“Large retailers have long-term relationships with sophisticated supply chains and suppliers everywhere,” said David Simon, CEO of Simon Property.
As retailers across the country struggle to bring pedestrians back to brick and mortar stores this year, the country’s largest mall operator said they are more concerned about business owners on Main Street than the large national chain with hundreds of stores.
In a conference call with Wall Street Analysts after the market closed on May 12, Simon’s real estate chairman and CEO David Simon said that if trade uncertainty surrounding the US and China persists for several months, SMEs could face difficulties ahead.
“I think large retailers have a sophisticated supply chain and long-term relationships with suppliers everywhere. I think Main Street retailers, local moms and pops need to be a national focus,” Simon said, explaining that mall operators are leasing space to hundreds of small business owners across the country.
“I don’t think we’re going to see the problem,” he said.
As for the mall operator’s US and international operations, at over 191 million square feet, including 235 retail properties in North America, Europe and Asia, Simon told Wall Street analysts that Indiana Mall landlords are taking a cautious approach to future growth and acquisitions.
“Attention is the word of order now,” he said. “So if you’re looking at the development pipeline, it might not exceed this billion-dollar level for now, but the acquisitions are still on the table, but of course, it all depends on underwriting.”
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During a detailed exchange with Wall Street analysts, Simon has expressed that most leaseholders have not experienced a significant decline in sales or have not requested renegotiation or termination of rent contracts as to whether the current US trade war is affecting retailers, including large department store chains and anchor tenants.
“The tariff situation is idiosyncratic for that department store and has a large impact on whether they have a large private label,” said Simon, who owns, develops and leassssssss of mall properties in 37 states.
“I think the good news is that the mood is more certain and more stable,” he continued, saying that recent breakthroughs in the US and China will suspend mutual tariffs for 90 days. “So we are optimistic that this uncertainty resolves itself.”
For the three months ended March 31st, Indiana REIT reported net profit of $413.7 million ($1.27 per share) compared to net profit of $731.7 million, or $2.25 per share, for the same period last year. Total revenues rose from $1.44 billion to $1.47 billion, down 2% compared to the first quarter of 2024.
With adjusted funds from an operational (FFO) basis, Simon increased its first quarter profit by $1.1 billion, or $2.95 per share, or 1.8%, to increase its $1.09 billion, or $2.91 per share, in the same period last year. Wall Street was hoping that mall landlords would report adjusted FFO earnings of $2.90 per share against revenue of $1.34 billion.
Adjusted FFOs are financial metrics closely monitored in the REIT industry, as they require net profit and add items such as depreciation and amortization.
In the US, Simon reported that occupancy at malls and outlet locations increased to just 95.9% compared to 95.5% a year ago. Minimum rent per square foot increased 2.4% to $58.92 in the first three months of 2025, compared to $57.53 in the first quarter of 2024.
Based on these solid store metrics, Simon repeated its 2025 outlook from $12.40 to $12.65 per diluted share in the last quarter, based on adjusted FFOs.
In response to the company’s bright first-quarter revenue, Simon’s shares rose $173 from $1.56 in trading outside of business hours on May 12. The stock rose 5% to $171.44 that day. Over the past 52 weeks, Simon’s stock has been trading relatively flat, at a minimum of $136.37 and a high of $190.14.
