Simon Property Ends 2024 With Healthy Earnings, Doesn’t Fret Over Trump Tariffs

Simon Property Group expressed few concerns as it rounded out 2024 with a total of $4.9 billion in funds from operations from the fourth quarter alone.

About $4.6 billion of that was generated from leasing and sales in its malls so it could divvy out $3 billion to shareholders, David Simon of Simon Property Group said in an earnings call Tuesday. Simon said the revenue was proof retail centers have made a slow but strong return from the pandemic lows.

And even with President Donald Trump threatening to levy tariffs on imports from other countries, Simon doesn’t seem too concerned, since the company has less exposure to tariffs in its tenant base. However, that may change as Simon is rapidly expanding in distant lands.

“This year, we will open our first premium outlets in Jakarta, Indonesia, in March and are expected to begin construction on four to five mixed-use projects,” Simon Chief Financial Officer Brian McDade said during the call. “We expect to fund these projects with our internally generated cash flow of over $1.5 billion after our dividend payments.”

Simon said that it had also broken leasing, occupancy and sales records for the last eight years, so it has only a moderate sense of caution considering the evolving tariff situations involving the U.S., China, Mexico and Canada.

How the tariffs, which are on hold for the most part as negotiations between the four nations continue, will impact business depends on the retailer, with Simon naming Catalyst Brands, a major tenant that now includes JCPenney, as an example.

“They only source 20 percent of their goods from China, and when we talked to Catalyst, their view of it, with respect to China, is that they’ll pass some of it on to the consumer, but also hope the supplier tightens up the cost of goods sold,” Simon said. “Many, many retailers have moved their production out of China over the last several years. The good news is, where we had the most exposure was shoes … but we disposed of the Reebok operating business [with the sale of a stake in Authentic Brands Group].”

Simon signed 1,500 deals across 6.1 million square feet over the last quarter and ended 2024 with 5,500 leases signed across 21 million square feet, of which 25 percent were new tenants.

Simon is also expanding its overseas holdings, namely with the acquisition of The Mall Luxury Outlets, two separate assets in Leccio, near Florence, Italy, and in Sanremo, on the Italian Riviera. Both were purchased from Kering. 

The sale generated about $364 million for Kering, the parent company of Gucci, Saint Laurent, Bottega Veneta, Balenciaga and Alexander McQueen.

In less exotic locales, Simon opened an outlet center in Tulsa, Okla., in the fourth quarter, one of 16 projects that wrapped up in 2024.

Mark Hallum can be reached at mhallum@commercialobserver.com.