Simon Property Group 4Q15 Earnings Call Notes

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Simon Property Group’s (SPG) CEO David Simon on Q4 2015 Results

Traffic at our malls was flat for the year

“I know you’ve all heard about mall traffic decreases. But let me give you some facts based on our internal data across the largest retail portfolio in the U.S. and not just estimates derived from arbitrary algorithms. Traffic at our Malls was flat for the year including the Holiday season, traffic at our Premium Outlets increased 1.5% for the year and more than 2% for the holidays, and traffic at the Mills increased slightly for the year as well.”

Consumers are going to the store more educated, doing less browsing

“So remember we get the overall traffic number and yet most of the folks that quote — most of the folks that quote numbers are based on algorithms, so it’s not real necessarily data like we have, and number two, is it is derived from certain stores. So it doesn’t, it necessarily equate the mall traffic and it gives you store data but not mall traffic data and that’s the distinction that I really important to make. And I will tell you the trend though with mobile technology is that the consumer today clearly is going to the physical environment more educated, they’re doing less browsing and they’re going to less stores.”

We are out of the big deal business

“Well, look, I think what Bilerman said earlier, asked earlier, I mean we are out of the big deal business. So people can speculate all they want. And I do think the market should understand and as our plan that we will be conservative on buybacks. As some of the higher — I understand Tom that some of the higher estimates out there on first call were due to the buyback number. So that’s part of the issue there.’

The second half of 2015 was a perfect storm for wounded retailers

“we did experience in ’15 a number of bankruptcies of kind of the really poor performing retailers. There was clearly a slowdown in retail sales in the back half of the year. And then when you couple that with the tourism issue, you couple that with the normal weather, I mean it was so to speak a perfect storm, and it took a lot of retailers out.”

Rick Sokolov

Able to release space from bankrupt tenants at reasonable cost

“Hi. This is Rick. In fact, we were doing very well with that releasing. What we are going to do is we are not going to put our space on sale, we are holding margins. In fact, the rents for foot of the space that has to lease are above the rents of the tenants that left because of bankruptcy and we’re making sure that we are getting in the right tenants at the right price, at the right space. So we’re on track with that, and there you’ll continue to see the benefit of that coming into this year as more of those leases open.”