管理層發言
Greetings. Welcome to Simon Property Group's First Quarter 2026 Earnings conference call. The operator provided instructions to participants. 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.
Thank you, Sherry, and thank you all 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 related 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. 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.
Good evening. I want to start by thanking all those who sent kind notes following my father's passing. His impact on our company and our industry is truly powerful. Turning to the quarter. We are off to a very good start for 2026 with first quarter results that exceeded our plan. Occupancy gains, increased shopper traffic and higher retailer sales drove strong cash flow growth in the quarter, reflecting solid fundamentals across all our platforms, the resilience of the consumer and the strength and breadth of tenant demand we have for our centers. Retailer demand remains broad-based, spanning new and legacy retailers across a wide range of categories in all of our platforms and geographies. During the first quarter, we signed more than 1,100 leases totaling over 4.7 million square feet. Approximately 25% of our leasing volume in the quarter was new deals. We have completed more than 75% of our 2026 expirations and are ahead of where we were at this time last year. We have a robust and expanding pipeline of deals that are significantly larger than this time last year, reflecting continued demand from a diverse mix of tenants. Now turning to development and redevelopment activity. We have projects under construction at 29 centers with our share of net cost of $1.06 billion at a blended yield of 9%. Approximately 50% of the net cost is for mixed-use projects, including approximately 1,200 units of multifamily residential at Brea Mall, Briarwood Mall and Northgate, and more than 400 hotel keys at Northshore Mall, Roosevelt Field and The Domain. We also have exciting redevelopment of former anchor boxes underway at Brea Mall and the Fashion Mall at Keystone, where we'll be adding more productive new retail, restaurants, entertainment and fitness uses. We have an additional $1 billion of projects for which we'll have the ability to start construction this year, including new developments, anchor redevelopments and international redevelopments and expansions. Beyond that, we have approximately $3 billion of projects in our pipeline that could start over the next several years — investments that will make our great centers even better. All of these projects will be funded from internally generated cash flow, and we will maintain our track record of discipline in how we allocate capital, rigorously evaluating each project against our return thresholds. We have complete flexibility in our development pipeline. We can be patient and adjust timing depending on construction costs or market conditions. We can also invest countercyclically, delivering product when others can't. These accretive development and redevelopment activities deliver strong yields, enhance our portfolio and drive long-term growth in cash flow, FFO and dividends per share. Moving on now to retailer sales. Malls and Premium Outlets were $819 per square foot in the quarter, up 11.8%. More importantly, sales growth accelerated. Total sales volume increased 5.6% over the trailing 12 months and 8.8% in the quarter, with comparable sales growth of 6.5% for the first quarter. Our remerchandising efforts are clearly showing through in total sales volumes with strong growth across our portfolio and across categories such as luxury, jewelry, athleisure and juniors. With that, I will now turn it over to Brian who will review our financial results from the first quarter in more detail and provide an update on our outlook for the remainder of the year.
Thank you, Eli. Real estate FFO was $1.2 billion or $3.17 per share in the first quarter compared to $1.1 billion or $2.95 per share in the prior year period, growth of 7.5%. Domestic and international operations both performed well and contributed $0.27 of growth, driven by increased lease income along with disciplined cost management. As anticipated, higher interest expense and lower interest income combined were a $0.05 drag year-over-year. Reported FFO of $2.91 per share includes $40 million or $0.10 per share of accelerated stock compensation expense which reduced real estate FFO by $0.02 per share and other platform investments net of tax by $0.08 per share. Domestic property NOI growth was strong and increased 6.7% year-over-year for the quarter, with approximately 120 basis points of that growth attributable to our acquisition of the remaining TRG interests. Portfolio NOI, which includes our international properties at constant currency, also grew 6.7% for the quarter. Malls and Premium Outlet occupancy at the end of the first quarter was 96%, an increase of 10 basis points year-over-year. The Mills occupancy was 99.2%, an increase of 80 basis points year-over-year. Average base minimum rent for the malls and the Premium Outlets increased 5.2% year-over-year and The Mills increased 9.1%. Occupancy cost at the end of the quarter was 12.7%. Shifting to return of capital. Today, we announced our dividend of $2.25 per share for the second quarter, an increase of $0.15 or 7.1% year-over-year. The dividend is payable on June 30. Also, in the first quarter, we repurchased approximately 965,000 shares of our common stock for an investment of $175 million at an average purchase price of $181.59. Turning to the balance sheet. During the first quarter, we were active. We completed 10 secured loan transactions totaling approximately $2.3 billion at a weighted average interest rate of 5.25%. We also issued $800 million of senior notes that we used to repay proceeds from to repay our $800 million of notes that matured on January 15. We also amended, restated and extended our $5 billion revolving credit facility at a 15 basis point lower pricing grid, and we ended the quarter with approximately $8.7 billion of liquidity. Subsequent to the end of the quarter, we closed on the refinancing of the Shops at Crystals via a five-year CMBS loan that was priced at 4.83%, the lowest retail fixed rate coupon CMBS financing completed over the last four years. Turning to Klépierre exchangeable bonds. During the quarter, we settled the conversion of approximately $174 million of outstanding bonds by exchanging 4.1 million shares of Klépierre and EUR 79 million of cash. As part of that, we recognized a noncash non-FFO gain of $64 million in the quarter on the exchange of the Klépierre shares. Subsequent to the end of the quarter, we settled additional conversions of $374 million of the exchangeable bonds. Following the exchanges, there are approximately $188 million of bonds outstanding that will mature in November. We currently own approximately 59 million shares of Klépierre's common stock which represents approximately 20.7% ownership. At the end of the quarter, our balance sheet remains strong with net debt to EBITDA of 5.0x and a fixed charge coverage ratio of 4.6x, supporting our strategy and continued execution. And finally, on to guidance for 2026. Given our results for the first quarter 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 $13.10 to $13.25 per share. That compares to $12.73 per share last year of real estate FFO and is a 5% increase at the midpoint. Thank you. We are now available for your questions.
分析師問答
The operator provided instructions to participants for the question-and-answer session. Our first question is from Samir Khanal with Bank of America.
Eli, as it relates to retailer demand, you mentioned it's very strong, and I assume you have a lot of leverage on negotiations with the tenants here. Maybe talk about the pricing power you have in this environment. I know you spoke about addressing upcoming expirations into 2027, so talk about that growth momentum over the next 12 months.
Sure. First, we don't have leverage over the retailers. Retailers can go many places — they can open stores, not open stores, go online. So we do not view that we have strong unilateral pricing power over retailers. On the pipeline, it is significant. What's interesting is it's up across all different categories that we're leasing today. That includes legacy brands, our new business leasing — brands coming to malls for the first time from direct-to-consumer channels or from Asia and Europe — luxury brands, restaurants and local and regional businesses. We are seeing broad-based demand across the portfolio, not just the top fortress centers. I attribute that to making our centers better and more relevant; the Gen Z customer wants to come to our centers, and you see that in traffic growth and retailer sales. We're not going to overstate pricing power; we have no leverage, but we feel very good about the pipeline and our conversations with tenants. On future expirations, we're ahead in our 2026 expirations — roughly 200 basis points more than this time last year. Retailers are now willing to talk about 2027, 2028 and 2029 expirations, which historically might have been more common with luxury tenants thinking in decades rather than quarters. We're actually hearing from legacy retailers in our existing portfolio, non-luxury, who want to start those long-term conversations because they understand the pipeline and the interest in our space. We like having those conversations, and they've been productive so far.
Our next question is from Caitlin Burrows with Goldman Sachs.
Maybe big picture: considering the leadership transition, do you expect any changes to Simon's strategy and execution? Is there any change to capital allocation priorities between acquisitions, share repurchases, the deep redevelopment pipeline and dividend growth? I know you've been active on all fronts recently.
Sure. Regarding leadership changes, it's business as usual. We have a best-in-class team and we're continuing to execute on our business plan, so no change there. Capital allocation — we evaluate all pieces. On development and redevelopment, current projects underway are about $1 billion. We have about $1 billion we could start later this year, and at least $3 billion behind that that we could start over the next several years. We evaluate each project meticulously, considering market conditions and retailer demand, and we pursue projects when returns meet our thresholds. Today, we're seeing very good returns around 9% plus for the projects under way. We will pause or adjust timing if construction costs or market conditions change, because this is land we own and we'll own forever. On acquisitions, there has been more transaction activity in retail, which is good — more capital coming into the sector. Our acquisition criteria remain the same: brand accretive, an asset where we can add value through our operating skills, and at the right price. Last year, aside from completing the remaining TRG stake, we did three transactions — the mall outlets in Italy, Brickell City Centre in Miami, and Phillips Place in Charlotte — and all three met our criteria and have outperformed our expectations. On share buybacks, activity slowed a bit in the last quarter due to geopolitical unrest and market choppiness; we were prudent. We did issue a bit over 5 million shares to complete the Taubman transaction and fully expect to buy those back. We'll be active when it's prudent, but we won't force repurchases. On the dividend, it increased; it's important to us and has grown at a nice rate. We take pride in it — Brian and I believe we should pass $50 billion paid as a public company in the third quarter. Ultimately, we generate roughly $1.6 billion of free cash flow after dividends, so we have many opportunities for capital deployment. If we naturally deleverage because we don't like opportunities, that's fine too. In short, no change in capital allocation philosophy: we'll evaluate opportunities and do what's best at any given time, which could be all of the above or none.
Our next question is from Michael Goldsmith with UBS.
Eli, you mentioned the resilience of the consumer. What are you seeing from the consumer specifically? Are they changing how they shop or spend at the centers? Do you have any data on the Gen Z consumer and how they may be different than other cohorts?
Sure. Sales growth is broad-based — a 6.5% comparable comp for the quarter is a very healthy number across categories. The upper-end consumer is doing very well, which you can see in the luxury business — hard luxury, jewelry and watches are seeing solid growth. We're also seeing strength in the juniors business, which targets Gen Z — both new juniors brands and legacy juniors brands are performing well. Competition is healthy, and legacy brands have innovated to compete with new entrants. I was at our Catalyst office recently and saw brands using new influencers effectively to reach their target customers. The one area that's a touch softer is food and beverage, which was essentially flat on a comp basis for the quarter — perhaps trading down or one less outing — and that's reflected in some restaurant groups' results. Tourist markets that rely on European and Canadian travelers are a touch softer; for example, Woodbury's comp was about 2.5% versus 6.6% elsewhere, driven by lower European international travel and fewer Canadians. Conversely, Florida markets — South Florida, Tampa, International Plaza, Waterside in Naples and Orlando — have been very strong. On Gen Z, we've been investing for this cohort; our "Meet Me at the Mall" campaign launched with our marketing team two years ago identified Gen Z as a growing cohort. We've been bringing in brands and activations geared toward them and we continue to see strong progress with that consumer.
Michael, the only thing I'd add is that Gen Z was the centerpiece of our "Meet Me at the Mall" campaign launched about two years ago. We've been leaning in on brands and activations that resonate with that cohort and our marketing and social activations have been geared toward them. We've seen great progress.
Our next question is from Michael Griffin with Evercore ISI.
Eli, can you give some color on whether it's new or renewal lease spreads and how that compares to this time last year? And with the portfolio north of 96% leased, are we reaching structural occupancy? Could it go to 96.5% or 97%?
Sure. On spreads, renewal spreads are not necessarily the most relevant metric but historically we've been in the mid-single-digits increase on renewals over the last several years. That bounces around quarter to quarter depending on the mix of renewals signed. That's holding true now. For new leases, new leases we're signing are generally 20% to 25% above new leases last year — mix plays a role, but brands understand the importance of a great physical representation and our centers deliver that. Our new business brands are outperforming that increase by another roughly 10% — best-in-class new entrants and international brands are paying higher rents because they're proving strong sales and traffic. On occupancy, if we wanted to, we could lease up to 97% or 97.5% — there's room. But we view occupancy as a long-term asset decision, not just a quarter-end metric. Sometimes we hold space for the right retailer or take short downtime for the right redevelopment. We have a strong short-term leasing program that helps maintain occupancy. We're focused on growing cash flow — excluding the Taubman 12%, we've grown NOI 5.5% year-over-year and have grown it north of 4% for the last four years. That is more important than 20 basis points of occupancy.
Our next question is from Alexander Goldfarb with Piper Sandler.
Eli, on data centers: you've spoken about B malls rebounding and some centers having excess power or utilities. Do you see opportunity to convert sites to mini data centers or entire sites to data centers, or are your malls and mixed-use uses still the highest and best uses?
We looked at this actively about 18 months ago, scouring the portfolio and evaluating excess land and utility capacity, and we talked to data center operators. We could not find opportunities that made economic sense. Power availability is less than one might think for an existing mall that would remain a retail center. We continue to evaluate, but to date we haven't found anything compelling. Ultimately, we're economic animals — if there were a higher and better use, we'd consider selling or converting to redeploy capital accretively. But we haven't seen that opportunity. We remain focused on retail and mixed-use densification where we see durable tenant demand. If someone offers a compelling price for an asset enabling better use of cash, we won't hesitate to act, but it simply hasn't occurred.
Our next question is from Greg McGinniss with Scotiabank.
How is the integration with Taubman going, what synergies are you finding, and where do you see the best opportunities for reinvestment into that platform?
The corporate integration has gone according to plan and was effectively completed by the end of April. From an asset perspective, we're more excited now than when we closed. We're leveraging our operating capabilities to increase margin — from operating expenses, marketing, ancillary income and parking to our short-term leasing program and leasing muscle. Most importantly, our balance sheet allows us to reinvest in these centers. We announced plans to invest over $250 million across three assets — Green Hills in Nashville, International Plaza in Tampa and Cherry Creek in Denver — starting later this year. Those investments will freshen these centers, improve tenant experience and support stronger leasing, particularly in luxury. We have renderings and strong retailer interest. It's a whole-of-company approach to make these assets even better, which is exciting for us.
Our next question is from Ronald Kamdem with Morgan Stanley.
Can you provide an update on the other platform investments and how they're performing relative to expectations? What's your thinking on monetization of these platforms? Also, part of the thinking was getting retailer data; how has that been helpful in areas like AI?
OPI is comprised of three pieces today: Catalyst (the former SPARC and JCPenney businesses), RueLaLa and Gilt (which includes Shop Simon), and Jamestown. All three are performing at or above plan for the first quarter. They each have independent management teams and proper capitalization and liquidity. From a monetization perspective, we're opportunistic — if an appropriate opportunity arises and it's in shareholders' best interest, we would act, but we're not planning a sale. Regarding data, it's less about hard transactional data due to privacy restrictions and more about best practices and learnings. Our marketing team interacts with RueLaLa, Gilt and Catalyst on where they see efficacy across ad buys, channels like TikTok, Meta and connected TV, and what drives customer acquisition and retention. Those insights help us think like retailers — for example, how they're managing tariffs and supply chain impacts and how they plan for the year. On AI and technology, we're learning from them on tools and personalization approaches and comparing solutions. It's a symbiotic relationship: we add value to those platforms and they provide insights to us. If monetization opportunities arise, we will not hesitate to act in the best interest of shareholders.
Our next question is from Floris Van Dijkum with Ladenburg Thalmann.
On the redevelopment pipeline: 9% direct returns appear attractive. You have $1 billion ongoing, another $1 billion you could start, and $3 billion in the pipeline, but that's a small percentage of the portfolio. What percentage of the portfolio is yet to receive capital? And if direct returns are 9%, what are the actual returns once you redevelop and realize halo effects in the center?
We invest capital in virtually every center each year. Large transformational projects — put aside the $1 billion under development and the $4 billion to $5 billion shadow pipeline — cover roughly 20 to 25 centers; we currently have projects at 29 centers. There are more opportunities across the portfolio; we're not running out of things to do. Some opportunities are limited by not controlling adjacent real estate, and we won't buy land just to develop immediately; we'll act when the economics and timing work. Regarding halo effects and incremental benefits, we do not underwrite speculative halo benefits because it's hard to quantify precisely what portion of future NOI improvement stems from the redevelopment versus underlying retail trends. For example, Southdale and Brea, which reopened similar projects recently, are performing 1,000 to 1,500 basis points above comparable centers across our portfolio — that demonstrates the value. We underwrite the direct returns conservatively and treat halo effects as additional comfort rather than a primary driver in our underwriting. We know they're important, and they give us confidence in pursuing larger projects like Boca, Ross Park and Fashion Valley.
Floris, to add: properties often receive multiple rounds of investment over time. Roosevelt Field is a good example — we've redeveloped it multiple times and continued to earn attractive returns and the halo effect benefits in the broader shopping center.
Our next question is from Vince Tibone with Green Street Advisors.
Where do purchasing vacant anchor boxes rank in terms of capital priorities? How do you think about the value of control of those spaces versus letting a third-party owner re-lease them?
We evaluate buying anchor boxes on a case-by-case basis. We consider price, leasing demand, construction costs, returns and the halo effect on the mall. Many malls have reciprocal easement agreements and approval rights, so third-party owners are constrained by mall ecosystem considerations. If we decide a box is valuable to control and the price is right, we'll buy it; we've been patient and price-sensitive historically. If we can buy at attractive prices and have redevelopment plans that pencil, we'll do it. Some projects announced over the next year will involve boxes we acquired at attractive prices, enabling those redevelopments. Ultimately, it's ordinary course business: we'll buy boxes when it's the right decision for the Mall and for our capital allocation.
Our next question is from Craig Mailman with Citigroup.
You clearly don't have capital constraints with liquidity and free cash flow. How much development do you think you could handle at one time and continue to source entitlements and opportunities? Is there a limit in the near term or do you have excess capacity?
From a capital perspective, we have significant excess capacity. From a resources perspective, these projects are highly local and often involve outside counsel and advisers. Our team is executing well and we can add human capital if needed, which would be accretive given the potential NOI creation. The main constraint is local municipalities and permitting timelines, which are outside our control. We can also bring partners on certain projects if desirable — we've done that for multifamily and hotels. We're generating approximately $1.6 billion of free cash flow after dividends; projects take time to build and won't all start simultaneously. We are under 5x leverage today, and each turn of leverage creates capacity, so financing availability is not a limiting factor. You should expect us to continue to realize and accelerate on these investment opportunities and deliver new product where others aren't building.
Craig, we're accelerating investments. We have great opportunities ahead and the ability to do things others can't or aren't doing. We're delivering new product, which we believe is a durable competitive advantage.
Our next question is from Haendel St. Juste with Mizuho Securities.
Two-part: on same-store NOI, up 6.7% in the first quarter — is there any change to the initial guide of at least 3%? It seems to imply deceleration over the next quarters. Also, can you share color on the current SNO pipeline, what's the embedded NOI and when it will come online?
I'll address the first part. We refer to domestic property NOI rather than same-store NOI. The 6.7% for the quarter includes roughly 120 basis points of contribution from the acquisition of the remaining Taubman stake we completed last November. That contribution will flow through results in subsequent quarters as well and will have an approximate plus or minus 100 basis point impact on the year. We don't update the "at least 3%" guidance — we've guided to that for several years and our aim is to outperform it. We have a good start to the year and we'll continue executing. I'll turn SNO to Brian.
Haendel, SNO at the end of the quarter was 310 basis points. You usually see an increase in the first quarter that dissipates as tenants open through the year, but 310 basis points was consistent with the first quarter of 2025.
Our next question is from Mike Mueller with JPMorgan.
A follow-up on the prior question: how much impact did the TRG buyout have on operating stats like year-over-year sales comps and the 5% base minimum rent growth?
We don't isolate the impact in our day-to-day operating view. Those assets are Simon assets — we operate, lease and account for them as part of the portfolio. The domestic property NOI figure includes the impact of acquiring the remaining interest, but we focus on operating performance of the combined portfolio rather than trying to separately quantify its effect on sales comps or average base minimum rent.
Our final question is from Rich Hightower with Barclays.
Brian, on the Crystals CMBS financing and the broader upcoming secured loan maturities over 2026 and 2027, can you discuss pricing and the impact on interest expense as you refinance given current rates?
Rich, Crystals was a great execution — a five-year CMBS with a 4.80% coupon, which is probably the tightest retail CMBS coupon we've seen in the last four years, but it's priced off a higher base rate so it still increases interest expense. That refinancing rolled up interest expense about 60-plus basis points. For the rest of our refinancing activity, coupons are up on average about 50 basis points relative to maturing loans. We are seeing interest expense headwinds as anticipated. Spreads are near record tights but base rates are higher, so the original $0.25 to $0.30 headwind we expected from higher interest expense and lower interest income remains. Given current rates, it is gravitating closer to $0.25 versus $0.30, but there is still a headwind for the balance of the year. Markets are open — we're active in CMBS, life and unsecured markets and expect to continue to be active.
With no further questions, I will turn the conference back over to Eli Simon for closing remarks.
Thank you, everybody, for your time today. I look forward to hopefully seeing many of you in Las Vegas or in New York in the coming weeks.
This concludes today's conference. You may disconnect at this time, and thank you for your participation.