Simon Raises 2026 Expectations as Leasing, Development Pipeline Accelerate

Simon Property Group’s second quarter offered more evidence that the nation’s largest mall owner is carrying its post-pandemic run into the second half of 2026.

The real estate investment trust said Monday that its quarterly revenue, funds from operations (FFO) and tenant sales are all climbing while the company’s leaders raised its full-year outlook again.

“Clearly, malls, retail centers at large are having a cultural moment,” CEO Eli Simon said. “People realize that they’re not going away. Young people want to hang out here.”

The Indianapolis-based company generated $1.79 billion in second-quarter revenue, up 19.5 percent from $1.50 billion during the same period last year and 1.9 percent from $1.76 billion in the first quarter. Consolidated net income, meanwhile, reached $574.1 million, up about 1 percent from $568.5 million in the first quarter, but down 10.8 percent from $643.7 million a year earlier.

Net income attributable to common stockholders was $483.1 million, or $1.49 per diluted share, compared with $556.1 million, or $1.70 per share, a year ago. (Last year’s second quarter included a noncash after-tax investment gain worth 21 cents per share.)

Simon reported $1.18 billion in overall FFO, compared with $1.11 billion in the first quarter and $1.19 billion in the second quarter of 2025. Real estate FFO increased to $1.25 billion, up from $1.21 billion in the first quarter and $1.15 billion a year earlier.

The performance prompted Simon to raise its outlook for the annual real estate FFO to between $13.20 and $13.30 per share, up by 8 cents. 

Leasing was particularly strong. Simon signed more than 1,200 leases encompassing more than 4.8 million square feet during the quarter, while the number of new deals increased more than 20 percent year-over-year. New leases accounted for about 28 percent of leases through the first half of the year, and initial base rents on new deals increased 17 percent from last year, while tenant allowances declined 12 percent. 

Simon also said it has already completed more than 87 percent of its 2026 lease expirations.

Occupancy at Simon’s U.S. malls and premium outlets remained 96 percent, unchanged from both the first quarter and a year ago. Base minimum rent increased 6.3 percent since last year to $62.42 per square foot, while trailing 12-month retailer sales jumped 13.9 percent to $838 per square foot.

Simon also took on about 1 million square feet of bankruptcy-related space during the quarter, largely from Saks Off 5th. However, the firm’s CEO said the company has already re-leased about half of that space and expects to eventually increase annual rents from the returned boxes from roughly $18 million to $44 million, with most of that upside beginning in 2027.

“We got back where we are,” Simon told analysts during the firm’s earnings call Monday. “I don’t think we’d ever be at 100 percent. We wouldn’t want to be. We want the ability to move around.”

Simon is also putting considerably more capital into its properties. The REIT ended the quarter with $1.07 billion of development and redevelopment projects underway, with roughly half of the investment devoted to mixed-use projects. More than $600 million of additional projects are expected to begin construction during the second half, while the broader development pipeline now is more than $4 billion.

Simon pipeline includes former Sears site at Town Center at Boca Raton in South Florida, where the company wants to build a 374-unit apartment building, 197-room hotel, nearly 160,000 square feet of new retail and a parking garage.

Simon said domestic property NOI increased 8.5 percent since last year, while total portfolio NOI rose 8.3 percent. Looking further ahead, the company is also planning enough new restaurant openings through its development pipeline to generate an estimated $400 million to $500 million in additional restaurant sales.

The company closed June with approximately $9.3 billion of liquidity, including $1.7 billion of cash.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.