Greetings. Welcome to Simon Property Group fourth quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to your host, Tom Ward. You may begin.
Thank you, Sally. Good evening from Atlanta. Thank you for joining us this evening. Presenting on today's call is David Simon, Chairman, Chief Executive Officer, and President. Also on the call are Brian McDade, Chief Financial Officer, and Adam Reuille, Chief Accounting 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. Actual results may differ materially due to a variety of risks, uncertainties, and other factors. We refer you to today's press release and our SEC filings for a detailed discussion of the risk factors relating to those forward-looking statements. Please note that this call includes information that may be accurate only as of today's date.
Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included within the press release and the supplemental information in today's Form 8-K filing. Both the press release and the supplemental information are available on our IR website at investors.simon.com. Our conference call this afternoon will be limited to one hour. For those who would like to participate in the question answer session, we ask that you please respect our request to limit yourself to one question. I'm pleased to introduce David Simon.
Good evening from Phipps Plaza, where we recently completed our transformation, including a new office building, a new Nobu Hotel, and a Life Time resort. I'm pleased to report our fourth quarter and full year results. We generated approximately $4.5 billion in FFO in 2022, or $11.95 per share. On a comparable basis, full year FFO per share was $11.87, an increase of 3.8% year-over-year. We returned approximately $2.8 billion to shareholders in dividends and share repurchases. Total dividends today paid since our IPO now totals approximately $39 billion. We invested approximately $1 billion, including accreted development projects and expanding our other investment platform into the growing asset and investment management businesses with our Jamestown partnership.
These consistent strong results are a testament to the quality of our portfolio, a relentless focus on operational and cost structure, disciplined capital allocation, and our team's commitment to our shoppers and communities. Fourth quarter funds from operations were $1.27 billion or $3.40 per share. Included in the fourth quarter results was a net gain of $0.25 per share, principally from the sale of our interest in the Eddie Bauer licensing JV in exchange for additional equity ownership in Authentic Brands Group, Authentic. We now own 12% of Authentic, valued at approximately $1.5 billion. Let me walk through some variances for this quarter compared to Q4 of 2021.
Our domestic operations had a very good quarter and contributed $0.23 of growth, driven primarily by higher rental income and with some lower operating expenses. These positive contributions were partially offset by higher interest expense of $0.03 and a $0.15 lower contribution from our other platform investments. 2021 was a great year for our retailers. However, in 2022, Forever 21 and JCPenney were affected by inflationary pressures and consumers reducing their spend. Despite not achieving the same profitability that we did in 2021, we are pleased on how we and the management teams dealt with the unanticipated external environment. Turning to domestic property NOI, we increased 5.8% year-over-year for the quarter and 4.8% for the year.
Portfolio NOI, which includes our international properties at constant currency, grew 6.3% for the quarter and 5.7% for the year. Occupancy for malls and outlet at the end of the fourth quarter was 94.9%, an increase of 150 basis points compared to prior year and an increase of 40 basis points sequentially. The Mills occupancy was 98.2%, and TRG was 94.5%. Average base minimum rent was $55.13 per foot, an increase of 2.3% year-over-year. For the year, we signed 4,100 leases for more than 14 million sq ft.
Over two years, we've now signed 8,000 leases for more than 29 million sq ft. We have a significant number of leases in our pipeline that will open for late 2023 and 2024 openings. Reported retailer sales momentum continued. We reached another record in the fourth quarter at $753 per sq ft for the malls and outlets combined, an increase of 6.6% year-over-year. All platforms achieved record sales levels, including The Mills at $679 per sq ft, which was a 5% increase. TRG was $1,095 per sq ft, an 11% increase. Our occupancy at the end of the fourth quarter was 12%. We opened a new development in 2022, our 10th premium outlet in Japan. Construction continues our new outlet in Normandy, France, west of Paris.
This will be our second outlet in France and our 35th international outlet. Our international outlet platform is a hidden jewel for SPG. As a frame of reference, it is bigger and much more profitable with much higher sales per square foot than another public company's portfolio. We completed 14 redevelopments and we will complete another major redevelopment project this year at some of our most productive properties. In addition, we expect to begin construction this year on six-eight mixed-use projects. All of this will be funded with our internally generated cash flow. Turning to other platform investments in the fourth quarter, it contributed $0.23 per share in FFO compared to $0.38 in the prior year period. For the year, OPI contributed $0.64 in FFO compared to $1.07 in the prior year.
We are pleased with the contribution from our OPI investments, especially given our de minimis cash investment we've made in these companies. Turning to the balance sheet, we completed refinancing on 20 property mortgages for a total of $2.3 billion at an average interest rate of 5.33%. Our A-rated balance sheet is as strong as ever. Our fixed coverage ratio is 4.8 x, and we ended the year with approximately $7.8 billion of liquidity. In 2022, we paid approximately $2.6 billion in common stock dividends in cash. We announced $1.80 per share this quarter, which is a 9% increase over the same period last year. The dividend is payable at the end of this quarter on March 31.
We also repurchased 1.8 million shares of our common stock at an average purchase price of $98.57 in 2022. Moving on to 2023. Our comparable FFO guidance is $11.70-$11.95 per share. Our guidance reflects the following assumptions: Domestic property NOI growth of at least 2%, increased interest expense compared to 2022 of approximately $0.30-$0.35 per share, reflecting current market interest rates on both fixed and variable debt assumptions. Similar OPI investment FFO contribution compared to 2022. The continuing impact of the strong US dollar versus the euro and the yen. No significant acquisition or disposition activity, and a diluted share count of approximately 374 million shares.
To conclude, we had another excellent year, effectively navigating external headwinds that included rising interest rates, strong US dollars, inflation, and a somewhat softening economy. We have consistently posted industry-leading results through our hard work, innovation, great people, and great assets, we are continuing to be excited about our plans for 2023. If you come to Atlanta, you will see what we're doing and it's a great example of the future growth prospects of our company. We'll now allow for Q&A. Thank you.
At this time, we will be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Ronald Kamdem with Morgan Stanley. Please proceed with your questioning.
Great. just starting with the guidance of at least 2%, sort of organic growth next year. you know, obviously, occupancy is already back to 95%. Just a little bit more color on that. How much of that is occupancy gain? How much of that is rent bumps? Just trying to get a sense of what's driving that. Thanks.
I think it's all of the above. It's rent, it's rent bumps, it's occupancy gain. We still, and this is very important to underscore, we still have a lot of openings scheduled for the latter half of 2023 and the early part of 2024. We're not going to see the full contribution of those tenants open until essentially really a run rate of 2024, I'd say, sometime in 2024. You know, you ask why. Because we have a high quality group of retailers opening these, and it takes a while to build out their quality stores. But it's occupancy gains, it's rental increase, you know, it's spread increases. It's a reduction in our temporary tenant income because we're leasing, you know, space permanently. It's, it's basically assuming...
There a lot goes into this. It's basically assuming relatively flat sales. If you remember last year, we said up to 2%. This year, we, you know, obviously blew past it. It was total for the domestic properties of clearly 5%, roughly 5%, 4.8%. You know, we're hopeful we'll do better, you know, again, we still have to make assumptions, and that's why we like where we're at. And the biggest assumption that, you know, is somewhat of the unknown is sales.
All right, next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question.
Yeah, thanks. Thanks for that answer, David. I guess, as you think about your other platform investments and, you know, some of the monetizations that you talked about with Authentic Brands, you know, how do you sort of think about those on a go-forward basis against maybe making new investments in new retailers that, you know, may be struggling at this time?
Well, you know, we have a unique relationship with Authentic. That's a very important partnership, so to speak, both as a big shareholder, but also, you know, we're 50% owners together, 50 for us, 50 for Authentic and SPARC. We have a different ownership structure with JCPenney. We don't really have any plans for SPARC to buy additional retailers. We're very opportunistic on that. You know, we had a very busy year last year with Reebok, you know, where SPARC became the operating domestic operating partner for Reebok. More a very complicated deal, as you remember. That did depress earnings. We mentioned that to you early last year, that it did depress earnings because we knew we had some losses to incur this year, so hopefully, we'll be past that this year.
We really don't have any plans to acquire anything. If we do, it'll be opportunistically. Just to, you know, we really, you know, we've done our Most of our work has been, you know, with, you know, on the bankruptcy front or where somebody wanted to unload a business. Generally, there's not a lot of distress in retail right now. You know, I'm not saying it won't develop in the year, but, you know, there's some brands out there that are in trouble that obviously people know about, but we don't see playing in any of those situations.
Our next question comes from the line of Derek Johnston with Deutsche Bank. Please proceed with your question.
Hi, good evening, everybody. Can we get a more granular update on Phipps Plaza? The repositioning has been open for, I'd say, most or at least part of 4Q. I guess, you know, how is it tracking versus plan? You know, what changes in traffic are you seeing or any notable change of inline rents? Any deets would be appreciated. I guess lastly, you know, the project seems to have increased your plan for accelerating, you know, some other mixed-use endeavors, I guess, with Jamestown. Any more information would be helpful. Thank you.
It really just opened. The hotel opened at the end of October, November, but it's really, you know, It's really new. The office, literally the first tenant just moved in January, mid-January. We just did a tour of that. We still have a lot of lease up. Just to give you a rough number, pre-investment, Phipps did in the low 20s of NOI. We think it'll be stabilized close to 60 and, you know, we'll have invested around $350 million in it over that period of time. Again, we don't. We're a big company. We don't really get into, like, granular detail, but, you know, we basically we'll increase the NOI by about $35 million. Remember, this was a Belk department store.
So in the Belk department store, we couldn't lease up that wing. We now have a plaza that has been created external. We announced Hermès opening into the plaza and part of the wing that, you know, really was difficult to lease with Belk as the anchor. We have an unbelievable Life Time resort. If you haven't seen what they build or their product, both with Life Time Work, the pool and the restaurants and the services and the salon and obviously all the fitness activities, I'd encourage you to do so. We have a, you know, class A plus office, the best in Buckhead, that just opened. So again, low 20, 60, $350 million investment is the math. Now again, we're doing. You mentioned Jamestown.
Jamestown investment is in the investment and asset management business. These mixed-use developments that I mentioned in my call text, the six-eight, we're doing all of those, you know, by ourselves or with partners that we've used before. That really isn't with Jamestown. Again, we look the Jamestown relationship future endeavors that we can do together or in partnership. You know, we're very active in building out our platform now, and Seattle is an example. We're about to, you know, start a Residence Inn, you know, a hotel which finally got approved, and that's gonna start construction. You know, we can go through the list, all that's Simon Property Group owned, just like Phipps, which we own 100% of.
Nobu, we own obviously the, you know, Life Time, you know, is a lease. The office building we own too, which is all a 100% owned asset. I don't want you to, you know, to confuse those two. That's the rough math on Phipps. The true lease up of Phipps, again, which goes back to the, my earlier comment, on the NOI. The true lease up of Phipps, because you have, you know, Yves Saint Laurent and some of the high-end brands building out their stores, it's not a three-month build. It's in many cases nine months to a year. The true offering that Phipps will have will really show in 2024 when all of these retailers open their stores.
Christian Louboutin, Hermès, and, you know, Akris and on and on and on. Most of those will either open late 2023 or 2024, and that's when Phipps really will be finished. You know, these things don't just flip a switch and it opens. That gives you a sense of it, and we think the true pro forma of this will, you know, ultimately manifest itself in year 2025 or even in 2026.
Our next question comes from the line of Alexander Goldfarb with Piper Sandler. Please proceed with your question.
Good evening. Good evening out there, David. Question on the retailer brand portfolio and your equity stake in Authentic Brands. You guys have a headwind. Or sorry, not a headwind. You guys have a fluctuating contribution from the retailers just based on their actual sales, right? Because it's not rents, it's based on sales. Yet, I'm assuming you get some sort of recurring cash flow from the intellectual property that you own in Authentic Brands, managing the brands and all, and all that.
I'm just trying to understand, as you guys sell more of the brand equity and exchange it for a bigger stake of Authentic Brands, how does your income mix switch from being solely sales dependent to being more consistent, whether it's managing or other sorts of more regular fee income versus volatility from, you know, however many jeans or shorts are sold in a given quarter?
All right. You're confusing... I'll take you through a tutorial because I like you, Alex. Here we go. SPARC operates the domestic business of the brands Lucky, Aéropostale , Forever 21, you know, down the list, okay? Brooks Brothers, et cetera. It licenses the brands from Authentic, and it pays a royalty fee to Authentic. Then we and our partner, Authentic, and it pays rent to landlords, including Simon, that it'll pay, you know, it'll pay rent to, you know, Forever 21 could be in a Vornado property. In fact, it is in Times Square, and it pays rent to Steven Roth and Vornado. That business has operating profit, and we share in that 50/50 with, you know, with Authentic.
We actually now that we converted and exchanged our license that we own together. Now we have historically done the license business on a JV basis. We've decided over time to exchange that into stock of Authentic, and that's why we were not a shareholder in Authentic, but eventually have become a 12% shareholder in Authentic through the exchange of our interest in the JV license business for stock into Authentic. Authentic's a big company. You know, it does $1 billion of revenue, close thereabouts, but it owns the license of, you know, many, many brands, beyond SPARC. You know, it owns its partnership with David Beckham, its partnership with Shaquille, Elvis Presley, you know, Juicy Couture and, you know, on down the list, you can Google it'll give you all the names.
SPARC is essentially the retail operating company. When you think of SPARC, you should think of it similar to any other retailer like American Eagle or, you know, anybody else that operates stores, operates e-commerce, et cetera, does wholesale. The only difference, it pays a royalty to Authentic. It does not pay a royalty to Simon Property Group. The only vagaries that Simon Property Group has is in fact what the operating profits of SPARC are. In the case of 21 versus 22, the big difference was essentially Forever 21 because that teenage consumer obviously cut back with the rapid increase in gas prices and, you know, inflation and, you know, the uncertain economic environment. I know we're not allowed, but can we let Alex... I'm asking Tom Ward, who's the police of the call. Can we ask Alex if he understands this now?
Yes.
Okay, Alex, do you understand this?
Yes.
Was I perfectly clear?
If I take away what you're saying, SPG lives really on the retail sales and performance. Your 12% stake in AB doesn't generate any fees to you. Again, the focus is really the earnings derived purely from sales. There's not any sort of recurring-
It's more than. Sure, sales are important, you know, there's gross margin. They also sell wholesale, okay? Brooks Brothers does have wholesale accounts. It's more that it generates EBITDA basically through running the business, which includes stores, e-commerce, wholesale, and certain other ventures. Authentic, because we equity account, they're a very profitable company with high, you know, high, you know, high gross margins. It's an asset-light company, essentially. We take our share of earnings from them, net income, because they are, you know, taxpayer, et cetera.
Together, all of those businesses, SPARC, RGG, which is our partnership with Michael Rubin, who owns Fanatics, and Authentic, all of that rolls through OPI, and OPI contributed $0.64 out of $11.87. you know, it's in that range to give you a sense. $0.64 out of $11.85. that... Hopefully, that helps explain it. Last chance. You got it?
I got it.
No problem.
Thank you, David.
Thank you.
Our next question comes from the line of Vince Tibone with Green Street. Please proceed with your question.
Hi, good afternoon. Could you provide some color on leasing economics and how those are trending in the current macro environment? Given, you know, current NOI guidance is about 2%, which is just lower than average contractual bumps, and there should be some occupancy upside. This just seems to imply leasing economics aren't great, but I know it's contrary to what you said on recent calls. Can you just help me better understand kind of the dynamics at play here with guidance and maybe where leasing economics are right now?
Yeah. Look, I would say we have positive spreads across the portfolio in renewals, you know, new leases versus existing leases produce mix. Again, we also have operating expense increase because, you know, we're not immune to, you know, security cost increases, housekeeping, you know, all of the normal operating expenses. To some extent, our fixed CAM bumps don't cover that. We're also projecting, you know, flat sales. You know, obviously, to the extent that sales outperform that will outperform as well. We, you know, have these cases when we're adding great retailers, great restaurants to our portfolio, you have to take out the tenant that was, you know, in many cases temporary. You have to take that out, and you hit basically have 9 months of downtime where you have no income for it.
You know, like we did last time, Vince, we said up to 2%, we did 4.8%. I'm hoping to do better. You know, those are basically the determinants, and that's why we said, you know, better than 2%. We have some operating expense increases. Real estate taxes, unbelievably continue even though we're the goose that continues to lay the golden eggs for all of the communities in which we operate. You know, our taxes continue to go up. We have operating expenses that go up with inflationary pressures. We have downtime, we have flat sales, and we lose temporary income while we're re-tenning and going to physical, you know, whether we're going to permanent income. All of that's great news, our rent spreads are positive, renewals are positive.
We, you know, and that's been the difference then obviously we'll throw COVID out, but even the trend prior to COVID, renewals were, you know, under pressure, as you know, Vince.
No, that's very helpful, however.
Demand continues to be very good.
Just one follow-up. Like is variable lease income, do you expect that to continue to trend down just as you unwind maybe some COVID lease modifications? Or how should we think about that part of the puzzle too, going forward?
It We have budgeted it basically down slightly because number one is to the extent that a tenant renews the lease, we're getting some of that overage into, you know, into, you know, the base rent. If you remember out of bankruptcy, Forever 21 pays basically percentage rent to all of its landlords, us included. It had a tough year last year, as I mentioned earlier, and, you know, we're budgeting basically flat this year. You know, there's a lot that goes on that kinda, you know, you got again, separated between overage and percent rent. It's a little bit of a crystal ball. You know, there are always retailers that do well, some that slow down.
You know, we're pretty good at anticipating who's gonna be great, who's not, but, you know, we're not the ones other than Forever 21, we're not the ones putting the stuff in the stores itself, okay? Forever 21, you can blame it on us, okay? I hope that helps.
No, thank.
Yeah.
No, this is very helpful. Thank you.
Thank you.
Our next question comes from the line of Craig Mailman with Citi. Please proceed with your question.
Great. Thank you. David, just you'd mentioned, you know, Forever 21, JCPenney, managed some inflationary headwinds in their business. I'm just kinda curious, with your purview through SPARC and other investments, just how you think the retailers that you're invested in, maybe other tenants that, you know, people have concerns about or been talked about in the news, are positioned, heading into 2023 from, you know, a gross margin management perspective and just balance sheet, and how much risk you see, in this current environment versus maybe the kind of the headline fears that are in the market.
Yeah. I, right now we feel really good about our retailers. I think they were very focused on entering 2023 with, you know, good, clean inventories. We feel like most of them have managed that. I ask my leasing folks all the time, any pullback on demand, it's not really happened. We feel good about that. Demand continues to be generally very strong. I think they, you know, really, you know, because of the bounce back out of COVID, really, you know, got the benefit of kind of getting their house in order. I think on a credit side, you know, we're feeling very comfortable. Right, Brian? Yeah.
Yeah. Our watch list has been lower as it has been in years. The tenant community rebuilt its financial position during COVID and is coming out of it in a much better place.
Nothing that, you know, obviously, you've got, you know, a couple of big names out there, but we really have very little exposure to them. In some cases, we'd like the, you know, most of them are box. They're mostly in strip centers, so, you know, the ones that we're, that we have, we'd like the box back. We think we can do something better with them. I'd say generally, you know, knock on wood, I think credit side is pretty good and demand is good. They ran, you know, December was very spotty for a lot of retailers. On the other hand, after Christmas, you know, most had a really good January.
Again, I think the mistake we made, Simon Property Group made, is that, again, SPARC was profitable, even though it didn't meet the financial results of what. Again, we shouldn't dwell on this too much because, again, $0.64 out of $11.87, $0.64 out of $11.87. It's important just so, you know, we'll do a little mea culpa. We made the mistake that thinking, 2021, you know, we budgeted basically flat to 2021, and 2021 was for a couple of the brands there, just extraordinarily profitable. We made some tactical mistakes at Forever 21. We brought in a new CEO to rectify those mistakes. She's doing a terrific job, we're very pleased there. We also are very pleased with JCPenney. It's unbelievably profitable EBITDA.
You know, you can see the EBITDA. There's some public filings out there. It, you know, it is it didn't have the 21, year of 2021, but we're very pleased where that company is positioned. We're extremely pleased with the management team and all that they're doing to, you know, reinvigorate the brand. That means so much to that consumer and those communities. We're taking a different tact than others that have managed or own, you know, or own that brand. We're actually reinvesting in that company to make it, you know, to make it very important for those communities. Very pleased with how we're positioning Penney. It, you know, it had EBITDA, you know...
I don't know if I can disclose it, but it had a lot of EBITDA, okay? You know, and our partner, Brookfield, we'll let Brookfield announce it if they do their... You know, I'm kidding, but, you know, but it was very profitable from an EBITDA point of view. We're very pleased there with the brands. We did make the mistake of thinking 2021 would repeat. Obviously, you know, you had a lot of volatility from a macro point in 2022 with, you know, huge increases in interest rates, huge increase in price and food and energy costs that, you know, the consumer was whipsawed. You know, and we felt the impact of it. It's stabilized now, we believe.
Our next question comes from the line of Craig Schmidt with Bank of America. Please proceed with your question.
Thank you. Given the China reopening, I wonder if you could outline how these visitors could impact your coastal premium outlets and your dominant coastal malls?
Well, I think we haven't seen the benefit, but just walking, you know, we, I mean, I don't wanna get into the kind of the geopolitics of what's going on, but we're, we think there's a real benefit to, you know, our landmark assets that, you know, that have always, you know, been shopped by the Chinese consumer or the Asian consumer. We're starting to see that a little bit. You know, we're not planning for that to really accelerate in 2023, but we're hopeful that it will.
Thank you.
Our next question comes from the line of Floris van Dijkum with Compass Point. Please proceed with your question.
Thanks. David, you had talked last quarter, actually in, in response to a question I asked about recovering back to 2019 levels of same property NOI, which, you know, we reckon to be about $6.2 billion. Obviously, that includes or that does not include some of your retailer investments. Depending on how you slice it, I'm just trying to do the math here, you're at least $200 million short, even if you include those retailer investments. If you can walk us through... That would imply that you would get to around 3.7% NOI growth to get back to those levels. You're clearly not guiding to that yet. You're guiding to 2%. What are the headwinds, if you will?
Well, Floris, I think you can't. You really should just focus on domestic. To put the retailers in there, you know, there's too much volatility. That's not something we look to. We're focused on our domestic property NOI to get back to 2019 numbers before we were shut down by the pandemic. The short answer is we will get there on a run rate by the end of this year. That's the short answer. You shouldn't put the retailer NOI in there. It's again, that's. You got to remember, we have, you know, we have basically no cash investment in SPARC. You know, I know we could talk about it all day, it's.
When you think about Simon Property Group, we want you to think about those investments as a gift with purchase, okay? You get this great company that owns all this real estate, that's redeveloping it, great balance sheet, the ability to make smart investments with an unbelievable return on investment outside its core business. That's what you get with a seasoned team that's experienced, you know, from recession to credit crisis to a shutdown in a pandemic, okay? We've managed it through it all. The bottom line is our domestic property NOI, because of the delay in some of these openings, we will get back on a same property basis. Remember, the other thing for us, we have properties in and out, so you can't go back in 2019. The portfolio is different.
If you do the same portfolio that we own today versus the same portfolio that we own in 2019, capital will be there by the end of this year. Okay?
That would... David, that includes... The $6.2 billion included your stake or in Taubman as well. I'm just curious because-
No. We're not including Taubman in it. This is just the domestic property NOI. We're not even including our international NOI. What we can give you, if you combine the mills, outlets, and malls domestic portfolio that we owned in 2019 and that we still own in 2022, we will get there on a run rate by the end of this year. Simple as that. We're not that far off, but we have delayed openings.
David-
You know, and depending on where sales come in, it's even possible we make it this year.
David-
That's the way to look at it, and that's the only way to look at it, really.
I don't disagree. If I can. The SNO pipeline, has that changed from the last quarter as well? You mentioned some of your space is opening later in 2023 and in 2024. Obviously, that has the potential to impact your NOI growth going forward by 5%-7%, depending on the rent that you signed, plus your fixed rent bumps. The math that we have suggests that 2% is, it's the extreme low side of what's probably gonna happen over the next two-three years.
Yeah. I mean, certainly if you look at it over that period of time, we would hope to, you know, way outperform. Again, I just go back to last year. We try to be as thoughtful in doing this, but there are, you know, there are variabilities to it, overage rent being the biggest, but we also have some certain inflationary pressures that we as landlords and property owners have to deal with that I mentioned earlier. Again, you know, you have downtime, but, you know, I would hope that we would beat our number just like we did last year, and just like we have historically.
Our next question comes from the line of Michael Goldsmith with UBS. Please proceed with your question.
Good afternoon. Thanks a lot for taking my question. In the past, you've talked about 80% of the NOI being generated by the top 50% of the properties. Does this remain true? Can you talk about the demand trends and pricing power that you have in the top half of the portfolio relative to the bottom half?
I don't... anybody has that question? Yeah.
Yeah. Michael, that holds true. You know, our top 100 assets generate roughly 80% of our gross NOI.
Yeah. it's more than 50-
... properties. Yeah. It's more than 50 properties.
I'd say demand across the board is good. Obviously, the, you know, the higher end property probably has more demand and but we're generally y ou know, our leases still to this day, our occupancy cost is low and our rent spreads across the board are generally positive. Regardless of the, you know, the sales per square foot.
Our next question comes from the line of Mike Mueller with JP Morgan. Please proceed with your question.
Yeah, hi. Just a quick one. For your platform investment FFO forecast, are you expecting any significant non-recurring costs like you had in the 2022 results?
No.
Got it.
No.
Okay. Thank you.
That's a good question. The answer is no, we're not.
Our next question comes from the line of Haendel St. Juste with Mizuho. Please proceed with your question.
Hey, good evening, David and team. Hope you're well. I was hoping, David, maybe you could share some thoughts on deploying capital in the current macro. We noticed you didn't buy back any stock in the fourth quarter. I guess I'm curious, you know, what your level of interest in stock buybacks is here today. Second, I know you mentioned that there's no sizable acquisitions or dispositions on the guide. I'm curious what your view of the transaction market for malls is, at least today. Clearly, things are still a bit stalled across the board. There have been a few trades in California the last couple of months. Curious what you think of those trades and if there are any pricing read-throughs. Thanks.
Well, I'd say we're generally pleased that we're seeing some activity in our, you know, sector. You know, it's great that, you know, there's others out there that are, you know, in other, you know, real estate industries that are trying to grow externally. You know, as an example, what was today that was announced. You know, it's good to see we're not the only ones that like to, you know, make things happen externally. That's good. I think our strategy has been, you know, essentially confirmed by others, other players in our industry, where size and economies of scale, see the benefits. It's always good to see. You know, we saw it in the warehousing world, and we saw it in the...
Now we might see in the storage world. It's, it's great that, you know, we, we see that. you know, from a stock buyback, I think our dividend is, you know, is really where we're focused growing at. One thing I mentioned, hopefully in my conference text that you heard was we paid out $39 billion in dividends. It's a staggering number when you put it in perspective. That does not include any stock buyback. That's just pure dividends. I'd say that's the, obviously the, you know, the focus. If the stock comes under pressure, we still have the ability to deal with that. That is in our arsenal. We got a lot of mixed-use properties.
I'd say generally relatively quiet on the, on the acquisition front. We did create our partnership with Jamestown, which we're focused on, this year and obviously the years to come to grow that relationship. You know, we've got a lot going on, and, you know, and the capital to continue to create external opportunities. We've been, you know, We haven't batted a thousand, but, you know, we've certainly moved the needle profitably with our investments and created unbelievable return on investment, both in the real estate. You know, still to one of the best deals ever done, in real estate was our deal on premium outlets. You know, which I'm happy to walk through the math, not today, but, you know, still one of the best, you know, multiple deals ever done in our industry.
At that time, you know, we were wildly criticized for, but one of the best deals done in, you know, in the public company space.
Got it. Got it. No, I appreciate that. It sounds like at a high level, without putting words in your mouth, that the focus of your capital investing today is gonna be more the redev, less the stock buybacks, less the acquisitions. Question, just to follow up maybe on the FFO guide itself. I appreciate some of the headwinds, the unknowns, the OpEx, the interest expense, et cetera. I'm trying to get a sense of what else might be limiting the FFO growth this year, which is basically flat year-over-year versus the 2% at least.
Yeah, it's really simple. It's interest rate. You know, we're losing roughly $0.30-$0.35 per share just from, you know, either floating rate debt that's now higher or our own assumptions of what, you know, our refinancing costs are gonna be. The good news is we're refinancing all of our debt. The market's there. You know, the cost of, you know, the cost of debt is higher. That's really, if you cut through it all, you know, that's. You know, when you look at, kind of where the market was, very few analysts updated their numbers at all for higher interest rates, you know, they, I don't have to tell you they've loomed over the last 12 months.
Yep. No, I appreciate that. Wanted to get a bit clarity, though, perhaps on bad debt, how are you thinking about that this year within the guide, FX headwinds, and maybe lease?
Yeah. Well, I think we gotta open it up. A little higher. We have a little higher bad debt expense budgeted this year than last year. Thank you.
Our next question comes from the line of Juan Sanabria with BMO Capital Markets. Please proceed with your question.
Hi. Thank you. Just hoping for a little color on expected CapEx spend just in general for maintenance, and then the development spend that we should be budgeting and what kind of returns or NOI contributions we should be thinking about on the dev, redev stuff that would flow through into 2023 as we your model?
I would look at our Form 8-K, because the development spend will add to that. Obviously, when you start a real estate project, it's over a two year, you know, sometimes three year process. You know, all that's disclosed in the Form 8-K. The CapEx, including TA will probably be roughly with what it was, 2022, if not a little bit less. Okay, thank you.
Our next question comes from the line of Greg McGinniss with Scotiabank. Please proceed with your question.
Hey, good evening, David. Regarding the large number of stores opening in late 2023 and early 2024, what's that expected NOI contribution or GOA that's attributed to these leases that are signed but not yet been paying?
At least $100 million.
On NOI or GOA? I guess NOI. Okay. Thank you. Is there any contribution expectation from the Jamestown investment? If you could talk about, like, with Klépierre, that's built into guidance as well, that'd be appreciated.
That's all in. Jamestown is accretive, but it wasn't a big investment, so, and so, you know, it's in our, it's in our budget, but it's not, you know, it's not really. The relationship's material, but the financial impact is not material. That's one. Klépierre. You know, it is consistent with their guidance that they'll be developing when they announce their earnings, this in the next couple of weeks.
There is some FX headwinds still baked in there, Greg. Just keep it within the boundaries.
Yeah.
All right. Thank you.
Thank you.
Our next question comes from the line of Ki Bin Kim with Truist. Please proceed with your question.
Thanks. Good afternoon. Hopefully a quick one here. When I look at your 2023 lease expirations, your portfolio still has about 10.5% expiring, which hasn't really budged in the past couple quarters. I remember from the last call you said these things can take time, especially with larger national accounts. I was just curious if you can share an update and how we should mentally think about a realistic set of outcomes here.
Well, Listen, we're, you know, negotiating for the benefit of, you know, our shareholders. They're negotiating for the benefit of their shareholders. A lot of these things we have what I'll say handshakes, and it's a process of being papered. You should feel good that there's no, you know, there's no smoking gun, there's nothing there that's gonna, you know, lead to a fallout. It's just a process. Renewals are going. We're in fact ahead of our 2023 renewals now compared to where we were last year. Some of the 2022s. In some cases, because 2022s took so long, we're doing 2023s. Together, you know, it's a process, but it's going, it's going well and relationships are progressing appropriately.
Okay. Just one quick one. Where should we expect your portfolio occupancy to end up by end of this year?
2023, slightly up. Slightly up. I don't have the number, but Brian may have it for you later.
Okay. Thank you.
Okay, last one. I guess we're over at six, but we have one more question, and we want to finish the finish the Q&A.
Yep. Our final question comes from the line of Linda Tsai with Jefferies. Please proceed with your question.
Hi. Thanks a lot for taking my question. On the guidance, the range you provided based on comparable FFO per share, in the coming quarters, when you have a better sense of mark-to-market gains or losses, will you also show guidance for estimated diluted per share for the full year like you did in prior quarters?
Yeah, well, we're hopeful. You know, last... You mean our mark-to-market equity investments?
Yes.
Yeah, sure. I mean, we outlined it, we separated, you know. We'll do comparable and real numbers. You'll see both. Hopefully, it'll only be up. But, you know, last year we did take a reported FFO... Do you have the number?
$61 million.
What was the per share number?
$0.08.
$0.08. We'll outline those for you, Linda. You'll see them both.
Great. Thanks a lot.
Thank you.
We have reached the end of the question- and- answer session. I'll now turn the call back over to David Simon for closing remarks.
Thank you. Again, I'm sure there are a lot more, detailed questions. Please, call Brian and Tom and, you know, they'll be happy to walk you through, more details. Thank you.
This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.