Expectations for tenant credit and potential bankruptcies in the year ahead, especially concerning tariffs.

Tariffs are putting pressure on retailers, particularly smaller ones, and are a headwind for 2026. While the budget was set before recent bankruptcies, the company is slightly more cautious, attributing most pressure to tariffs. “tariffs are clearly having an effect on retailers. So it is definitely putting more pressure on them... it's going to end up hurting the small guys. So we're a little more cautious.”

Whether ancillary revenues and economic growth will offset tariff disruptions, given the conservative guidance.

David Simon agrees with the thesis, noting that traffic and sales are up. Bankruptcies are typically from less productive retailers, which Simon can replace with higher-rent tenants. He is bullish on the economy and expects Simon+ and high-end retail additions to drive momentum. “The most important thing is traffic is up, sales were up. The retailers that don't make it, even though I could sit here and blame tariffs, they're not highly productive retailers. And given that it's our view that we can replace it with more productive retailers at higher rents.”

What could lead to outperformance or underperformance relative to the FY26 FFO guidance, especially with unexpected bankruptcies.

Brian McDade states the company starts conservatively and builds throughout the year, with potential upside from ancillary businesses, leasing, and sales. David Simon specifically points to tenant sales growth as a significant upside driver, budgeting flat-ish sales but hoping for 3% growth. “sales to me, could be significant upside. We -- because you probably know we budget ourselves flat-ish. And so we hit 3% growth, I would hope to be our estimate. And to me, yes, we'll have bankruptcies... But if we get the tenant sales growth that we hope to get, yes, then we'll do better.”

SPG

Simon Property Group (SPG) Q4 FY25 earnings call: guidance and Q&A

Earnings call· Dec 2025 (Q4 FY25)· Real Estate· Feb 2, 2026

Source: earnings call transcript

Executive summary

Simon Property Group Q4 FY25 – Strong Performance and Strategic Acquisitions

Simon Property Group delivered strong Q4 FY25 results, driven by robust leasing, strategic acquisitions, and significant redevelopment activity. The company achieved record FFO and increased its dividend, reflecting solid fundamentals and accelerating shopper traffic. While facing headwinds from tariffs and higher interest expenses, management remains bullish on the economy and the company's ability to enhance asset quality and drive future growth.

Highlights

Reported record real estate FFO of $4.8 billion or $12.73 per share for FY25.
Acquired $2 billion of high-quality retail properties in 2025.
Completed over 20 major redevelopment projects and opened a new premium outlet in Indonesia.
Domestic property NOI growth was strong, increasing 4.8% year-over-year for Q4 and 4.4% for FY25.
Increased the Q1 dividend by 4.8% to $2.20 per share.

Concerns

Lower interest income and higher interest expense combined resulted in a $0.07 drag on FFO in Q4.
Tariffs are putting pressure on retailers, potentially leading to more bankruptcies, especially for smaller players.
The addition of TRG assets reduced occupancy by 20 basis points for Malls/Premium Outlets and 30 basis points for Mills.

Guidance & targets

Category	Target	Timeline	Confidence
Real estate FFO per share	$13 to $13.25 high materiality	FY26	High
Domestic property NOI growth	at least 3% high materiality	FY26	High
Net interest expense	$0.25 to $0.30 per share versus 2025 medium materiality	FY26	High

SPG operating KPIs by quarter

SPG operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	This call Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Square feet Leases signed	6.1M sq ft We signed more than 1,500 leases for 6.1 million square feet in the quarter. Source: earnings call transcript	5.1M sq ft+ We signed 1,300 leases for more than 5.1 million square feet in the quarter. Source: earnings call transcript	3.6M sq ft+ We signed approximately 1,000 leases for more than 3.6 million square feet in the quarter, with approximately 30% of our leasing activity for the quarter on new deals. Source: earnings call transcript	~4M sq ft Retailer demand remains strong as we signed over 1,000 leases totaling approximately 4 million square feet during the quarter. Source: earnings call transcript	4.4M sq ft+ We signed more than 1,300 leases totaling over 4.4 million square feet during the quarter and over 4,600 leases for more than 17 million square feet for the year. Source: earnings call transcript	4.7M sq ft+ During the first quarter, we signed more than 1,100 leases totaling over 4.7 million square feet. Source: earnings call transcript	4.8M sq ft+ During the second quarter, we signed more than 1,200 leases totaling over 4.8 million square feet. Source: earnings call transcript	—
Occupancy rate Malls and Premium Outlets	96.5% Malls and outlet occupancy at the end of the fourth quarter was 96.5%, an increase of 70 basis points compared to the prior year. Source: earnings call transcript	95.9% 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. Source: earnings call transcript	96% The Malls and Premium Outlets ended the second quarter at 96.0% occupancy, up 10 basis points sequentially and 40 basis points year-over-year. Source: earnings call transcript	96.4% The Malls and Premium Outlets ended the third quarter at 96.4% occupancy, an increase of 40 basis points sequentially and 20 basis points year-over-year. Source: earnings call transcript	96.4% Malls and Premium Outlets ended the year at 96.4%. Source: earnings call transcript	96% Malls and Premium Outlet occupancy at the end of the first quarter was 96%, an increase of 10 basis points year-over-year. Source: earnings call transcript	96% Malls and Premium Outlets occupancy at the end of the second quarter was 96%, flat compared to the first quarter and year-over-year, a result that reflects the depth of retail demand as we absorbed approximately 1 million square feet of retailer bankruptcy-related space returned during the quarter and successfully relet. Source: earnings call transcript	0 pt
Occupancy rate The Mills	98.8% The Mills occupancy was 98.8%, an increase of 1% and is at a record level. Source: earnings call transcript	98.4% The mills occupancy was 98.4%, an increase of 70 basis points compared to the prior year. Source: earnings call transcript	99.3% The Mills achieved a record 99.3% occupancy, an increase of 90 basis points sequentially and 110 basis points from the prior year. Source: earnings call transcript	99.4% The Mills achieved a 99.4% occupancy, an increase of 10 basis points sequentially and 80 basis points from the prior year. Source: earnings call transcript	99.2% Occupancy in the Mills ended at 99.2%. Source: earnings call transcript	99.2% The Mills occupancy was 99.2%, an increase of 80 basis points year-over-year. Source: earnings call transcript	98.8% The Mills occupancy was 98.8%. Source: earnings call transcript	-0.4 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Development pipeline $4 billion year-end

exceeds prior

Pipeline of new development and redevelopment opportunities.

Deals & partnerships

The Mall (Italy) acquisition

Acquired 2 well-known luxury outlet centers in Italy as part of $2 billion in acquisitions.

Brickell City Centre acquisition

Acquired partners' interest in a premier mixed-use property in Miami's rapidly growing central business district as part of $2 billion in acquisitions.

Taubman Realty Group acquisition

Acquired the remaining 12% interest not previously owned as part of $2 billion in acquisitions.

Phillips Place acquisition

Acquired a high productivity open air retail center in Charlotte with significant upside from remerchandising and densification as part of $2 billion in acquisitions.

Saks Global investment $100 million

Investment made as part of Saks Global's funding for buying Neiman Marcus.

Capital programs

Development pipeline (Simon share) underway

Spent to date: $1.5 billion

Benefit:blended yield of 9%, 45% mixed-use projects

Net cost of developments across all platforms at year-end. The total pipeline exceeds $4 billion.

Boca Town Center redevelopment underway $500 million

Benefit:mixed-use and more retail space

Potential development value after winning litigation and acquiring the building from Seritage.

Risks & headwinds

Tariff pressure on retailers full impact will really be '26

putting more pressure on them

Mitigation:retailers managing it the best they can; potential Supreme Court ruling could be a small victory

Unexpected bankruptcies beginning of '26

some bankruptcies in there that surfaced at the beginning of '26

Mitigation:ability to replace less productive tenants with more productive retailers at higher rents

Higher net interest expense FY26

$0.25 to $0.30 per share versus 2025

Occupancy reduction from TRG assets year-end

20 basis points from malls and Premium Outlets and 30 basis points for the Mills

Mitigation:expect to drive higher occupancy at these assets as we execute on our leasing strategy

Policy survival odds (Supreme Court ruling on tariffs)

25% to 32% in favor of policy survival

Q&A highlights

Details on new and renewal lease rents, and comparison of current pipeline/demand to a year ago.

New lease rents are approximately $65 per square foot, expected to continue in 2026. The leasing pipeline is up 15% year-over-year, broad-based across categories, indicating increasing tenant demand.

“year-to-date, our pipeline is up about 15% over last year. And that's really broad-based across all categories. So no change in tenant demand, if anything, it's increasing.”

asked by Caitlin Burrows · answered by Eli Simon

2 min read 6 chapters

Detailed narrative

Strategic Acquisitions and Portfolio Enhancement

In 2025, Simon acquired a portfolio of high-quality retail properties totaling $2 billion, including The Mall in Italy, Brickell City Centre in Miami, the remaining 12% interest in Taubman Realty Group, and Phillips Place in Charlotte. These strategic acquisitions are expected to enhance the quality of Simon's portfolio and provide new growth opportunities through the company's expertise in leasing and property management.

The company plans to deploy its strong balance sheet to pursue further value creation across these properties.

Leasing Momentum and Tenant Demand

Simon demonstrated strong leasing performance, signing over 4,600 leases totaling more than 17 million square feet for the year, with approximately 30% of this volume representing new deals. Tenant demand remains robust, with the leasing pipeline increasing by about 15% year-over-year across all categories.

Average base minimum rents for Malls and Premium Outlets saw a 4.7% year-over-year increase, with TRG properties contributing 250 basis points to this growth.

Development and Redevelopment Pipeline

The company completed more than 20 significant redevelopment projects in 2025, including retail, experiential, hotel, and residential additions at various properties. Simon's share of the net cost of developments across all platforms totaled approximately $1.5 billion at year-end, with a blended yield of 9%.

The pipeline of new development and redevelopment opportunities continues to grow and now exceeds $4 billion, with notable projects scheduled for 2026 including Brea Mall and Northgate Station's residential phase.

Shareholder Returns and Financial Strength

In 2025, Simon returned approximately $3.5 billion in cash to shareholders through common stock repurchases and record cash dividends, bringing the total historical dividends paid to $48 billion. The company maintains a strong A-rated balance sheet with over $9 billion of liquidity at year-end and a net debt-to-EBITDA measure of 5.0x. This financial strength provides a distinct advantage for continued investment and shareholder distributions.

Saks Global Investment and REA Rights

Simon made a $100 million investment in Saks Global as part of their funding for buying Neiman Marcus. While the investment was written off at the end of Q4, Simon secured valuable rights, including the ability to terminate two leases, acquire two buildings, and build without REA approval across the entire portfolio with Saks, Neiman, and Off Fifth.

Additionally, Simon gained the right to convert the investment into IP ownership for Saks, Neiman, and Bergdorf.

Simon+ Loyalty Program Progress

The recently launched Simon+ loyalty program is in its early stages but has shown promising adoption from both customers and brands. The company is focused on increasing membership acquisition and engagement, having successfully executed a holiday activation that generated organic buzz and contributed to increased traffic. Plans for 2026 include adding new rewards, retailers, and partnering with other loyalty programs.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.