As retailers nationwide struggle to bring foot traffic back to brick-and-mortar stores this year, the nation’s largest mall operator said it is more concerned about Main Street business owners than larger national chains with hundreds of store locations.
During a conference call with Wall Street analysts after the market closed on May 12, Simon Property Chairman and CEO David Simon stated that if trade uncertainty surrounding the United States and China persists for several months, small business owners may face difficulties ahead.
“I think the bigger retailers have sophisticated supply chains and long-term relationships with suppliers everywhere. I do think the Main Street retailers, local moms and pops, we all need as a country to be focused on,” Simon said, explaining that the mall operator leases space to hundreds of small business owners nationwide.
“I’m not anticipating that we’re not seeing a problem,” he said, “But I do worry about that a little bit more than the XYZ chain that has a hundred stores.”
Concerning the mall operator’s U.S. and international operations, which include 235 retail properties in North America, Europe, and Asia, comprising more than 191 million square feet, Simon told Wall Street analysts that the Indiana mall landlord is taking a cautious approach to future growth and acquisitions.
“Caution is the word of order right now,” he said. “So if I’m looking at the development pipeline, maybe we don’t go much above this $1 billion level for now, and acquisitions are still on the table, but of course, everything depends on the underwriting.”
During his detailed exchange with Wall Street analysts about whether the current U.S.–China trade war is impacting retailers, including large department store chains and anchor tenants, Simon expressed that most leaseholders are not experiencing significant decreases in sales or requesting renegotiation or termination of their rent agreements.
“The tariff situation is idiosyncratic to that department store and mostly impacts whether or not they have a big private label,” said Simon, whose family namesake REIT owns, develops, and leases mall properties in 37 states.
“The good news, I do think, is that the mood’s getting more certain and more stable,” he continued, noting the recent breakthrough in the U.S.–China talks to pause reciprocal tariffs for 90 days. “So we’re optimistic about this uncertainty resolving itself.”
For the three months ended March 31, the Indiana REIT reported net income of $413.7 million, or $1.27 per share, compared to net income of $731.7 million, or $2.25 per share, in the same period a year ago. Total revenues increased from $1.44 billion to $1.47 billion, a 2 percent decline compared with the first quarter of 2024.
On an adjusted Funds from Operations (FFO) basis, Simon reported first-quarter earnings of $1.11 billion, or $2.95 per share, a 1.8 percent increase compared to $1.09 billion, or $2.91 per share, in the same period last year. Wall Street had expected the mall landlord to report adjusted FFO earnings of $2.90 per share on revenue of $1.34 billion.
Adjusted FFO is a closely watched financial metric in the REIT industry, as it takes net income and adds back items such as depreciation and amortization.
In the United States, Simon reported that occupancy at its mall and outlet locations increased slightly to 95.9 percent, compared to 95.5 percent a year ago. The base minimum rent per square foot rose by 2.4 percent to $58.92 in the first three months of 2025, compared to $57.53 in the first quarter of 2024.
Based on those solid store metrics, Simon reiterated its 2025 outlook, first announced in the previous quarter, of $12.40 to $12.65 per diluted share, based on adjusted FFO.
In response to the company’s upbeat first-quarter earnings, Simon’s shares rose by $1.56 to $173 in after-hours trading on May 12. The stock had closed up 5 percent at $171.44 earlier in the day. Over the past 52 weeks, Simon’s stock has traded relatively flat, with a low of $136.37 and a high of $190.14.
