarter real estate FFO rose to $1.28 billion, or $3.37 per share, from $1.22 billion, or $3.22 per share, a year earlier. McDade attributed the improvement in part to higher lease income, cost management and acquisitions made last year. Higher net interest expense reduced FFO by $0.05 per share year over year.

Reported FFO fell to $3.09 per share from $3.25. The latest quarter included $0.27 per share in noncash after-tax losses from unrealized mark-to-market adjustments to the Klépierre exchangeable bond and the revaluation of an equity security held in an unconsolidated investment.

Domestic property net operating income increased 6.6% in the quarter and 7.3% for the first nine months. McDade said approximately 120 basis points of growth in both periods came from the acquisition of the remaining TRG interest. Portfolio NOI, including international properties at constant currency, rose 6.7% for the quarter.

Occupancy at malls and Premium Outlets reached 96.5%, up 10 basis points from a year earlier and matching the company’s highest combined level since 2016. Occupancy at The Mills was 98.9%.

Simon said the company signed nearly 1,200 leases covering more than 4.3 million square feet during the quarter. Through the first nine months, initial base minimum rent per square foot on new deals rose 17% year over year, while tenant allowances per square foot declined 10%.

The prospective leasing pipeline was up 30% from a year earlier, Simon said during the question-and-answer session. He said demand from national retailers already in the portfolio was up 40%.

Sales Growth and the Holiday Outlook

Retailer sales at malls and Premium Outlets reached $852 per square foot, up 14.8% year over year. Comparable sales grew 4.9% in the quarter, while total sales volume increased 6.8%.

Simon said growth extended across platforms, geographies and categories, including athleisure, junior brands, luxury goods, watches and jewelry. Restaurants had their best quarter in three years, he said. October traffic growth was in the mid-3% range, in line with the third quarter.

The CEO said malls had slightly outperformed outlets, partly because some faster-growing categories, including luxury watches, are less represented at outlet centers. He described Florida as strong and said Woodbury and properties near the Canadian and Mexican borders were growing, although more slowly than he would like.

Simon said the company is still developing its 2027 budget and needs to see how the holiday season unfolds before forming a clearer view of next year’s sales. He estimated that higher interest expense could present a headwind of roughly $0.30 per share next year, while noting that rates remain volatile. The company expects to provide more detail on 2027 guidance when it reports fourth-quarter earnings in February.

Acquisition and Development Plans

The University Village acquisition is expected to close in the fourth quarter, subject to customary conditions. Simon declined to disclose pricing or yield details, citing the agreement, but said the transaction should be modestly accretive next year and accretive to net asset value on day one.

He said the company evaluates retail assets based on their quality, location and potential for Simon to add value, rather than whether they are open-air or enclosed. He also said buying a portfolio containing several unwanted properties to obtain a few attractive assets was not part of the company’s current plan.

At quarter-end, Simon’s share of net costs for development projects underway totaled $1.2 billion, at a blended yield of 9%. Simon said the figure had since risen to approximately $1.4 billion after additional approvals, with a further $4 billion pipeline behind it.

The company also plans to break ground on Sagefield, a ground-up development south of Nashville, the week after the call. Simon said the project is expected to open by the end of 2028 and include more than 80 retail shops and restaurants. He declined to provide its cost but said the expected yield was in line with other projects.

Dividend, Buybacks and Financing

Simon declared a fourth-quarter dividend of $2.30 per share, up 4.5% from a year earlier and payable Dec. 31 to shareholders as of the record date.

The company repurchased 1.1 million common shares during the quarter. Through the first nine months, it repurchased 3.4 million shares and limited partnership units for $667 million at an average price of $198.97 per share.

Simon said approximately 450,000 shares remained to be repurchased to offset shares issued for the Taubman transaction. He expects a continued buyback cadence when repurchases are accretive and can be funded with excess free cash flow, while emphasizing that decisions will depend on market conditions.

McDade said the company ended the quarter with approximately $9 billion in liquidity and net debt to EBITDA of five times. For 2027 maturities, he expects the company to use a mix of commercial paper and longer-term unsecured debt, and potentially additional international financing where rates are advantageous.

About Simon Property Group (NYSE:SPG)

Simon Property Group is a real estate investment trust that owns, develops and manages shopping, dining and entertainment destinations. Its portfolio includes regional malls, premium outlet centers and mixed-use properties, which combine retail with other uses such as restaurants and entertainment.

The company's properties are located primarily in the United States, with additional investments and operations in international markets, including Europe and Asia. Its business activities include leasing space to retailers and other tenants, operating properties and investing in redevelopment and expansion projects.

Simon Property Group was established in 1993, when it became a publicly traded company following a spin-off from Melvin Simon & Associates.

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