Good morning, ladies and gentlemen, and welcome to the Second Quarter 2019 Simon Property Group, Inc. Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference call is being recorded.
I would now like to turn the conference over to your host, Mr. Tom Ward, Senior Vice President of Investor Relations.
Thank you, Crystal. Good morning, everyone, and thank you for joining us today. Presenting on today's call is David Simon, Chairman, Chief Executive Officer and President. Also on the call are Rick Sokolov, Vice Chairman Brian McDade, Chief Financial Officer and Adam Roy, Chief Accounting Officer. Before we begin, 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 ks filing. Both the press release and the supplemental information are available on our IR website at investors. Simon.com.
For our prepared remarks, I'm pleased to introduce David Simon.
Okay. Good morning. We had a very productive quarter and are pleased with our financial results. Results in the quarter were highlighted by funds from operation of 1 $600,000,000 or $2.99 per share. Adjusting for the prior year for our noncash investment gain of Aeropostale IPCO ABG Exchange and the impact of external leasing cost, our FFO growth rate was 4.9% per share.
We continue to grow our cash flow and report solid key operating metrics. Our comp NOI increased 2% for the Q2, and total portfolio NOI increased 1.6% for the quarter. Retail bankruptcies in the 2nd quarter impacted our Year to date comp NOI has increased 1.8%. And to put this in perspective, our comp NOI grew 3.6% in 2016, 3.2% in 2017, last year 2.3 dollars Leasing activity remained solid. Average base rent was $54.52 and our leasing spread was $16.53 per square foot, an increase of 32.3 percent.
And we're pleased that our sales momentum from our retailers continued in the 2nd quarter. Reported retail sales per square foot for our malls and outlets was $6.69 per foot compared to 6.46 dollars in the prior year period, an increase of 3.5%. And just to give you a fund fact, we have over 77 properties, that's right, 77 properties that if you average their total sales will be over $900 a foot. So $77 over $900 a foot. And you can see that clearly as I report retail sales on an NOI weighted basis of $8.52 compared to the $6.69 per foot, occupancy would be 95.5 percent compared to 94.4 percent, and our average base minimum rent would be $73 a little over $73 per foot.
New development, we broke ground on a luxury outlet in Normandy, which is our first designer outlet in Western Paris, catchment area and our 3rd outlet in France. The center is projected to open in the Q2 of 2021. Construction continues on the 3 international outlets, Malaga, Spain, Bangkok, Thailand, West Midlands, England, all open in 2020. Queretaro in Mexico opened and its full grand opening will be in the fall of this year. We continue to expand our international outlet presence in growing markets, adding to our overall franchise value with high rates of return.
And as I mentioned to you in the press release today, we have 42 international outlets after we finish the 4 that are currently under construction. Redevelopment just highlights a lot going on, as you know. So we have 30 properties across all of our platforms in the U. S. And internationally with our share of net cost of approximately $1,700,000,000 Our extensive identified pipeline is over $5,000,000,000 in new development and redevelopment across all our platforms.
These significant redevelopments and transformations will continue to fuel our profitability. Importantly, we'll fund these accretive projects through our internally generated cash flow, and they'll continue to serve our communities. As you know, our properties generate significant property taxes and significant sales taxes for their jurisdictions that fund the police, fire, schools, etcetera. So we continue to play a very, very important role in the livelihood of our communities that we operate in. Now going to liquidity, you'll be pleased to know that we have $6,800,000,000 of liquidity, and that is net of our outstanding CP balance.
During the quarter, we purchased 1,050,000 shares of common stock. We continued in July to purchase another 630,000 shares. So we have combined over the last essentially 4 months, 1,680,000 shares of repurchase. And this further is represented by our strong balance sheet, which continues to be a far significant advantage in our area. We announced a dividend increase.
We're now paying $2.10 That's an increase of 5%. On a trailing 12 month basis ending June 30, over the last 3 years, our dividends have grown at more than 8%. Another fun fact, which I'm here to supply, to put our dividends in perspective as a public company, we have paid more than 30,000,000,000 dollars 30,000,000,000 to our shareholders in cash in dividends, pretty good number. As a reminder, our annualized current dividend yield of more than 5% is 300 basis points higher than the 10 year treasury, and our dividend is more than 1.5x covered by our annual FFO. We continue to reinforce our guidance of $12.30 to $12.40 Despite some headwinds, which include lower lease settlement income, lower distribution income from our international investments, stronger dollar, obviously, all the redevelopment that's going on with our anchors, accelerated redevelopment, including, say, Northgate, some of the unanticipated bankruptcies and some of our SPO cost, which we're now accelerating.
So to conclude, we produced another good quarter of results and operating metrics. There's no company in our industry that has the reach and impact on the communities that we have, and we continue to focus on the long term, continue to invest in our product and generate the kind of returns that will grow our earnings, cash flow and dividends. We're now ready for any questions.
Your first question comes from the line of Jeremy Metz with BMO Capital Markets.
Hey, good morning.
Good morning.
David, I was wondering
if you could break it down for us a bit and talk about what you're seeing on the mall front in terms of trends and traffic versus what you're seeing in the outlets, Anything that's going better than you expected so far this year, even lagging a bit? And maybe just as a follow on, what your expectations are that you have built in for Dressbarn here?
Well, I would say, and Rick can weigh in, the mall business sales are up. Traffic is reasonably good. I'd say it's there's ups and downs, but overall, it's up slightly. In the outlet business, we're skewed a little bit more toward the tourism. And because of the strong dollar and some of the implications of what's going on in the global environment.
Traffic there is flattish, but sales are more flattish. And that's really a function of the big tourist centers in the outlet business that are essentially flat where we would expect them to be up. Overage rent is up in the mall business. It's a little under plan in the outlet business. So I'd say generally, it's absent the strong dollar and absent what's the decrease in overall tourism in the U.
S, we would be performing well ahead of our plan. Obviously, the unanticipated bankruptcies is something we're dealing with. Yet even with that, we produced a 2% comp NOI growth. And I missed your last what was your well, Dressbarn is it is what it is. We'll see what happens.
Insignificant to us in the scheme of our operation. Rick?
The only thing that I would add is that the trends that David talked about are manifesting themselves in the interest that we're seeing from our retailers. There's still a steady stream of retailers that are seeking to find space in our property and the properties continue to get better through the addition of retailers that are making a difference in our trade area presence.
I appreciate that. And David, can you just talk about the investment in Blackridge and Allied Sports, just what drove this and what sort of larger opportunity you possibly see here with that?
Well, look, I think we do think obviously, there's a huge momentum going on about esports and venues. And we have just like the exhibition theater business, I mean, the mall is a great place to post those kind of events in a setting like that drive sponsorship income, drive traffic, reinforce the our real estate is kind of the place to be for the community. So we've got lots of options beyond just Allied about bringing those kind of venues to our real estate. And in fact, I mean, the whole the explosion in the location based entertainment area is incredible from kind of where it was a decade ago to where it is today. So we have essentially a dedicated team that's looking at all sorts of operations and venues that we're going to be bringing to our real estate that will broaden the mix, invest in the community, increase traffic, bring sponsorship opportunities, food and beverage.
And given the department store getting those department store back in a lot of cases or buying them back in some cases gives us the real estate that we've never had before to bring them into the mall. So that's what's really exciting is that, yes, it's a lot of work. Yes, we have to be focused, but we now have the ability where we didn't have it before to bring all sorts of those venues into our real estate. So we brought a team on essentially just to deal with the for no better word, the location based entertainment concepts just to go through that so that we could bring them to the centers. And again, we now have, in some cases, the real estate to put them in where we didn't have it otherwise.
And we can do it at accretive returns. Rick, would you like to add anything? The
there that demonstrate the viability of our properties for these types of uses. So we're building off of strength to implement the initiatives David just talked about.
All right. And last for me, and just sticking somewhat along those lines, looking back at the investment you made in Arrow alongside ABG and your experience you've had since that time, how do you think about making similar investments? Would you do it? What would you look for? Just given some of the distress out there, I wonder if this is something we could see you guys do again here at some point in the near term?
Well, look, I think it's very possible. We're going to be very smart about it, Jeremy. It's interesting because, as you know, we Authentic Brands Group just did a private placement where we decided to keep our stock, but certain shareholders sold and new shareholders came in, we decided not to keep our entire interest. So we didn't sell down because we believe in the company. But that stake based on its current raise in terms of new shareholders coming in is worth $153,000,000 and we basically put no money on it.
We still have the aeroopco, which is we own 44% and it's going to do $65,000,000 EBITDA, thereabouts. So I think we're not too bad at this investment. We're certainly as good as the private equity guys when it comes to retail investment. And so I wouldn't rule it out, but I mean we've made a ton of money in Aero and we're we love being partners with Authentic Brands Group, and we'll work together on other distressed situations. And let's face it, there are some out there.
So but we're only going to buy into companies that we think have brands and that have the volume that is worth doing it. So they just bought Sports Illustrated. I think they got a great the intellectual property there. I think it's got a great future with a company like ABG to focus on. We may invest in that as an example.
There could be sports illustrated, eSports, gaming, food and beverage, And we'll be at the forefront of trying to be as creative as we can with our real estate that you cannot duplicate. And again, what we do is we serve the community. We pay significant real estate taxes, significant our retailers and us pay significant sales tax. So and we're investing in our properties to obviously for our shareholders, but also
for the benefit of these communities.
Thanks for the time.
Sure.
Your next question comes from the line of Christy McElroy with Citi.
Hi, good morning everyone. Good morning. Just off of Jeremy's last question, but maybe from a little bit of a different angle. Given that past experience with ARO and Nautica and the insights that you've gained from these investments and you've also talked about being on many creditor committees in the past, how are you approaching retailer restructurings and bankruptcies differently than in the past or maybe differently than what some of the other mall REITs have the capability to do that maybe gives you a competitive advantage with tenant fallout and bankruptcy activity having picked up again this year?
Well, that's a good question. I would say we have another, what is it called quiver in my what is it? Arrow in my quiver.
Arrow in your quiver.
Arrow in my quiver. I always like converse what I'm supposed to say. Robin put it now. But now I would say we certainly have the ability to help beyond what you might do on the leases, become an investor in a distressed situation. So we have the ability.
I'm not sure we would do it alone, but with somebody like ABG, we've obviously worked well with historically General Growth and now Brookfield. So we have kind of the ability together or even individually or some combination thereof to look at becoming more than just a real estate player, but a buyer of these brands. And that's the difference. That's the majority difference. We also have the ability to underwrite the business a lot better than we could have.
So we're less in the dark about what the right rent should be a workout scenario. And we have resources. I mean, the folks at Arrow, Opco, the folks at the folks at ABG, our friends at Brookfield and our team can basically rapidly run through any kind of investment or retail scenario and find out get to the bottom of what the right fix is. And I would say to you, we were decent at it a few years ago, but now we're pretty good at it.
Okay. And then just with the straight line rent adjustment elevated in Q2 and somewhat volatile over the last couple of quarters, wondering if you could provide some insight into what's driving that perhaps impacted by some of the lease accounting stuff and how we should think about the impact of GAAP non cash rent adjustments for the full year?
Yes. So look, with the new as we pronounce this, we historically, we have never straight lined our CAM, even though, as you know, a lot of our CAM is not most of it, 95% of it is fixed with the growth in it. And I believe a lot of our peer groups historically have straight line that. So we have to straight line that because of the new pronouncements and that's really the change in that. Again, our comp NOI, Christy, as you know, takes out any straight line impact.
So it's basically cash.
Right.
And but that's basically all there is to it. When you look at kind of the increase in straight line, less the now that we can't capitalize our leasing cost, I mean, it's basically less than 1% differential in terms of our FFO per share is one way to look at it. But the reality is, if you look at the comp NOI, we strip it out in any event. But it's simply we never straight line TAM expense and now we have to.
Okay. So we should expect a terming elevated going forward because of the straight line impact?
Well, certainly this year, then I think you'll see it more normalized. Now we also write off we have to write when we have a bankruptcy, we've had straight line rent write offs this year because if you have a tenant that goes into bankruptcy and certainly any straight line rent or straight line can that you may have for that tenant is going to be written off. So we've had certainly some of that as well.
Got it. Okay. Thank you.
Sure.
Your next question comes from the line of Steve Sakwa from Evercore ISI.
Thanks. Good morning. I guess just a couple of questions. First, maybe to just start on kind of the leasing environment. I mean, you and Rick touched on it a little bit that there's good demand.
I mean, you just elaborate a little bit more? You said you've been impacted about 100 basis points from bankruptcies this year. And I'm just wondering, David, as you sort of look at the tenant watch list and the potential tenants that you're still kind of working with to restructure, where do you sort of feel like we are in that kind of pendulum or timeframe of kind of getting to the end of that? And does 2020 kind of begin to show a little bit of light at the end of the tunnel?
Well, I still think there are a couple out there, without naming names, Steve, that we're monitoring. And we'll have to see kind of where that goes. So it's hard for me to give you an exact response specifically to that question other than there are still a couple out there that we're monitoring and we'll see how it ultimately resides. I will tell you not that this is of interest, but it's not a reflection of our business, okay? And I know that's hard to say.
It's hard to I know that's a statement that many don't believe. But if you look at the bankruptcies, each one of these folks, there were things and decisions that they did that led him to that point as opposed to it's this, it's our business, okay. And I won't go through names, but lack of investment, too much leverage, opening too big a stores, going international when they should have stayed domestic, picking the wrong merch. It's not endemic of our business. And that's the important point because the reality is even with these bankruptcies that we've had to deal with, we're comping up.
Yes, it's not where I'd like to see it, but it's still comping up couple of percent and we would have really outperformed had we not had the unanticipated bankruptcies. We are outperforming in overage rent in the mall business, underperforming in the outlet business because of the tourism that I showed you. So there is pros in that and what we're seeing in sales there. The higher end continue to do well. As I mentioned to you, we have 77 properties in total would get you over if you just took the top 7, we'd be over $900 a square foot.
So it's not endemic of our business or our industry. It's each one of these each one of these has a story and I could spend 3 hours going through pros and cons as to what decisions they made that led them to that problem. And that's the most important message I can deliver to you today. It's not quote and again, we're much more diversified than the mall business, but let's talk it's not the mall business. It's certain folks that ran their business not in the best way.
And yes, we suffer while we recharacterize or re lease the space to better operators. So I'll turn it over to Rick to add any amplification to your question.
And part of that is demonstrated by the fact that our occupancy trends have held up very nicely in spite of all that bankruptcy. And as we detailed in the past, there is still a broader way of tenants that are seeking to come to our properties, whether they're new concepts, whether they are digitally native retailers, whether they are international retailers, we still have retailers that are traditional retailers like Aerie and American Eagle that are still growing significantly. And we are adding a lot of food to our property and all of that is contributing to the fact that you're seeing our sales growth and you're seeing our NOI growth.
Okay. I appreciate that. David, just a small point. On the total portfolio NOI, it was up less than the comp, which is not normally the case. And your share of NOI from investments was down.
Is there anything kind of just for us to focus in on as we think about
the rest of the year? Well, remember, we sold our interest internationally in HBS. That's the biggest reduction. In addition, we've got a lot of redevelopment going on. You could see that number.
We have a number of properties that are basically taking a step back because of our redevelopment efforts. But that those are the biggest ones that jump out at me, right? So and Tom just mentioned to me, FX as well. So when you put the I'd say those are the 3 things. So HBS has gone internationally, FX, currency and then the redevelopment as you can see, we have a number of properties that are kind of going down a little bit this year as we redevelop it, Burlington Mall, Ross Park Mall, a handful of these that are taking a step back to take several steps forward.
But that's basically the math.
Okay. Thanks. And then lastly, I just noted the average base rent per foot, which I know takes into a lot of things, including lease restructurings and others, was up a more modest, I guess, 1.2% to 1.3%. Anything we should just be thinking about that number versus, say, the lease spreads you're getting? And obviously the change in occupancies?
I just was curious on that trend.
No, I'd say it's basically a function of some of the workouts that we're having to deal with.
Okay. Thanks a lot.
Sure.
Your next question comes from the line of Craig Schmidt from Bank of America.
Thank you. I wondered if you could categorize the store closings and outlet space versus the mall space. Is it are they experiencing store closings to a comparable degree or are they more immune to the malaise?
I would say they're the last few bankruptcies have also had outlet exposure. So they're more comparable, where a couple of years ago, it was more the mall than the outlets and now they're similar. There's not a trend that outlets are better or worse than the malls. And when it comes to store closings due to bankruptcies, I'd say they're more similar in terms of that pattern.
Great. And then obviously very active in redevelopment. I wondered if it's possible to categorize what inning you think you're in, in terms of the major anchor repositioning. I recognize you're always going to need to do it. But in terms of this major push for anchor repositioning, maybe what inning we're in?
Well, I've never been much of a baseball player, but I would say what inning? I would say the 3rd, Tom give me 3. So he and I hit the number at the same time.
I'd
say the 3rd inning. Okay, great.
Thank you
very much. Sure, Craig. Your next question comes from the line of Alexander Goldfarb from Sandler O'Neill.
Hey, morning out there.
Out there, it's not that it's not like we're in outer space. We're not on the moon. Chuck. It's like Apollo 11 here.
Yes. Well
Ricky is kind of like Neil Armstrong. He's very thoughtful, straightforward guy. Go ahead.
Perfect, perfect. Steady hand at the landing. Just two questions here. First, David, sort of following up to Christy's question, the jump in. So 2 part question on the leasing spreads and straight line rent.
So one, how much of the increase of straight line rent is any of that due to increased leasing activity? Because looking at the leasing spreads, they've really jumped over the past year. So I don't know if that's purely mix or maybe this is the benefit of backfill. But if I look at your TIs over the past year, they've gone up a little bit, but nowhere near as much as the rent spreads have jumped. So just trying to understand how much of the jump in rent spreads is purely just mix versus it's actually you guys getting better tenants and maybe some of that is leaking into the higher straight line rent?
Well, we certainly continue to straight line our rental income beyond CAM. I don't have the breakdown for you, but it does add into that amount. We continue I mean, our rent spreads continue to be healthy. Obviously, a lot of that will be significantly enhanced as we're getting back very, very cheap space that we can rent in. I mean that's going to be the future growth of the company It's taking back some of these bigger spaces and generating much greater rental income from them.
And that's why we're spending the capital. So it all kind of feeds into each other in terms of generating our cash flow, future NOI growth, leasing spreads and obviously that will be part of the straight line rent income as well.
And I would just confirm your observation that our tenant allowances have been very stable over the years and there has not been a noticeable increase at all. It's business as usual as it has been.
So then, Rick, the rising re leasing spreads, is this just purely mix or we should expect these I mean, just wondering next few quarters, are these going to go down to more in the mid teens or are these going to stay elevated?
That's why you have a job, okay. You'll see when it happens, okay. But the bottom line is and that's why we have a job. The bottom line is we are certainly one of the greatest opportunities we've had as a company and I can't underestimate, yes, some people could look at the demise of certain anchors as a sign of impending doom. We look at it in the complete reverse as a significant opportunity because we are now getting the ability to take that space and redevelop it with accretive returns on investment and higher rents.
And so I do think that trend will continue, whether it will be up $5 or down that's just that's a quarter to quarter change. But that is that's why we're spending that's why we have a $5,000,000,000 pipe. I mean that is our business going forward, And it's important for the market to understand. I mean, that's where we see great opportunity.
Right. David, I just want to make I just want to make sure that wasn't like this wasn't like a definitional change or something accounting change. I'm just trying to get to because obviously it's impressive. So just want to understand if this is definitional change or accounting change or
Not at all. Not at all.
Okay. And then the second question is just quantifying, obviously, you got Forever 2021 pretty small. But overall, your comments about what your guidance has endured as far as headwinds stronger U. S. Dollar, tourism and all this stuff, where are you guys trending as far as your bad debt budget?
So presumably you budget whatever it is, 100 basis points or something like that for the year. Where are you trending on whatever your budget is, where are you trending on that year to date?
I would say we're higher. I mean, I don't have an exact number, but it's higher than what we certainly higher than what we budgeted because we had some unanticipated bankruptcies. Look, unfortunately, when we do our model, it's at the end of last basically November October, November. And we're now in July, and we've had a lot of stuff that we've had to deal with. So it's definitely higher than what we budgeted.
Okay. Thank you.
Sure.
Your next question comes from the line of Caitlin Burrows from Goldman Sachs.
Hi, good morning. Maybe on the leverage side, net debt to NOI has been coming down to 5.1 times now and I think investors do like to see this. So I was just wondering, what's driving this decision from the Simon side versus spending more on, say, development, buybacks or something else?
Well, look, I think we try to manage the balance sheet with great care. And so we do have a the pipe we can if we have not capital and demand in those particular markets, because as you know, a lot of the redevelopment efforts are going to be kind of mixed use elements. So we can only go as fast as the permits and our human resources can do it. And it does take in certain markets, Seattle, with Northgate, a huge development there, development that based on phasing, but in over a period of time and the approval process there is going very well. But that's a spend that could approach $1,000,000,000 given the opportunities we see with that site.
So but we got unfortunately got to tear them all down first, take your time, which were I think we start in 8 days, right? So I think that to get back to your question, I think the biggest constraint is really just human resources and permitting. So it's not listen, we don't want to be cavalier with the balance sheet. And as Rick mentioned, I mean, we're very every once in a while, we'll take a flyer on a development or redevelopment. But we certainly when it comes to tenant allowance, comes to capital, as you can see over the history of the company, we're very, very, very thoughtful on that.
I mean, we don't bad a 1,000. You see, I'm using the baseball analogy. But we're so we're very thoughtful on that. And then I think the buyback, look, we're going to be opportunistic. REITs will always be, and I think I read not to quote Steve Roth because I don't want to give him a big head, But I do think REITs are always going to be somewhat limited on buybacks compared to Industrial America because of our need to pay out our taxable income, obviously, to maintain REIT status.
And that's why if you leave with anything in this call is we have paid out $30,000,000,000 that's with a B of dividends in the history of this company, which is pretty damn remarkable, I think. Tom, you agree? Okay. And so it will always be something nice to do, but we're always going to be somewhat constrained just because we're paying out so much capital and dividends. Now the reality is we would buy we didn't pay have to pay out our taxable income and we'd be a cash flow machine, we buy a tremendous amount of stock back.
So there will always be there for us to do to be opportunistic, but we can't overwhelm given our payout on the dividend front.
Got it. Okay. And then maybe just, you do have a history of raising FFO guidance the vast majority of quarters in the past. So just wondering if you could give some detail on how maybe results played out during the quarter, how that related to your own budget and what prevented you from raising the full year guidance? I know in the previous set of questions, you did mention potentially that, that debt was trending a little higher than you had originally
Yes, I probably bored you. But the reason we haven't raised guidance this year is a few things and I'll just restate what I said. We have lower lease settlement income than we had budgeted. We have lower distribution income from our interest essentially in value retail. We don't equity account for that.
As you know, we cash account, cost accounting, not to bore you, I don't know what your background is, but cost accounting still exists, correct? Yes. It's kind of. Okay. See how old I am.
But cost to cap basically, we only book with what cash we get. So we anticipate a little bit higher distribution income from our investments in value retail. We haven't gotten that we had the stronger dollar. Obviously, we had unanticipated bankruptcies. We didn't budget SPO, though we kind of knew that we might do it.
We just it's kind of out there and we decided, well, it's out there. And then obviously, the anticipated bankruptcies On overage rent, we're trending above in the mall business, but below in the outlet. And I've explained that basically it's not a function of the business, it's a function of tourism and a strong dollar being basically reduced in the country. And we're not the only company in America that's telling you that you can see that in from a number of different ways. Got it.
Okay. So that's basically so that's what's been going on and why we haven't raised guidance this year.
Okay. Thank you.
Sure.
Your next question comes from the line of Rich Hill from Morgan Stanley.
First of all, thanks for reporting prior to the open. It's nice and refreshing to have it mixed up from dilutive companies reporting after the close. I appreciate the color on FFO guidance. But I wanted to also maybe talk about retail overall and maybe how you're thinking about some of your investments. So maybe first, could you maybe give us an update on your Clay Pier stake and if you would ever think about increasing that?
It looks like that's been a pretty good investment. And then maybe also an update on 5th consumer facing platform as well.
Okay. So I mean, having just been in a Board meeting last week, I think they're doing an excellent job. They're very well positioned. Their balance sheet is continues to be much better than their peer group. And their cash flow, their like for like, I don't remember exactly what the number was, but I thought it was pretty good given what's going on.
They continue to sell assets, shore up the business. And what we've seen is a company that continues to operate better and better over the years that we've invested. I would say to you, it's unlikely we would ever I mean, if we go over 30, I don't know if you know the rules, we'll probably to we have to offer the whole company. I would say it's not in our plans ever to do that right now. But I mean, it's certainly an option that we would have down the road, but it's not in our plans at all.
So with that said, and then our SPO, we have we're still in beta. We've got 12 retailers, 3,000 ish brands online. We're going through kind of the kinks. So you can have access to it if you're a one of our loyalty members. We've got another 15 or so that's in the process of coming on board.
And our plan is to make it public sometime in the Q3. And I'd say to you, we've got a lot of interesting things going on with that platform. Beyond just that, but I can't really share much beyond that other than stay tuned. I do think we can have a I do think we can create a real business opportunity for us in this area.
Got it. That's it for me. Thanks for the transparency and thoughts, David.
Sure. No problem.
Your next question comes from the line of Nick Yulico from Scotiabank.
Thanks. David, I just wanted to
go back to the topic of
redevelopment and also tie it into the questions about total portfolio NOI growth. I think we can appreciate how redevelopment is a disruptive NOI process with some attractive payoff down the road. But could we get a sense of timing of when this will start to benefit overall portfolio growth because it's not showing up in the numbers this year. And if you mentioned, your guess is that we're in the 3rd inning of this process. I mean, does this mean that it's going to be an ongoing drag on total portfolio NOI growth?
Or does this change at some point in
the next year or so? Again, just to be clear, there are 3 major elements on that. One is the that's where the currency stronger dollars hurt us. Number 2 is we sold an asset. So when you sell an asset, you don't have the income, okay.
So and then the 3rd element is our redevelopment. So the properties there are relatively flat. And normally, we would see growth there. So I just want you to put that in perspective. So with that said, I'll address your question.
Look, I think you'll start to see benefits in 2020 later, but it takes time. I mean, that's the reality. From a new development point of view, we don't have a lot. So a lot of the driving of the new development was through that line. We did decide to more or less buy the land in Tulsa to build Tulsa Premium Outlets yesterday and the outlet there.
So that's a go project. We still have some hurdles to do, but that's pretty much so. And that's open in 2021 and we've got a lot of the international outlets that really open in late 2020 early 2021. So it's going to take time. Now Nick, here's the important thing.
You will never hear from this company, we will have a throwaway year, okay? So even with kind of like, yes, it's not that exciting. We're not going to tell you wait for next year. We don't wait for Godot, okay? Not here.
So yes, it's going to accelerate, but we're worried about 2019 2020 2021. So we don't have throwaway years.
All right. Appreciate it. That's helpful. Thanks, David.
Yes.
Your next question comes from the line of Linda Tsai from Barclays.
Hi. Your weighted average interest cost is pretty attractive at 3.49 percent. And then in 2020, you have some higher rate debt maturing for both consolidated and JV With the 10 year having trended lower, do you think you'll achieve some interest rate savings on these upcoming maturities?
Hi, Lalit, it's Brian. Yes, look, as we look out into the future and looking at it through the perspective of today's current interest rate environment, certainly there would be some pickup if we stay in environment for a longer period of time.
Thanks. And then hopefully I heard this correctly. The bankruptcy impact on SS NOI year to date was 100 bps, but then given some subsequent comments about fallout being higher, does that mean that the full year impact on SS NOI would be greater than 200 bps?
No. I think what we said to you, so far, the let me restate what you just said, so there's no ambiguity. We had top NOI growth of 2%. We generally based on our budget would have been a little over 3 had it not been from the unanticipated bankruptcies. We're still our goal for this year is still 2%.
What's the overall impact of bankruptcies on same store for 2019?
We just told you year to date it's around 100 basis points.
Okay. Thanks.
Sure.
Your next question comes from the line of Derek Johnston from Deutsche Bank.
Good morning, everyone. Thank you. You've covered a lot. So just one for me, if you don't mind. David, look, I like malls, but acknowledging that sentiment on malls has been pretty poor so far in 2019, frankly worse than the fundamentals and clearly nobody knows your business better than you guys.
So when you look past 2019 with 2020 and beyond fast approaching, what is the management team most excited about opportunity wise or strategically speaking?
Well, thank you and a very great question. So I would say the most exciting, the most difficult thing that we've I mean, in terms of exciting, but difficult in terms of work and execution is the ability to redevelop our centers. And what we're doing with the 5th of the world, the North Gates of the world, Briad on down the line is to me really, really exciting. I mean, yes, it's a lot of work. I'd rather have my feet up on the desk, but that's the most exciting.
So it's we have been constrained, Derek, on how to redevelop a lot of these centers because we had to run through all these soups with the department stores. Well, if we've got the space back and we have their acreage, then we then the only thing constraining us is our imagination and our ability to get permits and obviously you got to be grounded by supply and demand. So that to me is the most exciting opportunity ahead of us is to really re imagine the center. Now you're right about the mall business sentiment. Now Rick and I are old enough, Rick a little bit older, to know that people have been trying to kill off the malls for 50, 60 years, right?
So it was the town centers, it was the power centers, it was Walmart, it was Amazon, it was this guy, it was that guy. Look, we're resilient. Rick and I are all like cockroaches, okay? We're going to still hang around. So but I do think that doesn't mean that we've got to we can't keep reimagining our places.
And I would say that's the most exciting. The other thing I would say to you, Derek, that is as exciting to us is because of our high quality portfolio or high quality balance sheet, the stability of our cash flow even with all the turmoil going on in our the retail world, we have lots of opportunities beyond what we do today and we evaluate those with keen interest.
Thanks, David.
Your next question comes from the line of Michael Mueller from JPMorgan.
Yes. Hi. David, you mentioned you have 77 assets that generate more than $900 a foot in sales. Can you give us a sense as to what portion of your pro rata NOI those assets represent?
No, but we'll let me think about whether I give that to you. I'm worried what you might do with that, Michael. You may tell somebody. Just get it. It's a joke.
No, I know. I got it. It's well over
It's well over 50%. It's probably 70 ish give or take.
Got it. Okay. And then maybe push it a little further at the opposite end of the spectrum, how small is the contribution from the assets doing, say, less than, I don't know, 500 a foot?
I don't have those number off the top of my head, but
Okay. Well, 70% helpful. Okay. Thank you.
Sure.
Your next question comes from the line of Wes Golladay from RBC Capital Markets.
Hey, good morning, everyone. I'm looking at the international properties in the total NOI bucket. And I'm seeing that that's been growing about 4% year to date. First question is, is that largely comparable? And what is driving that strength?
Well, it's largely comparable other than there may be an expansion here or there. But remember, that's also being impacted by FX. So it's actually probably would be higher than that had we compared to last year. Most of that, most the dollar has been obviously significantly stronger and we had budgeted to be not as strong and it's certainly year over year comparison stronger than where it was last year. Okay.
But the vast majority of that is comparable. Yes.
Would
you ever consider putting that in the total bucket and maybe adjusting on a constant currency basis?
I thought about it and we should do it because it would demonstrate the I mean the fact is, I think a lot of people forget about the diversity and the high quality portfolio we have. By the way, the 77 assets that would average over 900 is not has nothing to do with our international assets. They all, I'd say, by and large are well over 1,000 a foot. So we thought about it, but then I don't know, it's just I don't know, we decided not to. But I we thought about it, it would certainly generate higher comp NOI growth.
And I know others do that. They left it in there. So maybe one day, but then you would ask what the domestic business is and we'd be back to where we are today.
Well, I keep them as separate lines, but yes, that's why. Thank you.
Yes, no worries.
Your next question comes from the line of Christy McElroy with Citi.
Hey, it's Michael Bilerman here with Christy. David, I wonder if you can step back and think about the mall or the retail competitive landscape from a landlord perspective, and you talked about the turmoil in the retail industry is clearly affecting different of your peers in different ways, especially those that don't have the cost of capital or balance sheet. I was wondering if you can talk a little bit about perhaps your market share of retail leasing, and whether you believe you're getting a disproportionate share of retailer store openings or a lower share of retailer store closings, given that relationship and where you stand relative to all the other mall peers?
Well, I actually don't think, Michael, that I actually referenced any of our peers in this call other than to say, we do have some expertise that maybe others don't when it comes to looking at opportunities or restructures of retailers. So look, I would say to you, so I don't really think I referenced the peers all that much.
No, you didn't. I'm asking the question about whether you running the company are feeling as though you're getting a disproportionate share of leasing or a lower share of closings given retailers desire to be in your portfolio given a lot of the other things that go along with Simon, including the balance sheet and all the other variabilities, are retailers more apt?
Yes. No, I got the question. I would say I would answer it this way and Rick can add or embellish on. I would say simply, we've always we've kind of always had that position, frankly, because of the quality of our real estate and the fact that the quality of our real estate and the organizational strengths and so on. So maybe on the margin, it's even more important today.
But I think that the stability of the organization and the quality of the real estate and the fact that people know we're going to invest in our real estate certainly helps and certainly shouldn't be overlooked. And I will say anecdotally without numbers and whatever that's worth. I mean, landlords do matter. Historically, maybe in a go go time period, maybe they matter less. And I'm hopeful that as retailers look at whether it's in downsizing or restructuring or growing, whatever that scenario is, they do take into account who their partner is.
But I think we've always been in that spot, maybe it's slightly enhanced. And I do think the landlord the ability to invest, I mean, Rick and I run around, we talk to people, they say, yes, we know you're going to take care of your properties. Maybe there's a few retailers that want to put in what I'd call the clause where that we don't own it, they can do whatever the hell they want. They believe we try not to do that. But I mean, we hear stuff like that, but I'd say that's kind of on the margin.
Rick, please embellish.
The only other thing that I would add is that our portfolio creates a lot of profit for these retailers. They are not charitable institutions. I think they do hold us in high regard, witness our results. But the reason we have an ability to interact with our retailers in a productive way is because they make a lot of money in our properties. And when they think about their business, it's in their best interest
to do business with us.
And that's a function of all the things that David has been talking about the entire call about reinvesting in the properties, having a stable balance sheet, having all these inventive and innovative plans. It all comes down to having more productive properties and that's what gives us, I think, an edge.
David, can you talk a
little bit about sort of all the 5th platform initiatives? You've obviously had the outlet online business. You've done that esports, the CBD shops. There's a lot of other little bets you're placing in a lot of different ways. I guess, how should we think about how you're spending your time on all of those initiatives?
And how should we think about the capital that you may put forth to additional programs to drive more things to your assets?
Well, I think you'll see more and more of it, Michael, and can't really quantify it because it is opportunistic. But look, all of this is kind of return based. I mean, it's not money that we're willy nilly just throwing there hoping it sticks. It's not spaghetti up against the wall. But I do think we're going to be creative and as innovative as we possibly can be with the guardrails that we have historically used, which is making sure that's a good return on investment, making sure that it's synergistic to what we do, making sure that we're betting on the right people, on the right product and the right vision.
But you will absolutely see more from us in this area. And I'm hoping from that, look, we've been fighting the fight for years that we're more than a mall company. We've always defined ourselves as a retail real estate company from the get go. Even when we went public, we were more than a mall company. We have morphed into retail real estate.
We've morphed in international. So you we are densifying our business in terms of so I am hopeful that with time, even though we are categorized as a mall company, again, I'm not running from the mall business. And someone asked earlier, what one of our most exciting things we have is redeveloping all this anchor space, but we are much different than that and that process and evolution will continue and we're hopeful that we will be profitable in it like we have in our other ventures out of our traditional business, not our core business, our traditional business.
Just last one, Joe, strategically, as part of when you spun off WPG, which in hindsight, I think those assets clearly would have been a little bit more of an anchor to your growth. You did spin off the Open Air shopping center business. I guess as being a retail landlord, does that business and the potential to maybe re aggregate in that space or that's not on the table at all?
I don't think it's on the table. If I understood the question, I don't think it's on the table. I think there's a lot of opportunities ahead of us. I just wouldn't rank that as high up there.
And then how does the UK, which is obviously going through the stocks that are obviously having a lot of difficulties given their leverage position, you had Clapeer try to do something. Does that rank high on your list?
I'm more worried about my the season is about to start for my theme Crystal Palace. I'm more worried about it. And I have another I won a solid year this year. I'm tired of watching the relegation fight. So I'm more worried about that right now.
Thanks for the time, David. Sure.
I am showing no further questions at this time. I would now like to turn the conference back to Mr. David Simon.
Okay. Thank you and have a great rest of your summer and we'll talk to you soon.
Ladies and gentlemen, this concludes today's conference.