Please note this event is being recorded. I would now like to turn the conference over to Mr. Tom Ward, Senior Vice President of Investor Relations. Please go ahead, sir.
Thank you, Chuck, and thank you for joining us this evening. Presenting on today's call are Eli Simon, Chief Executive Officer, President, and Chief Operating Officer, and Brian McDade, Chief Financial Officer. A quick reminder that statements made during this call may be deemed forward-looking statements within the meaning of the Safe Harbor of the Private Securities Litigation Reform Act of 1995, and actual results may differ materially due to a variety of risks, uncertainties, and other factors. We refer you to today's press release and our SEC filings for a detailed discussion of the risk factors 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 evening will be limited to one hour. For those who would like to participate in the question-answer- session, we ask you please limit yourself to one question. Please introduce Eli Simon.
Good evening. We delivered another excellent quarter of financial and operational results. Domestic property NOI grew 6.6%, and real estate FFO per share grew 4.7% compared to the prior year period. Our results reflect continued operating momentum across all of our platforms, healthy leasing fundamentals, and the added contribution of our acquisitions last year. Traffic growth accelerated in the third quarter, furthering a trend we have seen throughout 2026. Sales productivity is at record levels for each of our platforms, underscoring the health of the retailers in our centers and the quality of our real estate. Our portfolio is well-located in growing markets, and our ongoing investment keeps our centers the destination of choice for shoppers and retailers alike. Last week, we announced that we entered into an agreement to acquire University Village, a premier open-air retail destination in Seattle, one of the most attractive markets in the country.
This acquisition reflects our focus on owning the highest quality assets, and the center's exceptional mix of national brands, local boutiques and restaurants make it a natural fit for our portfolio. We see real opportunity to build on the center's nearly 70 years of success through leasing, operations and future expansion. University Village expands our local presence alongside our recently rebranded. The District at Northgate, where we opened our first multifamily property with additional retail this summer. We look forward to serving the Seattle community, retailers and shoppers at both of these assets in the many years to come. The transaction is expected to close in the fourth quarter, subject to customary closing conditions. Moving on to leasing. Tenant demand remains widespread, from established national and international brands to emerging fast-growing concepts. During the third quarter, we signed nearly 1,200 leases totaling over 4.3 million sq ft.
New deals represented approximately 25% of total sq ft leased. Year-to-date through the third quarter, initial base minimum rent per sq ft on new deals is up 17% year-over-year, while tenant allowance per sq ft is down 10%. In other words, we are achieving higher rents while investing less capital per deal. Our pipeline of prospective deals is well ahead of where it was a year ago at this time. Under retailer sales, the malls and Premium Outlets were at $852 per sq ft, up 14.8% year-over-year. Importantly, total sales volume increased 6.8% in the quarter and 7.1% over the trailing 12 months. Comparable sales grew 4.9% in the third quarter and 5% over the trailing 12 months.
Onto our development and redevelopment activity, where at the end of the quarter, we had development projects underway across all platforms, with our share of the net cost totaling $1.2 billion at a blended yield of 9%. We continue to be very excited about the projects under development, as well as our pipeline, given the strong tenant demand from best-in-class retailers and restaurateurs we have for these new developments and redevelopments. Separately, next Thursday, we will break ground on Sagefield, our new ground-up development south of Nashville, which we expect to open by the end of 2028. It will be a truly special center with over 80 retail shops and an impressive lineup of restaurants across 100 acres with a number of community gathering spaces. More to come on this exciting development.
Finally, in September, we launched our new brand campaign, "It's a Simon Thing." For the first time, this campaign brings all of our centers together under the Simon name, highlighting what makes a visit to our centers different. Customer response has been tremendous. This is already the most engaged campaign in our company's history, and we expect that enthusiasm to build throughout the holiday season, which is good for our tenants. With that, I'll turn it over to Brian, who will review our financial results from the third quarter in more detail and provide an update on our outlook for the remainder of the year.
Thank you, Eli. Real estate FFO was $1.28 billion, or $3.37 per share in the third quarter compared to $1.22 billion, or $3.22 per share in the prior year period, an increase of 4.7% per share. Higher lease income, including overage, along with disciplined cost management and our acquisitions last year drove a $0.27 contribution from our domestic and international operations. As anticipated, higher net interest expense reduced FFO by $0.05 year- over- year. Reported FFO was $3.09 per share in the third quarter compared to $3.25 per share in the prior year period.
This third quarter includes $0.27 per share of non-cash after-tax losses from unrealized mark-to-market adjustments to the Klépierre exchangeable bond and the revaluation of an equity security that became publicly traded during the quarter and is held in one of our unconsolidated other platform investments. Domestic property NOI increased 6.6% year-over-year for the quarter and 7.3% for the nine months. Approximately 120 basis points of growth for both the third quarter and nine months was attributable to our acquisition of the remaining TRG interest. Portfolio NOI, which includes our international properties at constant currency, grew 6.7% for the quarter and 7.2% for the nine months. Malls and Premium Outlets occupancy at the end of the third quarter was 96.5%, a 50 basis point increase sequentially and a 10 basis point increase year-over-year, driven by our strong leasing activity.
This ties our highest combined occupancy level since 2016. The Mills occupancy was 98.9%. Average base minimum rent for the malls and Premium Outlets increased 6.1% year-over-year, while ABR for The Mills increased 11%. Occupancy cost at the end of the quarter was 12.4%. Turning to the balance sheet. During the quarter, we were active in the debt markets by issuing $800 million of U.S. senior notes in two tranches, with a combined average term of 7.7 years and a weighted average rate of 5.45%. We also completed seven secured loan transactions totaling approximately $970 million at a weighted average interest rate of 6.33%. Through the first nine months of the year, we closed 25 secured transactions totaling $4.67 billion at a 5.3% average rate. We ended the quarter with approximately $9 billion in liquidity.
The momentum of our results, together with the improvement in our capital efficiency, has increased our free cash flow generation by more than 7.5% year to date. That, combined with our natural deleveraging balance sheet, gives us a real competitive advantage. With net debt to EBITDA of five times and a fixed charge coverage ratio of 4.6 times, we have the flexibility to continue to invest in our portfolio to make our assets even better. Turning to dividend and share repurchases. Today, we announced our dividend of $2.30 per share for the fourth quarter, an increase of $0.10 or 4.5% year-over-year. The dividend is payable on December 31st to shareholders as of the record date. Importantly, during the quarter, we repurchased 1.1 million shares of our common stock.
In year- to- date, we have repurchased 3.4 million shares of common stock and limited partnership units for an investment of $667 million at an average purchase price of $198.97 per share. Finally, onto 2026 guidance. Given our results for the first nine months and our current view for the remainder of the year, we are raising our full year 2026 real estate FFO guidance to $13.30-$13.40 per share, a $0.10 increase compared to the range previously provided. At the midpoint, the new range represents growth of approximately 5% as compared to our $12.73 of real estate FFO last year. Thank you. We are now available for your questions.
Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Our first question for today will come from Michael Goldsmith with UBS. Please go ahead.
Good afternoon. Thanks a lot for taking my question. Eli, on University Village, can you give us a sense of the going-in yield and what you think the stabilized yield could be after the leasing, operating, and expansion opportunities you mentioned? Maybe more broadly, does the acquisition change at all how you think about open-air versus enclosed malls in terms of tenant demand, growth, and where you want to deploy capital? Thanks.
Sure. Thanks for the question. On the first, unfortunately, one is we obviously haven't closed yet, but two is, based on the agreement, I can't provide any detail on pricing. What I can say is that the transaction will be modestly accretive next year, NAV accretive day one, and we're very excited. We think this will grow well above our average portfolio growth for the many years to come, given the quality of the asset and the market. I do not think of this asset as an open-air center versus another asset as an enclosed center. That's really not how we run our business. Stanford's open air, Roosevelt Field enclosed, and we lease them the same, which is to make sure we have the best tenants for that asset to serve the customers in that market. That's really how we operate.
On further acquisitions, we look if there is opportunity to buy really, really good retail real estate in well-located markets, where we think if we can operate it and operate it, lease it, run it, potentially expand it, that we can add value, and it is at a fair price, we will do it. We never had one conversation internally where we said, "This is outdoor versus indoor." That is just not the way we think about our portfolio. We think about our portfolio today and the potential growth of the portfolio as we want to own really good retail real estate where tenants want to be and where customers want to shop.
Your next question will come from Samir Khanal with Bank of America. Please go ahead.
Good afternoon, everybody. I guess, Eli, there is clearly a lot of good momentum here on leasing. Given the healthy organic growth across the portfolio that we are seeing, how should we think about sort of the building blocks to growth next year, the bottom line, right? As you balance this continued leasing momentum, this operating momentum you are seeing against the headwinds from higher refinancing costs and any other offsets we need to consider. Thanks.
Thanks for the question. We are obviously in the midst of our budgeting process now. I think we spent literally 24 hours the last two weeks going through property by property, which is exciting, because I think what is exciting is that we are seeing strong demand and depth of demand across the portfolio, not concentrated in any given geography or any product type or any type of tenant, but really across the portfolio. Obviously, that is the key driver. The key driver of growth obviously is leasing and leasing velocity. That said, there are other factors, including sales, which is, until we kind of see how the holiday season plays out, it is really hard to have a great view on 2027 sales until the biggest months in 2026 are complete.
On interest expense, it is no secret, and we have said this, I think, last quarter, it will probably be in that similar $0.30-ish range of headwinds next year. Obviously, this is volatile right now, so we do not have a great number either, but it is going to be something like that. We feel confident in the portfolio, confident in our ability to execute, and we will obviously have more about guidance in February of next year when we report our fourth quarter earnings. When we look at the business today, we really do remain excited about the opportunities. Again, it is not just the leasing, it is the development, it is our Simon Brand Ventures business. It is really across the board. Obviously, it is on us to execute, but we will give you more detail on that early next year.
Your next question will come from Caitlin Burrows with Goldman Sachs. Please go ahead.
Hi, everyone. Maybe just on the acquisition side, obviously you did the deal in Seattle recently and have been somewhat active over the past year or two. As you go forward and look at the different opportunities that are out there, can you discuss, and I know you have talked about before, the different criteria for what makes something attractive to Simon, but to what extent you might be interested in a portfolio and say there is X amount of properties in the portfolio? Would you say that each one would have to kind of stand on its own with those criteria, or might you consider a portfolio where you would kind of go for the whole thing even if some were not that great on their own?
Thanks, Caitlin. I would say we are not going to buy for buying's sake. To me, buying a portfolio to get a few good things but take some things that you might not want, to me, that is buying for buying's sake, and that is really not in our plan right now. Our plan, to the extent we are active in the acquisition market, which, as you said, we have been in the last couple years. Obviously, we bought Brickell last year, which has been a phenomenal story for us. We bought Phillips Place, which will have some exciting news next year on building a multifamily building there with additional retail. We bought The Mall, two luxury outlets in Italy, where we are going to be expanding the one in Florence next year.
If you look at those transactions and obviously look at University Village, those are great assets that we want to own, that we want to own them forever. Buying a portfolio to get one or two of those assets but maybe take four, five, six of the assets that we don't feel that way, we feel good enough about the ability to grow internally with our redevelopment program, buy back stock, release, remerchandise our existing assets, and we'll run the business that way. When you look at the criteria, again, really good, well-located real estate where tenants want to be, where shoppers want to be, where we think our platform can add value to it at a fair price. If we can do that, we'll do transactions. If not, we have more than enough to do with our existing portfolio.
Which obviously has been very active on the development and redevelopment side.
The next question will come from Michael Griffin with Evercore ISI. Please go ahead.
Great, thanks. Eli, I'm curious if you can expand a bit on customer demand and sales patterns there. I mean, it seems like traffic continues to increase. Has this resulted in larger average ticket sizes, greater purchases? It seems that the demand is pretty broad-based, but I'm curious if there are any categories or price points that maybe are performing a little worse than you might have expected, or does it seem like it's full steam ahead as we head into the holidays? Thank you.
It's a great question. I would say generally speaking, that it is very broad-based. It is across platforms, across geographies, across categories that we have seen growth. That growth is, again, 4.9%. It's obviously impressive for the quarter, but I think what's more impressive is, if you recall in August, I said this is where we started to hit tougher comps last year. Our two-year stack, that's 7.2% growth, which is actually 80 basis points above the two-year stack in Q2. Really, growth is accelerating from a sales perspective. It's the same story that we talked about in the second quarter ath leisure, juniors brands, luxury, watches, jewelry.
One thing that is a nice story is we had actually the best quarter in three years in the restaurants in the third quarter, which that business has obviously been sort of flat-ish, I guess I would say, but we actually had a really nice growth story there. What we've seen is traffic is up and sales are up, and so it's hard for me to really say that people are buying more per person, people are buying bigger baskets, but I would say they are. Dwell time is up, they're going to more stores, and I think part of the reason they're going to more stores is we're adding more relevant stores at these centers.
We're adding great retailers, expanding national retailers that have been in our malls for a long time, complementing them with new brands that might be coming from overseas or coming from online, and are getting into our mall portfolio. We really haven't seen any slowdown. October traffic in line, just got this two hours ago, in line with the third quarter in sort of that mid 3% growth range. What we're hearing from the retailers is optimism for the holiday season, which is, as you know, is our Super Bowl, our time to shine. We're focused on getting these stores open and continue to add these new relevant retailers to our portfolio.
The next question will come from Vince Tibone with Green Street Advisors. Please go ahead.
Hi, good evening. I wanted to ask about how we should think about the buyback strategy going forward. I believe you have about $2 million shares left to repurchase to effectively offset the new shares issued as part of the Taubman deal. What I am really trying to get at is, after presumably you do a little bit more buyback related to the Taubman, do you see share repurchases being a big part of the capital allocation toolkit in the coming years? Or was the buybacks really just the desire to offset the Taubman deal, and once those shares are done, it is going to be more focused on redevelopment or other acquisitions or other capital uses?
First, Vince, it is actually about 450,000 shares left to buy back that $5 million and change shares we issued for Taubman. The way I think about it is, we love owning our assets, and if we can own more of them at a price that is attractive, we are going to do it. The reality is, we generate a significant amount of free cash flow after dividend and after capital. We are naturally deleveraging.
We are effectively sub 5x now. We see the embedded growth of that $1.2 billion development pipeline that is in the ground today, but we know there is the $4 billion of shadow pipeline plus behind it. I look at it and say, we are generating the free cash flow. It is a very good use of free cash flow. It does not preclude us from doing acquisitions. It does not preclude us from doing developments and redevelopments.
Do I think that we will continue a steady cadence on the buyback? I do. Obviously, we are going to evaluate market conditions. We are going to be thoughtful on it and not just do it to do it. But if we can do it accretively and do it with excess free cash, that is pretty interesting. I mean, if you think about it, the business is growing round numbers, $200 million or so a year. To stay at 5x, that is $1 billion of leverage. I mean, that is pretty powerful. Again, not saying we are going to add leverage to buy back stock, but this business is a powerful machine, and I think one of the uses of the free cash flow that we are generating should be to buy back our stock, because I look at it and say, "I would love to own more Sawgrass." Right?
Going through that leasing plan in detail yesterday, it is incredible. If we can own more of it, let us own more of it. We are not going to have any specific guidance around it besides, obviously, as you said, we will finish buying back the Taubman stake. But we will be thoughtful about it, and as Brian said, we bought back at $199 per share this year, which is, I think, pretty disciplined. We will see, but it would not surprise me if we continue to do more even after we buy back that remaining piece.
Your next question will come from Craig Mailman with Citi. Please go ahead.
Hey, guys. I'm just kind of curious. I know, Eli, you had said that the rate environment is fluctuating and there's not a lot of visibility, which feels like been the case for a while here. As you guys think about kind of the cost of capital or your normalized cost of capital to go or no-go on projects, I mean, you just spent time talking about the amount of free cash flow that you're throwing off and what leverage does if you kind of don't issue every year. I'm just kind of curious how disconnected your cost of capital is from the rate environment today, given how much free cash flow you throw off and how we should think about kind of that tie to the rate environment versus maybe some other companies that need to hit the capital markets to fund new investments.
It's a great question. I'd say, the cost of capital is still connected to the rate environment, I mean, just definitionally, I guess. When I think about our development pipeline or our development projects, and we had our capital committee meeting on Monday, a long meeting, which is good because there's a lot of projects. When I look at that, the first thing I look at every single time is there tenant demand? That's sort of the overarching principle. If there's no tenant demand, I don't really care where rates are and what hypothetical spread we can build to. We're just not going to do it. First and foremost is, do we have tenant demand? And the answer is yes.
When I look at building at our $1.2 billion pipeline, which is really $1.4 billion if you fast-forward to today, right? We added approved projects on Monday. That's a, I would say, 300 basis point spread, more, I guess, now with rates as they've moved in the past week or so.
Over a long time period, which is how we think about these developments, we're not merchant builders that are looking to flip, which you got to time it exactly right and say, "Okay, my 300 basis point spread, when I deliver it, and when I stabilize it, I'm going to hit X spread so I can make my 20% IRR." We look at it and say, "If I'm building to a 9% return and I'm going to own this forever, the cost of capital is important, of course, but that's a very healthy spread." A very healthy spread. Again, it goes back to the tenant demand. The projects that we're talking about, it's not just names on a page, it's signed leases. So we're really building with signed leases, with signed LOIs, and with depth behind those.
The other piece that I think is important is that these returns are only on the capital we are investing. If you look at a Brea, look at a Southdale, look at a Briarwood, those returns were great, but we've added at Southdale, I think it's something like 80 new tenants because of the transformational project we did. Brea, which is still not even fully opened, I think it fully opens in the next week or two with all the restaurants. We're going to change that whole inside of the mall, add capital for renovation, and then continue to add new tenants, and those tenants are comping up 10%, 12%. Those are the tenants that have already been here. The new tenants, they're going to be comping up not even till this time next year. So it's a good position to be in.
I think, yeah, the fact that we are building this from free cash flow, all cash, is 100% a competitive advantage. When the world turns, if we have the tenant demand and we like the math, we can still do it when others can't, which makes it even more valuable real estate when we're done. Again, as rates are high, we're incredibly disciplined on what we do. If they go down, we're incredibly disciplined on what we do. We look at every dollar, we look at every tenant, we look at every basis point. But where we are today, we have not changed really our viewpoint on this development pipeline because rates went up, I don't know, 50, 60 basis points from where they were this summer.
The next question will come from Haendel St. Juste with Mizuho. Please go ahead.
Hi there. Good evening. This is Ravi Vaidya on the line for Haendel. Hope you guys are doing well. How should we think about internal growth going forward at this point? Occupancy is at 96.5%. It seems it's near its all-time highs, and with maybe further upside seeming a bit light. Can you offer us color on the in-place rent bumps, and how does that compare to the leases you're assigning? Thanks.
I mean, the internal growth, obviously, again, I don't know if you consider it internal or not, is obviously the development and redevelopment is a big part of it, which I just talked about, the $1.2 billion, which is really a $1.4 billion, with the $4 billion pipeline behind it. That's earning a 9% return, so that's $450 million of incremental EBITDA. That's pretty good. That's a big part of it. But if you exclude that, our job is to continue to re-merchandise these centers, and that's not a, we get to 100% and we stop, okay? Our foot's on the gas always. We don't say, "Okay, we only have X number of leases to sign and then we're done." That's not how we operate.
We say, "Okay, how can we be better?" If you go to SouthPark, if you go to Boca, these centers have had incredible growth coming out of COVID the last four or five years. When we went through our budgets meetings last week, it wasn't, "Okay, we did a great job," which we did, and the team did a great job. It's what's next. What's next is continuing to re-merchandise, add more productive tenants. If you look at it, we're signing new deals today at $78 a foot, and last year it was at $65 a foot. As tenants become more productive, and we can bring in more productive tenants to the center, they can pay more rent, and NOI grows.
Yes, we get rent bumps, yes, we get renewals that are in, call it, the mid-single digit return, mid-single digit growth. But for us, our business is to continue to add the right tenants that can add to the center, and we're going to continue to do that, and we'll continue to redevelop appropriately on many of these centers as well over the number of years ahead.
The next question will come from Michael Mueller with JP Morgan. Please go ahead.
Yeah. Hi. Thanks. Can you give us a sense as to, for Sagefield, what the cost is, and what sort of yield are you expecting to achieve with that? And just one last one to tack onto it, just what sort of pre-leasing levels did you need to see to pull the trigger on it to start it?
Yeah. I would say, right now, don't feel comfortable saying the cost. The yield's the same, in line with all the other stuff we're doing. The pre-lease, it's less a specific number. It's more art than science. We don't have a number that approves deals. It's a number and the names of certain tenants. We want to have certain tenants that we think are really important. It's where the conversations are with the other tenants, what's the LOI, how deep is the pool behind those tenants. It's definitely more art than science, but it is going to be very, very exciting. We're honestly ecstatic about it. It's going to be like something that we have not built before. You'll see some renderings, I think, when we do our groundbreaking next week. But it's an awesome market.
It's the path of growth, and the tenant demand has been really strong. We're excited, and hopefully excited for everyone to come see it in a couple years' time.
The next question will come from Alexander Goldfarb with Piper Sandler. Please go ahead.
Hey. Good evening out there. Eli, I think you mentioned the new program called One Simon, if I have that correctly. It sort of combines all the brands. But bigger topic is, I've asked you this about the Simon Brand Ventures and increasing the ancillary income, but as social media, AI, and everything accelerates at a pretty incredible clip, how is it that you guys think about trying to monetize more of the way that people interact with the malls versus, obviously, your retailers, they are doing the same thing. Everyone has their own social media, everyone has their own AI. Now you have AI agents that go shopping for you, who find the best deals.
How do you guys look at this so that, one, you can sort of maximize the revenue that you have, but two, that you are not sort of competing with your customers, who are your tenants?
Sure. Thanks, Alex. First, the campaign, It's a Simon Thing. I encourage you guys to look at it on our social media channels. It is a very good campaign, been very well received, and it is exciting. When I think about our ancillary business, to me, I think there is a tremendous opportunity here. When we went through these budget meetings on these properties the last two weeks, what we have seen is that I think we are just scratching the surface. I do not think it is really cannibalization with our retailers. It is complementary for them. What they want is they want footsteps in their doors, and our job is to bring footsteps to the mall. Then there is now an ability, we think, to even drive a specific footfall to these tenant stores.
That is a combination of our digital presence, it is a combination of our database, it is a combination of our physical presence at the malls, and at our Premium Outlets, and at our Mills properties. It is a pretty exciting time. It is early days, obviously, with the Simon Media Network that literally we launched, or signed, I should say, some of our first contracts in the last week or so. It really is complementary to the retailers, because at the end of the day, everybody wants more traffic and everybody wants more sales, and that helps everybody. We are on the same team. We view our retailers as partners, and we think we have a mousetrap now, not just obviously in the physical footprint in terms of a mall, but in our digital channels and our databases to help drive traffic to their stores.
Then the other thing is, obviously, we think that is an incredibly interesting mousetrap, so to speak, for non-retailers too, for companies in the travel space, for companies in the financial services space, and in the hospitality space, who look at it and say, "We have the most well-qualified customers because they are here to shop and to spend." So we are having conversations not just with our tenants, but with also brands and companies outside of our retail ecosystem. So, it is exciting, it is growing, and hopefully it is growing significantly more in the years to come.
Your next question will come from Ron Kamdem with Morgan Stanley. Please go ahead.
Hey, great. Just a quick one from me. I think you talked about the strength in sales from the retailer side. I guess I was just wondering, is there any difference between either the full price and the off-price, and how sort of the tourist destinations, tourist centers are performing, if that is all consistent? Then my second follow-up, if I may, is, when you think about these sales numbers, when you are having conversations with retailers about store opening plans, does it seem more rational this time around? Because we have gone through this cycle where there has been some overbuilding. Just curious any color on that as well. Thanks.
On the first part, I would say the malls have outperformed the outlets just a little bit. I think that's honestly less the fact that it's a mall or an outlet, but more of some of the higher growth categories, specifically luxury watches, for example, are just not in the outlets. I don't really read too much into that. The junior brands are similar in both. The athleisure brands are growing in both. Men's and women's apparel are growing in both. It's just there's a few categories and a few tenants that are just in the malls that are not in the outlets. I wouldn't read too much into that. All three platforms have been growing each quarter this year. On the tourism side, I think it's a couple of things.
Clearly, Florida remains incredibly strong, and that's not just Miami, but that's Tampa, Orlando, incredibly strong. I would say Woodbury, which relies obviously on a good chunk of international tourism, has been okay. It's growing. It's less than it historically has been. It's still an incredible asset, and the growth is incredible. I think there's just a few idiosyncratic things there about certain customers coming into the U.S. that just aren't right now. That's really the only one of note. I would say the border is growing again. Both the Canadian border and the Mexican border assets and the U.S. side of it are growing, maybe a little bit lower than the portfolio overall, which again, those are more outlets than malls, and that again, kind of skews that outlet versus mall number.
Even Vegas, which is interesting, which sort of had a little bit of a lull at the beginning part of the year, we've seen real growth there, not just at Crystals and The Forum, but even Las Vegas North Premium Outlets had a great quarter. It's really all positive. Again, I'd like Woodbury to grow a bit more than it has, like the border assets to grow a bit more than they are, but it's overall no other real weak spots in growth. As far as the stores, I mean, listen, tenant demand is very strong, and that demand is broad-based. It is the national retailers that have been in our centers, in our portfolio for a number of years. It's new emerging brands, it's restaurants, it's the best local and regional operators.
When we look at it, the demand is strong, and I think they are realizing that you have to have stores at the best centers to grow a business. E-commerce is great, but without stores to control your brand presence, to control your distribution, direct-to-consumer distribution in the physical world, it's hard to really be a successful modern brand today. I think that's led to this pipeline that is up 30% year-over-year, but the national retailers that have been in our portfolio for decades, that group, it's up 40%. What they're seeing is that we need to open stores, and we need to open stores throughout the portfolio in the best centers, and with a landlord that they can trust, who's going to reinvest into their space, into their center, and bring traffic.
I think it's all good news from the leasing perspective.
Your next question will come from Juan Sanabria with BMO Capital Markets. Please go ahead.
Hi, thanks for the time. Good evening. Just wanted to The 30% number you talked about, was that the leasing pipeline that is up year-over-year?
Yep, correct.
My actual question. Thank you. My actual question is, we've seen some of the kind of high-end boutique retailers like Hermès move to non-traditional locations, like smaller outdoor shopping centers or lifestyle centers. Curious on how Simon and its various formats plays into that strategy, or if it's maybe a detriment to the traditional setting that they would look to be in, thinking enclosed malls, and kind of how you're trying to be part of the solution for retailers like Hermès.
Yeah, so obviously not going to talk about any specific retailer, but I would say we have great relationships with all the luxury retailers, and we are actively talking about adding space, expanding an existing footprint, and adding at different centers throughout the portfolio. So, there's always opportunities, or sorry, there's always options for retailers to locate. That's what makes this business fun and this business competitive, is there's always places for retailers to go. It's our job to create the best physical product and bring the best qualified traffic where they're going to do the most volume. And sometimes that will be with us, other times it's not, which is perfectly fine with us, and we'll make sure that we have the right retail mix for each and every property. And so, our luxury business remains very robust.
We have great relationships with all of the luxury retailers, and so we look at it and say, if they choose to go somewhere else, that is perfectly fine with us, and we hope they do great business there, and we will keep on doing what we're doing on our assets and worry about how we continue to make our assets better.
The next question will come from Floris van Dijkum with Ladenburg. Please go ahead.
Thanks, guys. Just curious on one of these questions on growth, and clearly you have a lot of contractual growth. Could you remind us again where your SNO pipeline stands today? I think it was 310 basis points last quarter. How much of that SNO pipeline is tied to your transformational developments and redevelopments? Maybe touch on, not just that capital that's being spent that obviously gets a return of, you say around 9%, probably a little bit higher than that, but also, what does that do to each property's tenant sales and potential cap rate compression? How much value, presumably you're creating a lot more value than simply the return on capital.
Floris, it's Brian. SNO is 290 basis points at the end of the quarter. We're not going to go into the varying pieces and parts to it. It is what it is. It encapsulates the entirety of the business and where we sit. The rest of your questions are just kind of speculation, so it's not hard facts. We're very pleased with our investments. We believe we create material value for shareholders through this investment funded with our free cash flow and would expect that we will continue to do so.
Yeah, I would say, cap rate compression matters if you're going to sell, right? When we do what we did at Brea, we're not selling. Do I think it's worth a lot more? 100%. It doesn't really matter what I think, because we're not going to sell it, and we're not going to go take it to the market to see what people will bid. I would say high level, if our sales grew at 4.9% for the quarter, those few transformational projects, they grew at double digit for the quarter. It's an exciting time to be reinvesting into high-quality retail real estate.
We like the cash flow profile coming off of it because we're funding it with free cash flow, Floris. Ultimately, you asked about cap rate, but for us, it's about cash flow growth. That's what we're focusing on.
The next question will come from Rich Hightower with Barclays. Please go ahead. Mr. Hightower, your line is open.
Oh, hey guys. Sorry, I was on mute. Can you hear me?
Yep, we can hear you.
Okay, great. Yeah, good evening. Brian, one for you, if you don't mind. Obviously, you guys chopped a lot of wood balance sheet-wise during the quarter, made some really good progress on the remaining 2026 maturities and even into 2027. But there still remains some remaining 2026 maturities as I kind of look at things as of 9/30. Just wondering what the plan is there, and how do you think about the I don't know if it's a trade-off or just how do you think about that balance between extending maturity and sort of optimizing coupon as you think about those moves?
Sure, Rich. Great question. Thank you. Balance of the year, really on the unsecured, we have a maturity, a $750 million maturity that we pre-funded earlier in September, so that will get repaid with existing cash on hand. There's a small stub remaining of the Klépierre exchangeable as well, about $38 million that will get addressed via cash. The rest of that balance is outstanding commercial paper, which we will continue to roll in the front end of the market. The secured side, we are actively. We've paid off two mortgages subsequent to the end of the quarter, that addressed two, and then we have actively refinanced two of the other maturities for the balance of the year. We will simply continue to roll the majority of our debt balances.
As we get into next year, certainly on the unsecured side, there's about $2 billion maturing. We would expect to put that back into the unsecured market. I think you're going to see us take a little bit of a barbell approach. Probably use the front end of the curve a little bit more in the commercial paper, but also issue in the 5, 10, and 30-year part of the unsecured market. We like the unsecured market. We've got a competitive advantage relative to secured debt, and so I would expect that some of our maturing secured debt next year is repaid and unencumbered with unsecured borrowing. We also have the opportunity to fund ourselves internationally where there's advantage rates, Europe and in Japan.
I do think you'll see us take advantage of a little bit more of that next year to continue to bring down our overall cost of financing, but also to further hedge our equity positions in those respective jurisdictions.
Great. Thank you.
The next question—
Sure. Thank you, Daniel.
The next question will come from Linda Tsai with Truist. Please go ahead.
Thanks. On initial base minimum rent per sq ft on new deals being up 17% year-over-year, but tenant allowance per sq ft down 10%, is this because there is less space available, so you have more negotiating leverage with tenants? So you are achieving higher rents and investing less capital per deal. Then how do you think about the sustainability of this trend?
Sure. I would never say we have any negotiating leverage. Tenants are free to come to our centers, go to other centers, go to the street, go to shopping centers, strip centers, stay online. I would never say we have any negotiating leverage. With regards to the trends, I mean, listen, the reality is the tenants want to locate in well-located centers where the landlord invests capital, and the deals we strike are the deals we strike, and we look at it and there is a lot of demand. There's a lot of demand from a lot of different tenants. A lot of tenants want to get bigger in place. A lot of tenants want to come into these shopping centers.
Our job is to choose the right merchandise mix for each center, but we are not hearing anything that would indicate that the demand from existing and from new tenants is slowing in any way, shape, or form. Honestly, it's increasing. Our job is to go space- by- space and determine what's the right tenant and the right cost and the right rent and the right capital cost for each tenant, which we do, and we signed, what? I forgot, 1,000 leases last quarter?
1,200.
1,200 leases. It's a lot, right? That's 1,200 individual negotiations, and what spits out are those stats, but they're obviously pretty good. But really what we're focused on is growing free cash flow over time, and that's just obviously a piece of it.
Your next question will come from Greg McGinniss with Scotiabank. Please go ahead.
Hello, this is Victor Fediv on with Greg. Do you see international becoming a bigger part of your growth strategy within the next couple of years, and where would you like to add scale? As you think about where to deploy capital overall, how do the returns and ability to push rents internationally compare with the U.S.?
I would say, do I think internationally becomes a significantly bigger part? Probably not. We love what we have internationally with obviously the outlets across Canada, Mexico, Europe, Asia. We obviously love our stake with Klépierre. That management team is fantastic. They're doing an incredible job. But as we saw when we acquired The Mall assets in Italy from Kering in January last year, if there's opportunities that make sense, of course, we'll transact. There's no set plan of I want to go more in this country or this geographic region. It's really, if there's an opportunity, we evaluate opportunities across the world every day. We look at expansions in Japan, in Malaysia, for example, the existing assets. We look at a new ground-up development in Korea on the outlet side.
It's not a focus to go and say, "Expand internationally," but if there's opportunity, of course, we'll do it if we think it makes sense for the company.
Thank you.
This concludes our question- and- answer session. I would like to turn the conference back over to Mr. Eli Simon for any closing remarks. Please go ahead.
Thank you all for your questions, and we look forward to seeing many of you soon in Atlanta in a few weeks. Thanks.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.