SIMON PROPERTY GROUP INC. Q1 FY2025 earnings call

• Completed acquisition of The Mall Luxury Outlets in Florence and Sanremo, Italy and opened first outlet in Jakarta, Indonesia. - Development projects underway with share of net cost $944 million to a blended yield of 9%, expecting to begin construction on additional projects like residential development at Brea Mall, etc. - Completed 12 secured loan transactions totaling approximately $2.6 billion in first quarter, with weighted average interest rate 5.73%, net-debt to EBITDA 5.2 times, fixed charge coverage ratio 4.6 times. - Announced dividend of $2.10 per share for the second quarter, a year-over-year increase of $0.10 or 5%.

Real estate FFO was $2.95 per share in the first quarter compared to $2.91 in the prior year. Domestic and international operations contributed $0.14 of growth driven by a 5% increase in lease income. First quarter funds from operation were $1.0 billion or $2.67 per share compared to $1.33 billion or $3.56 per share last year. Malls and Premium outlet occupancy at the end-of-the quarter was 95.9%, an increase of 40 basis points compared to the prior year. Mills occupancy was 98.4%, an increase of 70 basis points compared to the prior year. Average base minimum rents for the malls and outlets increased 2.4% year-over-year and the mills increased 3.9%. Domestic NOI increased 3.4% year-over-year for the quarter and portfolio NOI, which includes international properties at constant-currency grew 3.6% for the quarter.

• Reaffirming full year 2025 real estate FFO guidance range of $12.40 to $12.65 per share. - Expect results to trend towards the middle of the range given current macroeconomic and tariff uncertainty potentially impacting retailer sales.

• Tariff uncertainty affecting a few deals from one European retailer, with some retailers still concerned about import costs from China even with recent reductions, affecting inventory levels and sourcing. - Uncertainty regarding China supply chain reliance for retailers, with 30% tariffs still material for those relying on China imports. - Potential impact on local mom and pop retailers if economic uncertainty and tariffs don't stabilize. - Uncertainty in predicting sales for certain retailers like those in Catalyst Brands due to tariff and economic factors.

Q: Steve Sakwa asked about the tariff situation's impact on leasing and sales projection.

A: Only four deals affected from one European retailer, but other demand not affected much. Projecting sales is difficult due to China tariff uncertainty, with retailers holding or sourcing goods elsewhere.

Q: Craig Mailman asked about inventory, traffic, and de-minimis rule.

A: Retailers have a month or so to decide China inventory for Q4. Traffic holding up, Easter in different quarter affected sales. De-minimis rule benefits American-based companies and may help retailers.

Q: Samir Khanal asked about how tenants are dealing with uncertainty.

A: Business as usual mostly, but local mom and pop retailers may be at risk if uncertainty continues.

Q: Michael Goldsmith asked about Forever 21 boxes leasing.

A: Over half leased, demand good, replacing rent, with rents expected to at least double.

Q: Alexander Goldfarb asked about consumer, inventory, and tourism.

A: Consumer fine but cautious, sales flat through end of March, tourism to US may be cautious.

Q: Caitlin Burrows asked about OPI and Catalyst brands.

A: OPI had improvement, Catalyst brands had quarter-over-quarter improvement, Brooks Brothers doing great, expecting Catalyst to have positive EBITDA this year.

Q: Greg McGinniss asked about capital plans.

A: More cautious currently, but still advancing projects thoughtfully, starting about $500 million of projects.

Q: Floris van Dijkum asked about SNO pipeline.

A: About 300 basis points today, spending about 300 basis points, back half of year to see 30%-40% of it, including Forever 21 spaces.

Q: Vince Tibone asked about department store closures.

A: Depends on department store, no major changes seen currently.

Q: Michael Mueller asked about sales NOI-weighted and development.

A: Sales would be up on NOI-weighted basis, development starts $500 million is share.

Q: Ronald Kamdem asked about guidance assumptions.

A: No change in assumptions like interest income, interest expense, etc.

Q: Ravi Vaidya asked about luxury tenants.

A: No major change in leasing demand from luxury tenants, brand specific.

Q: Linda Tsai asked about pull-forward demand.

A: Possible for pull-forward demand in 3Q if consumers shop earlier for holiday season.

Q: Omotayo Okusanya asked about debt refinancing.

A: Lenders comfortable with asset class, rolling over debt, not looking for incremental capital.