The paragraph introduces the Simon Property Group's Third Quarter 2024 Earnings Conference Call, with all participants initially in listen-only mode and a Q&A session to follow. The host, Tom Ward, SVP of Investor Relations, introduces key speakers David Simon, CEO, and Brian McDade, CFO. The call includes forward-looking statements subject to risks and uncertainties, with additional details available in the company's press release and SEC filings. The call, limited to one hour, emphasizes a single-question limit during the Q&A session. David Simon expresses satisfaction with the company's financial and operational performance, noting increased leasing, occupancy, and sales volumes in the third quarter.

The paragraph discusses the steady demand for the company's retail real estate and highlights its strong financial position due to development initiatives and an A-rated balance sheet. The company has raised its dividend to a historical high of $2.10, overcoming challenges from COVID-19. Brian McDade presents the third quarter results, noting a 4.8% increase in real estate FFO to $3.05 per share, mainly driven by increased lease income. However, third quarter funds from operations fell to $2.84 per share, down from $3.20 the previous year, partly due to non-cash losses from derivatives linked to the appreciation of Klépierre's stock. Additionally, the company faced an eight-cent operating loss due to reduced consumer spending and lost income from selling its interest in ABG. Prior results included non-cash gains from a partial sale of SPARC ownership.

In the third quarter, Domestic NOI rose by 5.4% year-over-year, driven by strong leasing, consumer spending, and operational performance. Overall Portfolio NOI, including international properties, grew by 5%. Mall and Outlet occupancy reached 96.2%, while The Mills had an occupancy of 98.6%. Average rent for Malls and Outlets rose by 2.3%, and by 4.5% for The Mills. About 1,200 leases covering 4 million square feet were signed this quarter, contributing to over 3,900 leases and $1 billion in revenue for the first nine months of 2024. Additionally, 1,800 deals in the pipeline are expected to generate over $600 million in revenue. Retail demand remains strong, with retail sales per square foot at $737, and total sales volumes up 1.5% year-over-year. The occupancy cost was 12.8%. New developments include the fully leased Tulsa Premium Outlets and an expansion at Busan Premium Outlets. Numerous development and redevelopment projects are ongoing, with a total net cost of $1.3 billion and an 8% yield.

In the third quarter, SPARC's OPI results underperformed due to cautious spending by lower-income consumers, affecting brands like Forever 21 and Reebok. However, SPARC and J.C. Penney saw sequential improvements in comp sales, positioning them well for the holiday season. The company amended its $3.5 billion credit facility and issued $1 billion in senior notes. They refinanced $1.3 billion in property mortgages and repaid a $900 million maturity. With $11.1 billion in liquidity, they continue to innovate their physical and digital platforms, including rebranding their digital marketplace to enhance the shopping experience and drive sales.

The paragraph discusses a marketing campaign called "Meet Me @themall" celebrating the shopping mall's appeal across generations. It also announces a dividend increase to $2.10 per share, marking a 10.5% year-over-year rise and restoring dividends to pre-pandemic levels. The company maintains its guidance range of $12.80 to $12.90 per share, excluding a $0.14 per share non-cash loss tied to a bond adjustment. During the Q&A, Steve Sakwa from Evercore ISI asks about managing lease expirations and pricing power. David Simon responds that their strategy focuses on improving the merchandise mix rather than just rent, emphasizing a holistic approach to enhancing centers.

The paragraph discusses the ongoing efforts to enhance a property portfolio by attracting better retailers, including restaurants, despite a 60% increase in construction costs since the pre-pandemic period. The company is one of the few capable of building in this market, benefiting from limited supply. Their focus is on improving property quality rather than just increasing rent prices, maintaining a balanced growth approach as leases expire or new tenants arrive. Recent internal meetings emphasize property improvement as a strategy for growth. The speaker notes that supply and demand dynamics are favorable, and they have the capital to invest and address the rise in construction costs. Steve Sakwa humorously offers to participate in future meetings.

The paragraph features a discussion led by David Simon about Simon's development and redevelopment pipeline, currently valued at around $4 billion. Simon emphasizes the company's focus on anchor replacements and large mixed-use projects, mentioning opportunities at locations like Barton Creek and Fashion Valley, where they plan significant redevelopments. There's a strong relationship between retail and adjacent residential developments, which the company plans to continue exploring. Despite potential market oversupply, Simon expresses enthusiasm for advancing these projects.

The paragraph discusses a development strategy involving a project at Clearfork in Fort Worth, where a new office and retail space is being approved. The office space will be about 50,000 square feet, with Wells taking most of it. There is also mention of selective project developments and a focus on the residential side in response to overbuilding concerns. The conversation shifts to a question about merchandising mix and the company's efforts to enhance the omnichannel experience, particularly with initiatives like "Meet Me @themall," to engage customers and bring them to the centers over the coming years.

In this paragraph, David Simon discusses the evolving role of malls as unique community gathering places and emphasizes the importance of adapting to both physical and digital retail trends. He highlights the rejuvenation of younger consumers visiting malls and the need for retailers to capitalize on this trend. Simon also talks about their digital commerce platform, ShopSimon, which evolved from Shop Premium Outlets, having established a successful proof-of-concept. He mentions plans to integrate loyalty programs and services like Simon Search, enhancing the shopping experience with options like ship-from-store and in-mall pickup, thereby reinforcing the mall's value to communities and retailers.

The paragraph discusses the importance of the digital platform ShopSimon in adapting to changes in mall merchandising and logistics. While digital growth has slowed, the company remains committed to investing in it. David Simon expresses confidence in ShopSimon's ability to add value through strong retailer relationships and partnerships. In response to a question from Craig Mailman, Simon acknowledges the potential for malls to incorporate logistics elements like mini distribution centers to assist retailers and enhance services such as in-store pickup. While not committing to immediate changes, Simon indicates a willingness to explore these possibilities to support retailers and monetize mall spaces.

The paragraph discusses ongoing efforts and potential opportunities in the last-mile segment of the power sector, emphasizing the strategic location of their well-situated real estate assets. While last-mile initiatives may not dominate, they present selective possibilities. During a discussion, Greg McGinniss from Scotiabank inquires about leasing performance and future occupancy goals. David Simon highlights their focus on improving occupancy and prioritizing suitable tenants and locations to enhance merchandising. Greg also asks about the financial guidance related to Funds From Operations (FFO) per share, noting concerns about contributions from Other Platform Investments (OPI). Brian McDade responds, noting a revised negative contribution expectation from OPI but offset by strong real estate performance, with improvements anticipated in the fourth quarter.

The paragraph discusses the financial impact of certain investments on the real estate business's financial results, specifically mentioning OPI (which includes investments in RGG, Jamestown, SPARC, and J.C. Penney) as a drag on FFO due to depreciation and expenses. However, these investments still generate positive EBITDA. The company has minimal investments in Penney and SPARC, slightly more in RGG and Jamestown, and considers these long-term holdings. The sale of ABG is mentioned as a strategic decision that affected income projections. The overall message is that while retail investments have been a challenge this year, the company is working towards positive developments, with potential announcements expected by the end of the year or early 2025.

The paragraph is a conversation from a conference call where David Simon, presumably an executive at a real estate or retail investment company, discusses the company's focus on maximizing the value of its investment without additional capital. Alexander Goldfarb from Piper Sandler asks Simon about the company's strategy regarding their lower-performing malls, previously used for cash flow, in light of the competitive retail environment and lack of new supply. Simon suggests that changes in the retail landscape might present new opportunities for these bottom-tier malls that weren't available a few years ago.

The paragraph discusses the potential for improvement in the lower-tier assets of a mall portfolio. The speaker acknowledges that not all assets in the bottom tier can be improved, but highlights the opportunity to enhance the bottom 20% due to a lack of new supply in those markets. The focus is on reinvestment and making significant progress by 2025. The conversation then shifts to a question about leasing and financing lower-quality malls. The speaker mentions that 75 new luxury deals have been executed covering 208,000 square feet, with an additional 47 deals pending.

The paragraph discusses the ongoing development and redevelopment efforts of a company, highlighting that they are steadily increasing their output despite some slowdown in sales for certain brands. The company is replacing underperforming retailers with better ones and has secured long-term commitments from retailers. Brian McDade notes that they anticipate delivering about 30% of their portfolio investment by 2025, with an expected 8% return on these investments. Vince Tibone from Green Street asks for clarification on the timeline for stabilization and income contribution, and McDade confirms the 30% target for portfolio investment delivery as an average expectation.

In the paragraph, a discussion takes place during a company earnings call regarding recent mall redevelopment projects, with Brian McDade mentioning a residential project at Briarwood and redevelopment at Tacoma. Juan Sanabria inquires about the potential impacts of the upcoming election on the business, specifically mentioning tariffs. David Simon responds by stating that CEOs should generally steer clear of politics but acknowledges that lobbying for company interests is necessary. He expresses caution due to current uncertainties in both domestic and global contexts, indicating that the company remains prepared for various outcomes. However, he refrains from endorsing any political side, emphasizing that decisions should be left to individuals.

The paragraph features a conversation from an earnings call where David Simon expresses his belief that individuals like him should not try to influence public opinion and should let the people decide without external pressure. He acknowledges six potential political outcomes they need to be prepared for without specifying his preference. After this, Michael Goldsmith of UBS asks about the company's positive occupancy growth and expiring rates, suggesting these factors provide confidence for sustainable mid-single-digit NOI growth in the coming years. Brian McDade responds affirmatively, citing the momentum and capital reinvestment in the business as contributing factors.

The paragraph is a discussion from a conference call involving David Simon, Brian McDade, and analysts Linda Tsai and Mike Muller. David Simon mentions that new projects will open in 2025 to 2027, which will support growth despite no new supplies. Linda Tsai asks about quarter-over-quarter improvement and NOI growth for 2025, with Brian McDade indicating current momentum but deferring detailed guidance until February. Mike Muller inquires about future acquisition opportunities and development spending. David Simon notes their company is well-positioned to acquire high-quality retail real estate but finds it hard to predict if opportunities will match those of the past five or ten years.

The paragraph discusses the company's cautious approach to acquisitions since the TRG deal, which occurred just before the COVID-19 pandemic. Although they haven't made many acquisitions recently, they're carefully evaluating future opportunities and anticipate growth through acquisitions over time. There's a mention of a $4 billion development and redevelopment "shadow pipeline," with $1.2 billion already committed and an expectation of $1.5 billion annual investments, which could fluctuate slightly depending on project sizes and deliveries. The discussion shifts to ShopSimon.com, where the company is in the early stages of using the platform for deliveries. They are exploring backend logistics, particularly whether shipments from multiple brands can be consolidated or if they remain separate.

The paragraph discusses the steady growth and development in a marketplace, particularly in terms of Gross Merchandise Volume (GMV) through the ShopSimon app or website. Although there's been significant progress and traction, detailed GMV figures are withheld due to a partnership. The conversation shifts to Domestic Net Operating Income (NOI) growth, which is approaching 5%, and questions about future growth projections for different retail sectors, like traditional malls and outlets. David Simon notes that exact numbers for 2025 will be disclosed in the future, and they are currently evaluating different segments like Malls, Outlets, and The Mills.

The paragraph is a conclusion to a conference call. David Simon and Brian McDade express gratitude for the questions and interest shown during the call, and David Simon notes that additional information will be shared during their year-end earnings report in early February. He also mentions the continued positive momentum over the past few years. The operator ends the conference, inviting participants to disconnect.

This summary was generated with AI and may contain some inaccuracies.