Simon Property Group Q2 Earnings Call Highlights

Simon Property Group reported accelerating second-quarter growth in domestic property net operating income and real estate funds from operations, citing continued tenant demand, higher lease income, acquisitions and solid retailer sales. Chief Executive Officer, President and Chief Operating Officer Eli Simon said domestic property NOI increased 8.5% year over year in the quarter, while real estate FFO rose 7.9%. He said shopper traffic accelerated and retailer sales continued to grow, supporting management’s view that its malls, Premium Outlets and other properties remain attractive destinations for consumers and tenants. The company signed more than 1,200 leases covering over 4.8 million square feet during the second quarter. New deals increased more than 20% from the prior-year period and represented about 28% of total leased square feet. Through the second quarter, initial base minimum rent per square foot on new leases rose 17% year over year, while tenant allowances per square foot for new leases declined 12%, according to Simon. The company had completed more than 87% of its 2026 lease expirations and was negotiating expirations scheduled for 2027 and 2028. Simon said the prospective-deal pipeline remained ahead of last year’s pace, with more than 100 additional deals and a 26% increase from the year-earlier period. He added that new leases signed year to date carried rents of roughly $78 per square foot, though he cautioned that lease renewals and tenant mix decisions mean expiring inline-shop rents cannot simply be compared with new-deal rates. Malls and Premium Outlets reported sales of $838 per square foot, up 13.9%. Total sales volume increased 6.6% over the trailing 12 months and 7.6% in the second quarter, while comparable sales grew 5.7% in the quarter. Simon said sales momentum was broad-based rather than concentrated in the company’s largest properties. Luxury, jewelry and watches remained strong, while brands targeting Gen Z consumers recorded 16 consecutive months of positive comparable sales. Restaurants trailed the broader portfolio, he said, while international travel patterns moderated growth at some outlet properties in markets including Las Vegas and Orlando. Chief Financial Officer Brian McDade said Malls and Premium Outlets occupancy ended the quarter at 96%, unchanged from both the prior quarter and the prior year. The Mills portfolio was 98.8% occupied. Average base minimum rent at Malls and Premium Outlets increased 6.3% from a year earlier, while average daily rent at The Mills increased 12.3%.