Just lost internet. COO Eli Simon. This session is for Citi clients only. Disclosures have been made available at the corporate access desk. To ask a question, you can raise your hand or go to LiveQA, enter code GPC26 to submit questions. Eli, I'll hand it over to you to introduce the company and team, providing the opening remarks. Tell the audience the top reasons an investor should buy your stock today. Then we'll get into Q&A.
Perfect. Good afternoon, and thank you, Nick and Craig, for the introduction. We appreciate the opportunity to speak with you today. Let me begin with the core principle that has guided Simon for decades. Assets matter. When assets are built to last and located in the best market, their longevity generates sustainable growing cash flow. That has been the defining characteristic of our company for decades, and it continues to drive our performance today. Our assets stay relevant because we continually reinvest in them, redeveloping, densifying, and curating the best tenant mix, and enhancing the customer experience.
This continuous improvement creates a virtuous cycle that extends asset life and compounds cash flow growth. Not many real estate assets last for 70+ years. Ours can and do through disciplined, accretive reinvestment and operational expertise, including most recently at Southdale Center in Edina, Minnesota, where we have reinvented the oldest enclosed mall in the country and made it more relevant than ever. Our strategy remains clear and consistent. Own and operate the best retail real estate in the best markets. Reinvest in our assets with high return redevelopment, densification, and mixed use additions to drive long-term value creation.
Pursue disciplined accretive acquisitions where we can add value, and innovate to enhance both the consumer and retailer experience. 2025 was an exceptional year and a validation of our model. We delivered record results across all key operating metrics, including revenue, NOI, real estate FFO, and dividends, supported by strong retailer demand and increasing shopper traffic. We completed $2 billion of strategic acquisition, including the remaining interest in Taubman Realty Group, our partner's interest in Brickell City Centre, and The Mall Luxury Outlets in Italy. Each of these deals enhances the quality and long-term growth profile of our portfolio.
We completed significant redevelopment and expansion projects, transforming former department stores into high productivity experiential environments and expanding our mixed use components. Our active development pipeline is $1.5 billion with a shadow pipeline of more than $4 billion that will start over the next few years. Approximately 40% of that pipeline is in transformative mixed use projects at iconic properties, including the Town Center of Boca Raton and Fashion Valley in San Diego. Our financial foundation remains rock solid with our A-rated balance sheet continuing to be a defining advantage.
With more than $9 billion liquidity and over $1.5 billion of annual free cash flow after dividends, we have the flexibility to reinvest, acquire, and return capital to shareholders while maintaining disciplined leverage. As we look ahead, our conviction remains strong. Demand for high-quality physical retail remains strong and consistent. Retailers know that operating stores is essential to profitable growth and new supply remains limited. Our continually improved portfolio will support durable cash flow growth for many, many years to come. Our strategy is clear, consistent, and proven. Our platform is exceptionally well-positioned for long-term value creation. Thank you. We look forward to your questions.
Great. If I synthesize that, or maybe you can synthesize that down, what are the, let's just say two or three reasons investors should buy this stock today?
Yeah. The first, as I said in my opening remarks, assets matter, and our portfolio is unrivaled. Demand remains strong and consistent across the portfolio, across all categories, apparel, food and beverage, experiential, entertainment, and the like. We're coming off a record year, as I mentioned, 2025, and that momentum has continued in the beginning of 2026, and we look forward to it continuing. We also have a strong proven track record of disciplined investments, both external growth opportunities, as well as our development and redevelopment pipeline, which remains strong and is growing with many very high accretive projects hoping to start over the next two to three years.
Finally, as I said, our balance sheet is a significant competitive advantage. You know, we generate over $1.5 billion in excess of our dividend each year, which allows us to reinvest that free cash flow into high accretive opportunities and which will continue into the future. You know, bottom line, I think no one is more cycle-tested and has overcome various external threats more than we have, and we are very excited for that to continue into the future.
Sense, yeah. It certainly feels like a good moment for retail broadly right now. I feel like the market and the question that we get the most frequently is how could AI disrupt these different businesses? I wanna get into Simon specifically, and I know you've been active, and on the front foot about deploying AI and different technologies over the years. Maybe starting more broadly on retail, and what you're hearing from your tenants and the retailers directly about the opportunities and risks that they're seeing from AI today.
Sure. I think from the retailer's perspective, it's a potential new avenue of growth, a new avenue to drive sales. You know, from a physical retail perspective, nobody's looking at it and saying, "Well, I'm gonna replace my physical stores with an AI agent and with my e-commerce only." I think it's been pretty clear and proven at this point that the way to grow profitably is to open stores. It's a better customer acquisition cost. It creates better long-term value. What we see when we talk to retailers is they want to open stores. They wanna be in the best markets, and that's what our portfolio provides them.
We're not hearing any negativity from the retailers and hopefully it's a positive. More sales for them is better. If they can operate their businesses better, we obviously own stakes in retailers. We understand that business. They are going to— our retail investments are going to find efficiencies operationally from AI, which only benefits us as now we'll have a better financially healthy tenants. We look at it as a positive and not really focused on any potential negative outcomes.
How about internally within Simon, the opportunity to either be more efficient or?.
Of course. You know, we look at AI like we do any other investment, whether it's we're looking to partner with somebody, build it internally, buy something. It's incredibly disciplined. We look at every single nickel in the company however we spend it, whether it's overhead, technology, in our capital projects, in our operating expenses. We'll continue to do the same with AI. We've obviously used it and had success across various departments, across our legal department, our marketing department. We have 30,000 tenants or so, that all have different needs, different imagery. We have 200+ properties in the U.S. If we can create materials for them, create pitch books, et cetera, faster, that's only benefits us.
Then lastly, obviously on the data side, we have a tremendous amount of data. We're in the early innings there. Really being able to take that data, use it better, use it more efficiently, and then ultimately, find ways to monetize it, which we've started to be very excited about that, but early innings. You know, we'll grow significantly from here.
We had a question come in that dovetails on this. You know, what initiatives are you developing around retail media, the use of customer information to, you know, synthesize the data, better bring in foot traffic, and maybe partner with tenants and retailers?
Sure. I look at it as two facets, right? One is our internal use. We have better data, better ability to use the data to allow us to lease better, allow building programs internally, allow us to have a better understanding of what tenants need to be where, how they will perform, which is only gonna make us better operators. From the use of data going forward, we've launched a retail media network, launched it last year, continuing to grow it this year. Basically, if you think about it, we have 25 or so million people in our consumer database that's built up over time.
We launched our loyalty program November of last year to get more granular data on those consumers. I think it's a pretty attractive data set for both our retailers, but also a broader universe because, you know, that 25 million people is a part of a cohort that spends $100 billion a year in our assets. You know, a couple billion visits a year, a few hundred, 200, 300 million individual shoppers, so clearly that is pretty powerful. In the early days of harnessing it, obviously AI will help us, but it's something that we're really focused on top to bottom of the company right now.
Maybe beyond the efficiencies at corporate level, from an operating expense or maintenance, kind of, preventative maintenance, right? What are you guys doing at the property level? Or what good technology is there out there, if any, at this point, to really help modulate heating, cooling expenses, and lighting, and all the things that kinda go into it and can minimize CAM?
It's something that— it's not like we just woke up and saw the letters AI and said, "Oh my God, how is this gonna help us operate better," right? We've consistently, over a very long term, invested in different platforms and different ways to be more energy and efficient, run our properties better. We view that as just a continuation. What might've been a software program before now might be AI-backed. We're continuing to trial things.
You know, the good thing for us is, when we talk to potential providers, if we find something that works, they see the ability to roll it out across 200 or so assets in the U.S., which means that, we're gonna get that first phone call when people have interesting ideas, and we take those calls all the time. You know, we're starting to see interesting results. Obviously very early, but energy cost is something we are very focused on and think that hopefully, there are real savings to be had there.
To circle back, your prepared remarks, you highlighted the $4 billion of potential kind of development, redevelopment within the pipeline. Maybe talk a little bit about how much of that is Taubman-related now that you guys have full control of it versus legacy portfolio, and maybe a range of returns or how we should think about that incremental capital spend.
Sure. I would say honestly, the $4 billion I think has basically none of Taubman because that was sort of in plan before. You know, we obviously announced right after earnings that we have a $250 million, three projects in Denver at Cherry Creek, Nashville at Green Hills, and Tampa at International Plaza. You know, we are incredibly excited about those projects to make really good assets even better that, frankly should've been done a while ago. We didn't have the ability to do it. Now we are gonna do it. That $4 billion is the vast, vast majority of it, if not all of it, frankly, is our core portfolio.
You know, from the Taubman portfolio, if you think about it, they had an independent balance sheet, not the $9+ billion of liquidity we have. Some of the assets do need capital. We've highlighted those three as where we think we can have the biggest and best returns. We're going through property by property and have been the last several months looking to see where we can merchandise better, where we can make the properties look better, we'll continue to do that. You know, we look at it not as a 2026 story, these are assets we wanna own forever.
That's why we did the deal initially. That's why we bought the next 4%, the next 4%, the last 4%.
It's because these assets are great assets that we want to own for a very long time. You know, going to your return question, I think the billion and a half is at a 9%. I would say two things on that, right? Obviously, that's a lot of assets in there, right? A lot of different projects. We'd expect the pipeline, the shadow pipeline, I should say, to be similar. You should note that, I wish we were building multifamily to a nine, right? We're not. We're building at, you know, 150– 200 basis points spread. If you think about that as a 6.5 % or so, a lot of the other projects then are higher than that, right?
40% or so of the pipeline is mixed use. The other thing, which I do think is important to note is when we underwrite that pipeline or provide those public returns, that is truly the cash we are spending in the box of what we are doing, right? Whether it's a department store redevelopment, what we did at Southdale, the exterior renovation where we added luxury. What it's not doing is picking up all the other benefits that we're getting throughout the property, which to be intellectually consistent, but that makes that number obviously much higher, right?
You look at Southdale, that doesn't take into account the 40–45 new tenants we've added since we announced and started construction of the luxury redevelopment, which is now open. You know, those tenants are outperforming those like-for-like tenants that have been at Southdale for a while are outperforming that same tenant in other malls by 1,000–1,500 basis points because we revitalized a 70-year-old asset. Yes, it's 9%, which, that in and of itself is obviously very good. You know, we do know that there is a lot more accretive returns that are beyond that with what we're doing.
What's the tail on this from a timeframe on that $4 billion? Like, when should we expect that to hit? What is behind it? I know you have Taubman, but as you reevaluate the portfolio and continue to re-underwrite or bring in new assets, what could that kind of additional opportunity be over time?
Sure. I guess on the first part, on the $4 billion, I'm hopeful that that starts over the next several years. You know, maybe AI can disrupt how city planning in some of these towns work, so they can be quicker. Because it's not an issue of our desire, it's not an issue of our capital or the tenant demand. It just takes time to get through some of these processes. I would expect most of that to start over 2027, 2028, 2029. You gotta remember that some of these projects at Fashion Valley, that's gonna be a three-year development, right? You know, an iconic asset in San Diego that we're gonna add multifamily, flagship retail, world-class restaurants, et cetera.
I think it's important to note that it's not just when we start, but this capital does get deployed over a multi-year process. Behind the $4 billion, we are just scratching the surface, right? Again, it has nothing to do with capital constraints. It's, where's the best use of our time, and that's what this $4 billion has determined. We continue to look at our portfolio every day because if we're not making the asset better, inherently it's getting worse. We say, "Okay, where's the next asset that we can put significant dollars in to make it better?
The next Southdale, the next Brea, you know, in Orange County, which is,p near the end of that significant work. We think there's a lot behind it. $4 billion I think is not too bad, but we'll continue to grow that over time.
You guys have historically, you know, been opportunistic as well on the direct real estates or direct retailer side. I know that a couple years ago you pulled back a little bit 'cause maybe you were getting some feedback from investors. As Saks comes and some others potentially down the road, how interested —I know you guys already have an investment in Saks, so that's maybe a redundant question.
Going forward, if you have this level of potential redevelopment or use of capital within the existing portfolio that's a little more organic, probably a little de-risked, that versus the appetite to continue to be opportunistic. Just kinda curious how much capital maybe you set aside for those relationship or strategic investments versus the just the straight up real estate side?
Yeah, I mean, I think it's, as you said, opportunistic. We're not looking for it. If somebody calls us, we'll take the call, and we'll look at an opportunity. I mean, from a capital perspective, you gotta remember, we have very, very, very little net cash in these deals. We put in little cash to begin with, and then we've returned significant amount of it. Earmarking anything it would be silly because it's de minimis relative to liquidity we have in the other uses of cash. If there's something interesting, can we do it? Of course, but we're not actively looking at it. Obviously, with our investment in Catalyst, we're happy, right?
I think the management team there has done a great job. We're not actively looking to do anything. We think we got a great opportunity in our existing portfolio. Let's just keep making these assets even better and driving cash flow growth, which is, what I think we're the best at.
Any questions from the audience? Open up for a minute. Nope. All right. On the leasing side, the demand has been strong, the execution has been strong. As you talk to retailers, the tariff issue, SCOTUS slapped it down, the administration came right back with another avenue. Kind of how is that uncertainty or extra cost essentially factoring into conversations you guys are having as tenants are looking to lease or they're looking to figure out their cost structure and margins and your OCRs factoring all that in?
Sure. I think a couple things. First is, tariffs and sort of changing supply chains is not a new story. This went on pre-COVID in the first Trump administration and has been continuing to today. That I think, from retailers, their flexibility is a lot better than it might have been 20 years ago. And that's first and foremost. Second is, when we had our earnings call first week in May, a month or so after Liberation Day, I think we said on the call that there were four or so leases that fell out, right? Out of we signed 4,500 leases last year, and four or five fell out because of tariffs.
We're sitting here almost a year later. The number is still four or five leases fell out because of tariffs. We don't see that changing. The conversations we're having are good. You know, retailers are looking to secure renewals on their space going into the future more. You know, because they realize that if they have good space, they wanna keep that good space. We're working on not just 2026 renewals, but 2027 and 2028 renewals with some retailers in certain circumstances. You know, obviously it's fluid. We're cognizant of it.
You know, could there be some impact on margin? Of course. I think the retailers, though, by and large, have done a good job of figuring out how to minimize it. You know, we'll see what happens, but we'll be ready to react either way. You know, as we sit here today, the leasing pipeline is still very strong. It's still north of 15% above where it was this time last year. You know, even after 10 or so months of tariff noise.
We had a question come in through LiveQA, specific to Klépierre. How do you think about the success of that investment and keeping your capital in the deal longer term?
I think the key word you said there is investment. We view Klépierre as an investment. You know, an investment by its definition, we can hold an investment or we can sell an investment. You know, that's how we look at it. Obviously, it's been very successful. We're proud of what we've done over the last 14 years. We're proud of how it's performed, but it's an investment. We will evaluate it every day and determine if it's an investment we should keep or it's an investment that we have better use of that capital. Otherwise, business continues as usual.
In regards to the exchangeable, I know, I think we had talked— you guys have the ability to pay it back in cash, you have the ability to put shares. You mentioned you did put a little bit of the investment back, a very small piece. As you guys go forward, how should we expect that debt to be paid off? Could you liquidate more of the investment there through the payback of it? Or did you kind of right-size what you guys wanted to right-size, and now you pay it back with cash?
Sure. I mean, we'll look at each and every exchange as they come in to the extent they do, and then decide at that moment what we wanna do. You know, as of the earnings call, we'd exchanged 1.5 million shares, out of our 63– 64 million shares. You know, obviously that's not a huge percentage, but we'll evaluate each exchangeable notice to the extent they come in and sort of determine what's best for SPG at that time.
Kind of pivoting a little bit, and it goes back to maybe the investment piece. You guys bought Jamestown a few years ago. It's been quiet on that front, at least externally, right, what you guys are doing with them? Is there anything near term or on the horizon or maybe even in the $4 billion that you referenced that leverages that platform over time? How should we think about that relationship going forward?
Sure. It's a great relationship. I was talking to Matt and Michael, I think, on Wednesday or Thursday last week. I would say the $4 billion is just SPG, right? I would think of it less as what Jamestown is giving to us versus what we are giving to Jamestown. You know, they're working on— they closed on our transaction in Charlotte, not too long ago in the last couple weeks. They're working on a transaction in Berlin that's closing soon. They're looking at a couple large, mixed-use, sports-related developments in Tampa and in Atlanta.
We provide input, we provide expertise maybe down the road, depending on how those deals get capitalized. We maybe provide capital. It's a great relationship. You know, we're 50% owners, right? We don't control it by any means. It's an awesome management team who's doing a good job. We talk to them weekly at least, and to continue to find ways to grow that platform. It's an investment that we're happy we made and we'd like to continue to grow it. The goal was to grow AUM, and, you know, ultimately that is what we're kind of focused on, and we expect to see that in the near future, with that platform.
Is there ever an opportunity for you guys to do or them to do a fund with you guys contributing assets, taking outside capital? Could that be something down the road, or is it basically you guys just want an asset management arm? Maybe you introduce them to some people they might not know to get their AUM up and kind of enjoy the fees, the high profit margins on that.
Never say never, but I think it's more the latter, right? Because if you think about, by and large, our portfolio, the assets we want to own outright, right? Or our share of what we have with partners. To contribute it to grow their AUM in a business that we own 50% of versus what we can own and what we can control our own destiny, that's much more interesting. You know, we do develop interesting capital relationships with Jamestown, right? They do talk to large institutional investors on the private side that we might not really have a need for, frankly.
Maybe one day down the road we do. That's an interesting angle for us is to develop those relationships.
You know, we look at it and say we have boots on the ground in literally hundreds of markets or north of 100 markets across the country. Basically any asset that Jamestown is looking at to underwrite is the market that we know. That is pretty valuable intel, when they're looking at going to raise capital, and they're talking to the large institutional investors. Not too many people can say that. You know, we think it's additive to their platform.
We had a question come in. I know you guys addressed this a little bit on the call. Maybe an update on the expectation for the Saks bankruptcies. How many stores have you gotten back? Do you expect any leases to be bought in auction?
Sure. You have to separate, right, the Saks OFF 5TH and the full-price department stores. On the Saks OFF 5TH, as we said on the call, I think we have 38 stores that pay $18 million and effectively they have rejected the vast majority of those, and we're gonna take that $18 million and based on where we are today with about half those stores, that's a $30 million rent roll. You know, based on the rest of the stores, that should more than double the $18 million. You know, all those are in the outlets in the mills. That is going well. Low-paying, low productive space in very good locations.
I was at Silver Sands Premium Outlets last week. We're gonna take their box.
It's in a prime corner of the center. We have a deal with a great retailer that will do literally maybe 10x the volume, if not more, of what Saks is doing, or Saks OFF 5TH is doing. On the full-price department stores, that's early. We'll see. Obviously, we announced at Copley, the Neiman box that we're gonna redevelop and add multiple restaurants that will do over $100 million in volume and additional new luxury retailers. We'll see where the rest of the full-price stores shake out.
Either way, if Saks remains as a going concern, which, you know, I think would be good, generally speaking, for the industry and for the environment, then that's fine. If something worse were to happen, their stores are in great centers and we've obviously been thinking about alternative uses, we'll just see how the bankruptcy plays out. We're prepared either way. It's not the first time we've dealt with something like this.
Another question come in. How have tenant sales or traffic trended year to date relative to trends last year?
Through January, both sales and traffic have accelerated where they were the last couple of months of the year in 2025. It's obviously early. February, too early to know, to have a read on. I think anecdotally similar-ish, but, kind of crazy weather in parts of the country that might not normally get it. Don't have a great read on February yet. We'll see. Through January have accelerated, both the growth in sales and the growth in traffic over the last couple months of the fourth quarter last year.
You guys have done a fair bit of outlet development overseas. Just kinda curious with the geopolitical risk going on and what's going on over the weekend, just does that delay or change your underwriting at all on the decision to kind of put capital outside the U.S. on the margin? I know where you guys own is not where this is going on, but clearly there's friction.
Yeah. I mean, obviously we don't own in the area so frankly not really looking in the area, so that's not a concern. I mean, when we look at international development, which we right? Our most recent asset was in Indonesia last year. To the extent we're taking country risk, we're gonna make sure we're earning the right return. It's just a higher return threshold, but we obviously evaluate it very, very closely. You know, I don't wanna say we scrutinize it more than something we do here because we scrutinize every $5,000, $ 10 ,000 decision very closely to make sure we're not wasting money.
On the international front, we have a few new deals, an expansion in Japan, a new development in Korea that is supposed to start later this year. Let's see where the geopolitical environment is. The great thing is we can do it or we can not do it, and that's funded basically by those portfolios with those partners. Doesn't really sweat either way. We're not really sweating either way, we'll just evaluate each one. We have a very stringent criteria when we go overseas, and obviously it's been incredibly successful so far, and we're proud of the assets we have.
Then in terms of capital allocation priorities, we had a question come in, between expansion of malls, outlets, densification of, you know, other uses, how do you prioritize those? How do you think about either larger cities or more secondary cities?
Yeah. I mean, we prioritize all. We do all, we'll do all, and are excited about all. you know, there's no issue resource-wise, both in terms of people or in terms of capital at all, right? We're generating $1.5 billion after dividend to fund the pipeline and while naturally de-leveraging. It's not a, it's not a concern. It's each individual asset, what's the best decision for that asset. Sometimes, like a Boca, just, you know, one of my favorite malls, frankly, and one of the best malls in the portfolio, we have an opportunity to do something incredible to add a hotel, multi-family, great retail, great dining. We're gonna do it.
In other markets, it might make more sense to do a, you know, sort of a box replacement or maybe a small, you know, restaurant, you know, outlay, what we did at Mission Viejo, where we added a handful of restaurants outside and a couple furniture units. we look at each and every asset, what's the best use of that asset, not where are we putting money, because if we do something here, we can't do it there. on, you know, development itself, obviously we've announced what we're doing at Sagefield, you know, in south of Nashville and Franklin, which we could not be more excited about.
you know, a little bit different than what we've done in terms of the style, truly taking into account the beautiful layout where it is, and but retail demand for that has kind of been unlike anything we've seen in terms of the quality of retailers that are excited about that. That's, you know, obviously gonna really start picking up later this year and open in two years. you know, we continue to look at new development opportunities less so on the full price side, probably more on the mall side, sorry, on the outlet side, but those will have to be deals that, you know, we wanna do that we think generate an attractive return.
Debt spreads have been coming in for the REITs, especially the larger, more highly rated REITs. What's your view on need for capital in the near term? Kind of how should we expect, or should we expect you guys to tap that market to take advantage?
Yeah, I mean, Craig, we're regular funders in the secured-the-unsecured market. I mean, we're not raising incremental capital. We're funding our business with free cash flow. Really it's just replacement debt. Markets are wide open. We did an offering earlier in the year, you know, five-year offering at 65 over Treasuries. You know, in the history as a public company, we've only issued a five-year tighter one other time. The markets are open. The secured markets are opening and pricing efficiently.
You know, ultimately, we will be very active again this year, as we are every year, probably have about $10 billion of total financing to do between unsecured and secured. You know, we still do face, you know, higher interest rates than the coupons we're rolling off. You know, we benefited during when interest rates were at zero. I was actually, you know, kidding with David that we will have rolled off our last 1% coupon next year. We, you know, we are still getting tight pricing, but base rates certainly are elevated relative to recent past.
We have our rapid fire questions to end the session. What will same-store NOI growth be for, we'll just say, retail overall next year in 2027?
Less than ours.
Any specific numbers?
Still less than ours.
Will there be more, fewer, the same number of retail REITs a year from now?
Doesn't impact us.
Broadly, do you expect M&A across retail REITs?
We'll see. Doesn't impact, doesn't impact us.
All right. Thank you.
Thanks, guys.
Thank you.