Simon Property Group, Inc. (SPG) Q4 2011 Earnings Report, Transcript and Summary

Shelly J. Doran - Vice President of Investor Relations David E. Simon - Chairman, Chief Executive Officer and Chairman of Executive Committee Richard S. Sokolov - President, Chief Operating Officer, Director and Member of Executive Committee Stephen E. Sterrett - Chief Financial Officer and Executive Vice President

Quentin Velleley - Citigroup Inc, Research Division Michael Bilerman - Citigroup Inc, Research Division Jonathan Habermann - Goldman Sachs Group Inc., Research Division David Harris Christy McElroy - UBS Investment Bank, Research Division Steve Sakwa - ISI Group Inc., Research Division Paul Morgan - Morgan Stanley, Research Division Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division Ki Bin Kim - Macquarie Research Jeffrey J. Donnelly - Wells Fargo Securities, LLC, Research Division Carol L. Kemple - Hilliard Lyons, Research Division Cedrik Lachance - Green Street Advisors, Inc., Research Division Benjamin Yang - Keefe, Bruyette, & Woods, Inc., Research Division Gautam Desai James W. Sullivan - Cowen and Company, LLC, Research Division Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division Wes Golladay - RBC Capital Markets, LLC, Research Division Michael W. Mueller - JP Morgan Chase & Co, Research Division Jeffrey Spector - BofA Merrill Lynch, Research Division Craig R. Schmidt - BofA Merrill Lynch, Research Division

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 Simon Property Group Earnings Conference Call. My name is Cathy, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today's call to Ms. Shelly Doran, Vice President of Investor Relations. Please proceed.

Good morning, and welcome to Simon Property Group's Fourth Quarter 2011 Earnings Conference Call. Please be aware that statements made during this call may be deemed forward-looking statements, and actual results may differ materially from those indicated by forward-looking statements due to a variety of risks, uncertainties and other factors. Please refer to our filings with the SEC for detailed discussion. Acknowledging the fact that this call may be webcast for some time to come, we believe it is important to note that our call includes time sensitive information that may be accurate only as of today's date, February 3, 2012. During today's call, we will discuss certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are included within the earnings release or the company's supplemental information package that was included in this morning's form 8-K. This package is also available on the Simon website, in the Investors section. Participating in today's call will be David Simon, Chairman and Chief Executive Officer; Rick Sokolov, President and Chief Operating Officer; and Steve Sterrett, Chief Financial Officer. I will now turn the call over to Mr. Simon.

Good morning. We reported FFO of $1.91 per diluted share for the quarter, which represents an increase of 6.1% over FFO in the fourth quarter of 2010. FFO for the fourth quarter was $0.065 higher than the midpoint of our increased guidance range provided in October of 2011 with our third quarter results. These results exceeded the First Call consensus by $0.01 per share, and we have now met or exceeded expectations for 30 of the past 32 quarters, which is an 8-year run. This quarter capped off a great 2011 for SPG, our FFO growth per share was 14% for the year, expected to be amongst the highest of all the REITs. Our FFO of $6.89 per share was $0.365 higher than the midpoint of our original guidance provided in February of 2011. For our malls and outlets, total sales on a rolling 12-month basis were $536 per square foot, up 10.7% from $484 as of December 31, 2010. Occupancy was 94.8%, which was 30 basis points higher than the year-earlier period and 90 basis points higher than the end of the third quarter. The releasing spread for the rolling 12 months was $5.20 per square foot, a positive of 10.5%. Our releasing spread continues to grow at a steady pace as deal quality continues to improve. Resulting -- the following resulted in our comparable property net operating income growth of 4.5% for the quarter, which had a positive impact from overage rent and our year comp NOI growth came in at 3.4%. During the fourth quarter and subsequent to year end, we completed several property transactions. We dissolved our joint venture with the Macerich Company and exchanged our 15% ownership interest in 6 malls and 1 community center with them for their ownership interest in 5 malls and 1 community center. No cash was exchanged other than customary net working capital adjustments. We disposed of our interest in 3 properties; Gwinnett Place, Factory Merchants Branson and Crystal River Mall, and this transaction led to a reported gain as disclosed in the financial statements. For the full year 2011, we invested approximately $1.8 billion in acquisition activities with the acquisition of one property and the acquisition of initial ownership interest or increases in ownership interest in 12 properties. For the full year, we disposed of our interest in 10 malls, 3 outlets and one community center for a total value of $550 million. And during January 2012, we acquired an additional 25% ownership interest in Del Amo fashion center, which now increases our ownership interest to 50%. We're extremely excited about the upside potential from this transaction given the redevelopment opportunities that exist there. And also in January, we sold our 49% interest in GCI, which is our Italian interest investment. As a result of this transaction, we no longer own any interest or any assets in Italy. We received aggregate proceeds of $378 million for our equity interest, and we will report a gain in the first quarter of 2012 associated with this transaction. On development, we opened one new development in the fourth quarter. Johor Premium Outlets in Malaysia, it's 100% leased. Initial sales are very good, and we plan on working on Phase 2 of that transaction -- that development. We also have, as you know, 2 new outlet projects under construction in Merrimack, New Hampshire and Southeast Houston, Texas. Both will open later this year. We currently have 23 renovation and expansion projects under construction in the U.S. with completion dates scheduled for 2012 and 2013, including which is the major restoration of Opry Mills, which is scheduled to open March 29 of this year. We are very excited about that. That event has been a long tough road to get that mall back to where it will be a very productive asset for us. In 2011, we spent approximately $400 million in new development, redevelopment and renovation activities. We have identified 20 new development, expansion and renovations where we expect to begin construction in 2012. Three that I want to highlight, importantly, in our Premium Outlets projects. First, today in fact, or maybe yesterday, depending on how you're thinking about Korea's time zone, but we marked the groundbreaking of a 240,000 square-foot outlet center in Busan in Korea, which is scheduled to open in the fall of 2013. It will be our third project in Korea. We also will begin construction in April of our 360,000 square-foot Phoenix Premium Outlet Center, which will open in the spring of 2013. Additionally, we plan to begin construction of our 360,000 square-foot premium outlet in Toronto this spring with our partner Callaway, and that will open in summer of 2013. We're seeing very good value creation opportunities in these new developments and redevelopment projects, and we are anticipating spending $1 billion in 2012 with all the activity that's going on. That estimated rate, at this point, we anticipate being approximately $1 billion in 2013 and $1 billion in 2014. As always, as construction commences, we'll detail all the cost returns and timing for these projects in our supplemental reporting package. Let me turn to the capital markets. As you know, in October, the fourth quarter, we closed on our new unsecured revolving credit facility that increased our revolving borrowing capacity to $4 billion. This facility can be increased to $5 billion during its term and can be extended to October 30, 2016, at our sole option. The base interest rate is LIBOR plus 100 basis points. On November 10, 2011, we completed a $1.2 billion senior note offering, which resulted in historically low coupon rates and effective yields with an average weighted all-in yield of 3.6% interest for 8 years, which we are very pleased to do. And let me turn to our dividends. In the fourth quarter, as you know, we increased our -- fourth quarter 2011, we increased the quarterly dividend of our common stock from $0.80 to $0.90. I'm pleased to announce another increase in the dividend today from $0.90 to $0.95. Our quarterly dividend now has increased 18.8% since the third quarter of 2011. This puts us on a trajectory to pay dividends of at least $3.80 per share in 2012. This morning, we also released guidance for 2012 of $7.20 to $7.30 per share. This guidance includes the near-term dilution resulting from our sale of our GCI business, the proceeds of which have been utilized to pay down short-term floating rate debt currently until that capital is more permanently redeployed. It also reflects downtime with some of our better assets that are undergoing major redevelopments in 2012, including, but not limited to, the Fashion Mall at Keystone here in Indianapolis, South Dale Center, Dadeland, Quaker Bridge and Walt Whitman malls to name a few. And it also reflects the impact of expenses we will incur in connection with the development of our proprietary consumer marketing initiative. In the fourth quarter of last year, I recall that my conclusion addressed concerns voiced by some about our ability to grow in light of our size. We generated funds from operation of an aggregate of $2.4 billion in 2011, a record for us and the industry. This represents an increase of nearly $320 million over our 2010 FFO. By comparison -- by our standards, we have only researched 15 U.S. REITs that in fact have an FFO greater than $320 million in 2011. We will continue to grow our company and deliver excellent results. Our common stock once again outperformed in 2011, generating a total return to our stockholders of 33.6% as compared to the RMS return of 8.7%, and an S&P return of 2.1%. We have now outperformed the RMS for the last 11 consecutive years and have outperformed the S&P 500 in 10 of the last 11 years as well. We're very well-positioned for 2012 with a strong portfolio, irreplaceable assets and a very attractive pipeline of new and redevelopment projects. We look forward to another strong year, and our focus remains on enhancing long-term shareholder value. With that, we're ready for any questions.

[Operator Instructions] And our first question comes from the line of Quentin Velleley of Citi.

I'm here with Michael Bilerman as well. My first question is maybe for Rick. Just in terms of J.C. Penney's announcement of the main street concept in the 80 to 100 branded shops that they're thinking of introducing into their department store boxes, Rick, I'm just keen for your thoughts on what you think the overall impact might be on the mall?

Well, let me just take a step back. We obviously are very excited about anything that'll make our properties better, and we want all of our tenants to be as good as they can be. And certainly, Ron Johnson and his new management team have energized all the constituencies based on the introduction of the strategy. And we hope they can implement it. As to your specific question, the concept of having the in-store shops is certainly not a new one. And if you walk our mall and walk the existing vendor matrixes of our department stores, you're going to find dozens of retailers that have wholesale presence in the department stores along with very robust in-line, full-priced specialty stores in our malls. Just an example: Nike, Skechers, Coach, Sephora, Bare Essentials, Kiel's, Art of Shaving, I could go on and on. So the answer is that we don't think it's going to be a particularly negative impact, and we hope it's going to be a lot stronger to enhance the market share of our properties.

Let me just make it even simpler than that. He's a great retailer, we think it will be great for the mall environment. We look forward to working with Ron who we know well during his -- both his Target days and his Apple days.

Okay. And, David, just regarding your capital shopping center stake. There were some related party transactions announced regarding a plant in Glasgow and an option on land in Spain. I understand that you're sort of now a passive investor in that REIT. But I'm just keen for your thoughts on those transactions, and whether or not that changes the way you view earning the stock?

Well, that's a very good question. Needless to say, I think we're in -- we were disappointed in the Spain transaction. I think the company needs to focus on improving the U.K. shopping center environment and its centers. And even though the transaction is not overly material, I think it's a bad use of management's focus to go ahead and spend time in Spain. Needless to say, we all know what's going on in Spain in terms of unemployment retail sales. And certainly, as a large real estate owner, we understand that we want to look at things on the long-term basis. But in my humble opinion, this management team has no business being and pursuing projects outside of its native territory in the U.K. And it is -- puts doubt into me the strategy that the company is undertaking. Obviously, I don't have to reiterate how they viewed our offer and whether or not they acted in the best interest of shareholders. At this point, I think we have the better argument in that case, and I'm waiting for an explanation as to why. In fact, they're pursuing, looks to me like just the divergence of focus. Whether or not it'll impact our stake, it's too early to tell, but I am waiting for some kind of explanation from the management team.

David, it's Michael Bilerman. Just one quick question, you talked about cost relating to proprietary customer marketing initiatives, and it sounds like that's all the Simon Groupon-type stuff that a lot of the customer data and technology stuff that you've been doing. Can you just elaborate a little bit more about sort of what you intend to spend and sort of timing of when things will come to fruition?

Yes, look, the spend -- we have allocated in our budget a spend that I don't want to get too specific, but there will be an investment that we will spend. We'll have some, obviously, we're going to be expensing all of these so there's no capitalization of it. It's not going to change the materiality of the company. And given the prospects of a successful creation of a product, we think it's worthy of the investment. Now our goal right now, Michael, is to debut this product in the Northeast for the fourth quarter of this year. And there is not complete certainty that we'll do that just because it is complicated, and we want certainly a handful of important retailers to join in our effort, but that's what we're anticipating to be. We would prototype this and debut it in up to 5 properties in the Northeast, and look to see what kind of adoption or what kind of product acceptance we get and then tweak it from there. But that's the goal. The materiality of it -- materiality is in the eyes of the beholder. I will just say it's not going to detract overly. It's certainly more than a rounding error, but it's something that we want to invest in. Connecting with the consumer, understanding the consumer, is I think critical to the future of mall ownership, so this is where we're going to embark. We'll see where it goes from there.

Our next question comes from the line of Jay Habermann of Goldman Sachs.

Just focusing on the anchor stores for a moment and maybe just back to sort of Quentin's question on J.C. Penney. As you think about sort of leaders in the category, and I guess you could put Macy's, Nordstrom and certainly the positive news on J.C. Penney, how are you thinking about potential closings over the next couple of years, and perhaps capital that might need to be invested as some of the sales or market share erosions for others that are declining -- or accelerating sorry?

If you look at our capital that have been spent, and we show you every quarter all the activity we have, this is really an ongoing process. Over the years, we replaced probably over 60 anchors from all the different consolidations. And in virtually every case, the property ends up stronger, and we've been able to generate good returns as a result of that process. We don't envision that this time period is going to be any different.

So you're not concerned about the number of closings accelerating in the near-term?

We, frankly, based on all the announcements from Sears, that included none of our properties. And Ron Johnson and his presentation reiterated his strong belief in malls and the significant opportunity that his stores have in malls.

Okay. And maybe just switching gears a moment, I mean, David, you mentioned the very strong performance over the last decade. And clearly U.S. sales have recovered and more than some since the last downturn and your stock now at an all-time high. How do you think about sort of the best opportunities for growth or new investment over the intermediate term, say, the next 3 years or so, and specifically you've talked about Brazil, you've talked about China and obviously Europe's been in the cards as well?

Well look, Jay, it's absolutely clear to us that the best thing that we can do and why we added to the executive range here is redevelopment in our core business. And we anticipate, again, things can change, and I think I am pleased that we got confidence coming out of the economic upheaval sooner than a lot of folks that this year we're going to spend, I mean, always, things take longer than you want and things flop from one year to the next and redevelopment -- development. But this year, we're budgeting $1 billion. And it looks like we're going to spend $1 billion next year, and these are all very high return on investment activities. So to me, that the absolute #1 priority, we've got 2 new outlet that are going to open this year. Let's not lose sight of that. We've got the restoration of Opry, which has been closed for I don't know how long, but too long, 2.5-plus years. And we're starting construction in 2 outlets, Phoenix and Toronto, in the next 60 days as just example. And then we've got all sorts of expansions on the outlet side and the mall side, so to me, that's the focus. I think you'll see something from us in Brazil, something from us in China, but it won't be a big grand, huge, unique, big investment on either one. But I think you'll see us enter those markets thoughtfully. And we're out of Europe right now, and I have -- at this point, I have no regrets from that decision. So Europe is a different animal.

You timed it well. Just in terms of the starts on the premium outlet side, can you talk about the pre-leasing at this point? And maybe, Rick, just sort of where you are on '12 lease rolls?

Well, on the outlet side, Galveston is frankly substantially leased. We expect to open that thing almost 90% with a great collection of tenants. And Merrimack is opening this year. And we're frankly almost -- we're 95% leased there. In terms of our rollovers, we're about halfway through our '12 and with very good momentum in that business.

Our next question comes from the line of David Harris of Imperial Capital.

Can you just elaborate a little bit more on the dividend? I for one was a little surprised that your board chose to increase it again -- I mean, having increased it last quarter?

Well, David, it really boils down to simple calculus, which is we are chasing our taxable income. And it is likely that we're going to have to chase our taxable income all year. So we're trying to do it in the most thoughtful way. We did listen to the marketplace about the special dividend, the world was less than excited about it. To me, $0.20 of cash is still $0.20 of cash, but we listened. And we're looking to chase our taxable income the rest of this year and then in the future. So -- I mean it really just boils down to that simple calculus.

So it's reasonable to expect there could be another review subsequently this year?

We're -- I think it's reasonable to assume that every quarter it's going to go under -- taxable income for any entity, any big company, is complicated. It's certainly, in our case, complicated because not only do you have taxable income from just a normal business, but you've got acquisitions, sales, obviously we're going to get future depreciation from all the investment we're in, et cetera, but the fact of the matter is it's going to have to be under intense scrutiny each quarter from here on out the rest of this year. And it's likely we're going to have to chase it a little bit this year. And the good news, it ain't going down.

And with regard to Europe, your comments, do they include or exclude the U.K.?

I would say they -- I would include -- I've been more impressed frankly with the U.K. government's actions. So I think just from a macro point of view, I almost feel little bit better about kind of what they're trying to do macro there. But put that aside because I'm certainly no expert, I would throw them in the same bucket.

One final question, I think it was on this call a year ago that you talked about the biggest decision you were going to be looking to make this year, i.e. in '12 -- I'm sorry, '11, would be whether to really tap the capital markets. I know you raised the $1.2 billion of unsecured and you looked to your revolver. But it didn't really -- the market didn't really kind of force that decision, I mean, how do you look at the world today particularly in the light of Bernanke suggesting that -- or telling us that the Fed is going to remain on hold through the end of '14?

Well, I think we have the ability to be extraordinarily thoughtful and patient there. I mean we have no capital needs. Really, '12 and '13, if you look at our balance sheet other than typical refinancing of mortgages, which the market has gotten somewhat better at. And look, if there's a transaction out there is when we'll factor something like that, but right now, even though the capital markets are attractive, at this point we don't see any reason to warehouse capital.

Dave, it's Steve. I'll just add one thing to what David said, which is, we do as as ordinary course of business, rollover a lot of secured debt, and we've been very active with extending duration and locking in rates given the environment that we're in. And in fact, I just happened to look at this, this morning, our weighted average borrowing cost over the course of the last 12 months went down 20 basis points, and on $24 billion of debt, that's a pretty meaningful move. So while the headline, "large raise of bond proceeds" we did just once in '11. We were doing a lot of nicking and nacking it around -- rolling over our debt, and it did affect the profile of the balance sheet.

And while -- just while I've got you, Steve, and I'm sorry to take up so much time. I know there's a lot of other people waiting. I mean today is the company kind of where you want to be in terms of leverage? Or do you consider yourself to be under-levered or whatever metric you want to use to think of your debt to equity?

Well, it's certainly a broad question. I will say this. If you look at our coverages today, which are 3x, and you look at the stability of the cash flow that was demonstrated during '08, '09, I think the strength of the balance sheet is pretty evident and the stability of the cash flow has been demonstrated that. I mean typically, we're going to naturally de-lever because of the cash flow we generate, absent the transaction. And as David said, we have the opportunity given the transaction to be very aggressive in the capital markets with the way the financing environment is right now.

And I would just say I like de-levering.

It's not a bad thing.

So I have -- again, I mean, we're good at doing deals and making money from doing deals. The spot that we're in right now where we can de-lever, invest in our good real estate is a good spot to be in, and I like that position.

Our next question comes from the line of Christy McElroy from UBS.

In the process with Macerich of dissolving the JV, as you came to an agreement on the value of those assets in determining the appropriate split? Can you just talk about the range of the cap rates that were used to value the malls and what was the median cap rate of the portfolio?

Look, I don't have those numbers right in front of me, but these assets were appraised a while ago, and we basically use those appraisals as the basis, but it's much more simpler than that. The fact is, Macerich expressed an interest in unwinding the deal. We said fine, suggest to us how you would do it. They came back and said, well, you can choose between the 2 pools of assets. The one that they manage and the one we manage. We looked at the real estate, we looked at the relative values, and we chose the pool that they were managing, and it was really -- since the appraisals were done, I don't know, a year-plus ago when we were -- we had a discussion about the same kind of topic. At that point, it was just what -- whether or not we wanted to proceed on the basis that they suggested, and we did. And it's as simple as that and it wasn't a -- we didn't sit there and negotiate values. They gave us an option A and an option B, and we chose option A. And they were left to decide whether what they offered was good, and we were left to decide whether or not what they offered was good for us. And we're pleased with the outcome.

Okay. And then just with regards to the sale of the GCI portfolio, I'm wondering if you could disclose the cap rate? And can you talk about your -- sort of IRR over the life of that investment, so what was your undepreciated cost basis in GCI?

Well, we'll -- you'll see the gain in the first quarter. It was an okay deal. It was not a great deal. The cap rates sale based upon '12 is around a 6.5 cap rate. We learned a lot. It was good experience. Ocean was a good partner. The reason we got out, we were more worried about the macro environment than they were. The redevelopment that was offered was less returns than what we wanted. And we had a mutually agreeable way to unwind, very similar to Macerich. That's what happens sometimes. And the cap rate was 6.5. It was an highly levered entity. That's why will have dilution this year. I think Steve, $0.06, $0.07 in our numbers. So had we not sold it, we would have had guidance higher. But we think in the long run, it was the right thing to do. It was an okay deal, not a great deal. I don't know what our IRR was, but the gain you'll see in the first quarter.

And then just lastly, regarding the debt coming due on Mills this year. You have the $655 million senior facility and then another I think $1 billion of mortgage that's coming due. Can you talk about plans for refinancing all that, are you having preliminary discussions on the facility? And would you expect any resulting changes to the partnership this year?

The mortgage refinancing is all in process, so we anticipate that happening again. You've got to remember some of those deals Mills is TMLP, our partnership with Fairlawn is a small partner in some of those assets. So the gross number sounds bigger than what the actual TMLP's responsibility is. And if you then look at our responsibility as half the owner of TMLP, it's even smaller. The senior and the net debt, we are just starting discussions with the senior lenders. No issue there. We expect -- we built up a significant amount of cash in TMLP to deal with any refinancing requirements, that's in process. We'll spend the next couple of months doing that. And the last one, look, you never know, partnerships sometimes are built to last a long, long time. And sometimes, they unwind in a very positive way. And I would expect that we'll have a positive outcome. It's been a good partnership, and it will either continue on, on a very good basis or we'll figure something else out.

Our next question comes from the line of Steve Sakwa of ISI group.

Steve, I had just a couple of technical questions as it relates to Page 15. I guess the interest and other interest and dividend income went down. And I guess, we were under the impression that you were due a dividend from CSC, and I'm just wondering if that's the case, whether there was a timing or something else is going on in that line item?

There's something else going on it, Steve. If you look at the balance sheet, you'll also see a decrease in our deferred cost and other assets. I think we had mentioned on prior calls that we held some mortgages as investments on other shopping centers. And those mortgages were paid back at their maturity date.

We were really bummed on that front.

Okay. Secondly, I just noticed that down on the other expense line item, the other figure jumped quite a bit for the quarter and is up pretty significantly for the year. Is there anything you can sort of talk about, does that relate to any of these projects, David, that you talked about in terms of this consumer marketing initiative? Or is there something else in that line item?

Steve, it's really a function and you'll see the line right above it on Page 15 as well, the professional expenses was up quite a bit in the quarter. We've got a lot of transaction activity going on, some of which materialized in the fourth quarter, some of which David alluded to, it's potential activity in '12, and it's just a combination of costs related to those. Some are professional expenses, some are related expenses, but they are all driven by transaction or potential transaction equity that we've got in the hopper right now.

But it didn't -- we have been using BCG to help us work, scope out, work on this initiative that we hope to prototype and debut in the fourth quarter. And so some of those expenses are also rolling through that number.

So it's fair to assume that the 12-month number's maybe inflated, or you do you think those are good run rates?

No, I think the '12 -- I think the fourth quarter number, Steve, is higher than what you would see on a run-rate basis.

Okay. Maybe I missed it, did you guys -- I know you gave guidance, but did you give the same store guidance for the year?

No, Steve, we really decided to change the -- we've decided in '10, if you go back in '10, we decided not to do that any longer, just to give you kind of the gross number. And so the answer is no, we did not do that. And obviously, we feel confident it will be positive this year. But we decide -- we do not give that number out.

Okay. Just in terms of leasing spreads, is there anything you could sort of talk about in terms of how it progressed throughout the year? I'm just trying to figure out if you kind of exited the year at a substantially stronger rate as you kind of go into '12, and does that kind of 10.5%, 11% number sort of have kind of upward bias to, as you look into '12?

We did have positive progress throughout the year quarter-over-quarter in our spreads, and we are seeing better demand as we enter into '12. We've already made very good progress towards our '12 renewals in the mall business, so we anticipate a positive bias in that spread.

And look, Steve, we -- I just wanted, the retail real estate business is still tough, okay. And we are grinding like no other time. And our results, our sales, our occupancy and our rents are all obviously very positive. But it is a grind, and there are retailers that continue to downsize and continue to -- we continue to have struggles on leasing some of that space up and getting the market rent on some of that space, so we still feel positive about it, but it -- there is still work to be done. And it is not -- it's a lot of work to produce these results.

Okay. My last question, could you just circle back on the Toronto project? I mean you were pretty adamant when you were starting that project and I realized there's kind of been a head-to-head competition up there. What can you sort of tell us about leasing or kind of the state of the site, any more details about that project?

Emphatically, we're going to start in the spring, so we're -- we feel we're permitted to go. We're finishing it up. Leasing, look, we're in a different spot than others in the outlet business. We have the -- we can rely on the experience and judgment of having 70 Premium Outlets, Mills assets throughout the world. We don't necessarily need to pre-lease. We're pros. We're experts in this business. The answer is, we've got real interest. We've got certain commitments, and barring something unforeseen, both of those that I mentioned, we will be starting construction. So we're a little different. We understand this business very well. We know the risks about starting construction whether you're fully leased or not. We've done it in the past in the outlet business, and we're good to go on both of these deals.

Our next question comes from the line of Paul Morgan of Morgan Stanley.

I just wanted to go back to the dividend a little bit. I mean, you've got -- based on kind of where you are now, your FFO payout ratio is only 52-some percent. You got a big portfolio as you burn through your depreciation basis, you said you're kind of chasing taxable income. And I kind of wonder, I mean do you have a feel for, I mean your guidance for FFO is relatively narrow. Do you have a feel for kind of where -- how much you might have to grow the dividend, is dividend going to be growing at a materially-faster pace than FFO going forward short of the deal...

Well look, Paul it's an entirely appropriate question and obviously this is a great dialogue at the board level. So it's hard for me to be really specific. But based upon what I know, it's -- we're going to have to, I would think, continue to raise our dividend the rest of the year. It doesn't give you a guidance on how much and when. But we want a little bit more data coming in with the first quarter ops. We want to understand what if any transactions transpire or happen, or what have you that may have some impact on that. But what I know today, obviously subject to counsel with the board, $0.95 will not be enough per quarter to pay out our -- 100% of our taxable income.

Does -- I mean, you generate a lot of free cash flow right now and kind of fought over the years to grow that half the dividend. Does -- I mean, does this make it any more -- make you anymore inclined to pursue deals? I mean, because obviously that's one side benefit of a large transaction?

Only -- look, not at all really because -- and I mentioned it early, we've got so much going on with the existing portfolio and all of the redevelopment and new development. And again there is nothing wrong with generating the cash, increasing the dividend, de-levering and just keep doing what we're doing. So I feel absolutely no need or pressure to do any deal whatsoever. And I like kind of the model we've got, that's not to say we won't. If we think we like the real estate that we would get, at the end of the day, but I am -- I don't like parting with our cash right now. I like reinvesting it in our portfolio. So we're entirely pleased with what's going on here.

Okay. And on that note, you've got $700 million or so in -- what your supplemental talks about as being kind of renovation and expansion. Doesn't really say much about, which kind of malls are being expanded, but it kind of implies $70 million of incremental NOIs essentially? Can you provide some color on kind of where that's coming from or any kind of big expansion to drive that, it's just looks like sort of renovation but...

Yes, I mean for instance, in the outlet side we expect to start in Las Vegas and in Orlando and in Desert Hills and Seattle. Seattle is under construction, so those are 4 in that side. In the mall side, we're undergoing a massive extension and redevelopment of Walt Whitman, Quaker Bridge, we've got Opry Mills, we've got King of Prussia. We announced, as you know, at KLP that we're going to connect the 2 malls. We are in planning phase on that now, obviously working with the town on approvals. Those are just -- Nanuet is -- the mall has been shutdown. We're going to start construction there finally. La Plaza, we're going to add a second level on. We've got major redos, new department stores, new food courts, examples with Keystone, Dadeland and Southridge in Milwaukee. Plaza Carolina has been -- several boxes have been added. So those are just off the top of my head. When we start construction, we put it in the 8-K, and I think you'll see addition to that disclosure as the year progresses.

Okay. And just my last question on occupancy. You ended the year I think maybe it's not your highest number ever and -- are you reaching a point at kind of 94A [ph], I know some of it is seasonally high, but where you're sort of at a frictional max? How much farther do you think you can drive portfolio, occupancy? And if it's not much farther, does that mean you can start pushing rents harder?

Well, I think -- yes, you're right, there is the frictional number. This year will be a little bit interesting because we do have a lot of movement going on with the portfolio as you might imagine with all the development spending. So -- but put that aside, I think there are some improvement. But I think now the focus is on improving the quality of the 95% that were leased. And we didn't have that luxury obviously in '09, '10 and to some extent '11. We're still going to feel pressure in '12 with certain retailers, but I think the focus now, hopefully, is to marginally improve that occupancy. But it's really going to be taking the existing occupancy, maybe stabilizing that as it is, but really improving who's in the space.

Our next question comes from the line of Alex Goldfarb with Sandler O'Neill. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: I'm impressed you guys are in with all the stuff going out there in Indi.

Well, we're so focused on what we do. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: I figured you guys would be renting out the parking spots for additional FFO.

That's true. We've got sponsorship on our building that may have a big impact on our fourth quarter -- first quarter. But we're so focused on what we do we have blinders on this -- for this week in any event. In fact, we are so focused on what we do that we forgot that the Super Bowl with this, so when I planned our board meeting and our earnings call. We could have probably picked a better week. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Just quickly, it sounds like in Europe, obviously the macro situation didn't help any, but it sounds like the yields that you were seeing over there from your investments just were not meeting your expectation and the macro situation just sort of was the hair on the camel's back. As if you think about Brazil and China, what are the returns or what are the return premiums over what you would invest at in the U.S.? What are you looking for in those different markets?

Well, I think the development returns in Brazil are well-articulated. And I think in our view in Brazil, what we would do is develop, as opposed to buy there. And I think the development yields that they try to achieve the 15% kind of return on cost would be where our focus would be. And China is -- we've got opportunities. I was over there in December. We're working on a couple of outlet deals, but the numbers side of that equation, all that kind of the financial due diligence is still in a work in progress. But if it's not a premium to what we do here, we just -- there's just no reason do it. Even though you might argue that the NOI growth will offset that, I still want to invest at higher levels than I can here, that's the frustration, let's say going to Europe and doing a lot of redevelopment, but we do see, as we pencil out China and Brazil, just like we have in -- seen in Japan, seen in Korea, seen in Malaysia, all of those are higher development yields than we would gather here -- garner here I should say. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Okay. So by implication then, when you were considering the capital shopping, then despite the low going in yield that the U.K. commands, from your underwriting, you were seeing returns that were in excess of the U.S., is that fair?

I was really referring to new development, okay? I think what we saw there and again, recall that our deal was subject to due diligence. We saw at the end of the day, yields comparable to what we would pay here on acquisitions, yet once we got our hands on the fact that management operations could be improved, and so, I just -- I don't want to confuse development yields with acquisition yields, and we saw kind of comparable acquisition yields in the U.K., comparable to what we would pay here. With supply issues, they are a lot different than they were here. So on that basis, it was worthy of pursuing it to get to the point where we could validate that initial conclusion, but we weren't access to the books, and therefore, we did not make a formal full bid. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Okay. And just the second question, just going back to the dividend, EQR went to a policy where they paid a steady, first, second, third quarter dividend with a true-up in the the fourth. Is that -- as you guys contemplate the dividend, is that something that would be, that you think would be helpful or would investors be receptive.

Well, look, that's what we did in '11 and the fact is, the more we talk to people, the less they liked it, so my view would be to try and not do that really create a dividend that equals taxable income, and that as that grows, your dividend grows. So, we would like to get away from the special dividend based, kind of, the true-up dividend, which in our case, was represented by a special dividend. We would like to get away from that, and make it more what I said. Now look, sometimes you never rule out, if you sold $5 billion of properties, and you had a big taxable income, you may -- there may be certain circumstances that you'd have to that, but the fact is, we would like to not do that, and that's what we're going try and achieve in '12, but certainly, as we catch up to our taxable income, we will get away from the special true-up dividend.

Our next question comes from the line of Ki Bin Kim of Macquarie.

Just a follow-up on Alex's previous questions about Brazil. From a levered return standpoint, would you be funding it locally, or is there some arm of opportunity using your cheap cost of corporate debt to fund development out there?

Well, we would use our -- the cheapest capital we have is this cash on the balance sheet. What are we getting.

Billion dollars a year.

No, but what are we...

Forecasting?

Investing.

Oh, 20, 30 bits.

20, 30 bits, so the fact of the matter is any development that we would undertake in Brazil, we're just going to cash-fund, so we wouldn't use any leverage.

Okay. Is that typically -- would you by JV or by yourself?

Right now, we're contemplating a JV.

And that's probably likely what -- how we'll do that

And in China as well if we get to that point in China.

Okay. And last question, if I look at those sales per square foot increases in your portfolio consolidated versus unconsolidated, it seems like the -- your JV probably is a lot better, up 22% year-over-year versus your consolidated, which is up only 9%. Still good, but lording your JV assets. So how should we think about the opportunity for additional JV takeoff in terms of -- are all the JVs, at one point in time, are they all opportunities for you? And broadly speaking, if you could talk about cap rates, not deal-specifically, but for the best assets, where could we see cap rates for these assets and I guess kind of going down the spectrum of quality?

I would just say part of the difference between the growth in a consolidated and unconsolidated -- we can get a better answer for you on that than just the quality because some of the mix change, and that we put more -- we add more outlets in there now, that we put prime in our numbers. But I think we restated 10 for that in any event. So -- but we can get you a better answer on that. So I think the mix -- our mix in our wholly-owned properties is great. And so there's no real issue between what's in our JV and what's in our consolidated, I mean, just -- in our consolidated, you have Roosevelt Field, King of Prussia, Forum Shops, Woodberry all of the outlet business. So put that aside, that's not to say we don't have some great JV assets, but the basis, much bigger in the consolidated than the JV. So don't read too much into that, now going to your question, cap rates on A assets is -- got to be -- there's not a lot being done in that whole area, but they continue to move lower given that the fact that investors believe in NOI growth for high-quality retail assets. So you tell me, I mean it's low -- it's lower than -- it's in the 4s, maybe. That helps?

Yes, it does help. And I guess, one part of that question is...

...Assets, I got that we'll be buying in the 4s, so, because you know, but I think there are people out there that would clearly buy in the 4s.

So, even for your A assets, that you're managing something in the 4s wouldn't be a price that would clear at or a takeout?

Look, I don't know. I mean it would have to be something really, really unique to get to that. I mean King of Prussia we did not get to that number, there's nothing like that asset especially given its development. So look, it all depends on circumstances, but I do think there are institutional investors out there that would feel comfortable at those kind of iconic assets to be in that level. Whether we would or not, it would take an interesting set of circumstances.

Our next question comes from the line of Jeffrey Donnelly of Wells Fargo.

Actually, can you just talk about the volume of move-outs that have happened subsequent to quarter end? Is that in line with prior years and then just on your guidance, where did you guys peg your year-end occupancy?

Well, on the move-outs, we have basically been consistent historically. We didn't have anything out of the ordinary.

Well -- and this is Steve, Jeff. We've also, year-to-date, as you've seen very little bankruptcy activity as well so...

And what did you say, within your guidance maybe for year-end occupancy as the target?

Well we don't -- we're really getting away from those kind of specifics. We do it asset-by-asset to build up to our budget. It's -- in our own budget, it's a slight improvement, but we don't give specific numbers, Jeff.

Okay. And then, just while I got you guys, and on Sears, just more obviously, more focus on Sears holdings. You're de minimis, I think direct exposure to base rent, but do you have an estimate of what your ultimate financial exposure is through cotenancy rights?

We -- yes, I would just say, if we do give cotenancies with retailers, we do in some cases and not really happy about it, but we do, do it. It's rare that it's going to be tied to a Sears operating, usually it's 3 out of 4 and something like that. But I would say that particular issue would be de minimis.

And just maybe you could talk a little bit about your exposure there. Is there a theme to it, if you will, maybe the majority of your exposures in single- or two-story stores or there in malls of a certain sales production, just curious?

If you look at our Sears portfolio, they are very well situated in our better properties. We have obviously significant numbers so throughout the portfolio. But again, this is nothing new. I mean, this is, we're working with Sears. We are strategizing if in fact the eventuality comes we want to deal with it, we're lining up demand. There is happily substantial demand. And we're just going to have to see how this unfolds. To date, none of our stores have been impacted. And we try to monitor their volumes, and our portfolio as a whole is above average both in terms of gross volumes and sales per foot.

And just last 2 questions. One is on Del Amo, are you able to share maybe a cap rate or rough cap rate on that transaction? And then maybe, Steve, can you talk about what you've seen change in the financing market for, I guess, I'd say second-tier market malls, or those with below-average sales production, any movement there?

I can take the second part of the question first, Jeff. We continue to see really pretty robust demand on, call it for lack of a better term, the middle-quality malls. And interestingly enough, it's come from the banks in anticipation of a restart of the CMBS market in 2012 and the ability to syndicate some of these. Pricing has been pretty decent. And as I said, we've been out with 2 or 3 assets, and the demand has been very good.

Look, Jeff, we don't do individual cap rate, things, malls, other than we really feel like we made a fair deal and one that we'll be able to add value with as we move very aggressively on our redevelopment plans there.

Our next question comes from the line of Carol Kemple of Hilliard Lyons.

Are there any updates on the St. Louis potential outlet development?

We're working it, but the short answer is, not really.

Okay. And then, Steve, I know that G&A expense was up in the quarter. Was that something that's just this quarter, or is that a good run rate going forward?

It's a little bit of both, Carol. There's part of it where it's just the full year impact of compensation plans, but then there is -- a bit of it that is probably not going to repeat in 2012.

Okay. And then I know you all talked about you feel no pressure to do acquisitions, and you think renovations are a better reinvestment of your capital at this point. If you decided you wanted to do acquisitions, is there anything out there on the market that you have any interest in?

Do you have any ideas?

No, I don't. I like the renovations at your old malls personally.

The answer is, usually they come about when you least expect it. So again, we -- it's not a high priority, but we look at just about every and any alternative, and though the good news is, but you got to be really disciplined when you have this ability. The good news is we could look at basically any real estate company in the world and decide whether or not it makes sense for us. So -- but comes with that a burden not to screw up. So what's better, you could look at every deal or you're in a position where you can't. I'd rather be in the fact that we can look at every deal, but with that comes some discipline here that we better not make a mistake.

Our next question comes from the line of Cedrik Lachance of Green Street Advisors.

David, earlier you talked about some of the challenges that are still out there when it comes to leasing space in your properties or in the mall business in general. Can you quantify it for mall categories if you will, so what do you observe of A malls versus Bs and Cs?

Well look, the risk in the A malls is really not a risk because if you do get that space back, you're going to -- you have plenty of demand to lease that up. But it is going to be in the kind of the -- however, you want to characterize, I hate listing malls A, B and C, but it's certainly going to -- the pressure that we have as an owner will be on what people call as the B mall category. And it's surfacing because of tenants like The Gap, the -- PacSun wearers of the world that are still and continuing to connect with the consumer. And again I don't like naming names and pointing retailers out, that's only representation of a couple of retailers that in fact themselves have said they're closing stores. But the fact is, that's where the pressure in the portfolio occurs and is occurring, and that's what we're working to offset. If we get the space back, and the fact of the matter a lot of A malls, retailers that are downsizing, we're taking the opportunity to help with that downsizing by not renewing them in the A malls.

Is it the same with the B malls, who are the replacement tenants when a Gap or a Paxon exit the property?

Well, there are a lot of people that are very aggressively growing their footprint and that leads to David's point. We're doing deals throughout the quality spectrum with Loft, with Love Culture, Crazy 8, Izumi, Chiles, Cotton On, Francesca's, all of the -- Cabana, all of those tenants are -- H&M. So we're doing with a lot of these tenants throughout the portfolio. And one other point that I want to make is, this billion dollars that we're spending in our portfolio is certainly giving us more attractive properties in terms of the tenants wanting to be in them. It's no accident when we're adding over 35 anchors in our portfolio when we're renovating 20 properties, when we're getting substantially higher growth, that's making us have a better product for our leasing agents, and that's hopefully, going to bear fruit and enable us to deal with the space we get back from the tenants that are shrinking their footprint.

Okay. And just to finish in terms of the Italian sales, are there any circumstances or tax circumstances associated with repatriating the capital to the U.S.?

None.

Our next question comes from the line of Benjamin Yang of KBW. Benjamin Yang - Keefe, Bruyette, & Woods, Inc., Research Division: David, you talked earlier about how the joint venture with Macerich was carved up, but I don't think you mentioned, was there any consideration to selling those assets outright?

Not really. The answer is, no. Look, Dave, we're off on our own with each other, so we never really talked about selling the whole portfolio. Benjamin Yang - Keefe, Bruyette, & Woods, Inc., Research Division: And that's just why Steve's comments that the financing market for these mid-tier malls is coming back? I mean is it anticipated that you might end up selling them or selling more above and beyond what you just got from Macerich?

Well, the fact of the matter is, the portfolio that we got we think there's upside. So we're pleased with the outcome. We think we can move the needle on those assets, and we have no intention at all of selling those assets. So look, we're going to still prune the portfolio. And I think, as Steve said, that the fact the financing market is getting better, I think that will help us. It's been, obviously, that's been a challenge to sell kind of the smaller malls. But with respect to specific -- respected IBM, there's absolutely no desire or interest to sell those assets. Benjamin Yang - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. And then just switching gears, you have made some comments also that you guys are different. You don't need to pre-lease to start the construction, which, to me, it sounds like, kind of a shot across the bar to the competition, so I was just curious, can you...

I didn't say -- I said we take a different approach. You use the word different, so I don't think I said the word different, but I'd love to go back, I could be wrong. Benjamin Yang - Keefe, Bruyette, & Woods, Inc., Research Division: But I'm just wondering, can you talk about how retailers have been evaluating the multiple options in those markets that you identified where there is competition. I mean it is just the stalemate that kind of forces you to, what looks like go to do some spec development outlets.

Well, I think every development is different. A lot of cases, the retailer is using the competitive scenario to drive down rents, and we're seeing that a lot. So the retailer is very adept, very skilled at using the leverage of competition to drive rents down. And in some cases, they're sitting on the sidelines saying, "Well, I want to be -- I want to have an outlet in this marketplace, but you guys figure it out, they're on the sidelines." And in some cases, they have they faith in us, they want to go with us because we've got this knowledge base of all of these assets. And in some cases, they want to go with the other guy because of whatever other reason. So it's all over the board. The fact of the matter is, we don't really pre-lease, period. We're doing Nanuet, and we've got -- that's not an outlet -- and we've got certain commitments from very important retailers. But are we sitting there leasing up the small shop up to a certain percent to where we lease, the answer is, no. We should be able to use our judgment, our experience, whether or not we can get something leased, at what rent, and that's just the way we operate. Certainly not meant to be a shot across the bow for anybody. Everybody can do whatever they want. I have no influence on that at all, but that's how we operate. Benjamin Yang - Keefe, Bruyette, & Woods, Inc., Research Division: That's helpful, but at what point do you end up actually buying the land. I mean is it satisfund [ph] that you've actually purchased the land in Phoenix, in Toronto, in St. Louis, is that...

Phoenix, we have signed the ground lease. I was down there, I don't know, was it last week or 2 weeks ago. It's a ground lease. We're on Indian land, and by the Wildhorse Casino there. So that ground lease is signed. And Toronto, it's all documented and signed, land closing is forthcoming. Benjamin Yang - Keefe, Bruyette, & Woods, Inc., Research Division: What type of delta is that when you ground-lease something like that versus buying the land outright?

It tends to have a better return in a lot of cases. Obviously, when we're on Indian land, you can't really buy the land, so that's how it works. And we thought -- we liked the site enough given that, that was -- that was a good outcome for us on that deal.

Our next question comes from the line of Gautam Desai of Credit Suisse.

I will take another retailer example, Williams-Sonoma was amongst your larger tenants 5 years back. And now roughly 40% of their business is online, and about a quarter of their leases are expiring over the next 2 years. And what I'm hearing from multiple conferences is that they are planning to negotiate the rent in those expirations. And if they're not successful, they just plan to move more of their business online. I just wanted to get your thoughts on it, and if this is like indicative of a changing trend in retail in general?

I don't believe there's anything out of the ordinary with your example. Williams-Sonoma happens to have a great real estate and great properties. And if their business strategy is such and their productivity is such that they cannot afford to maintain the space that they currently have, they're going to come in and offer us a rent that enables them to maintain their occupancy. If we don't believe that rent is fair market value, they're going to move out and we're going to replace them with somebody that has got a productivity and a business strategy that will enable them to pay what we believe is fair market rent.

Right. It makes sense. And another question, are there any acquisitions included in your 2012 guidance?

Acquisitions?

Yes.

No, there are none.

Our next question comes from the line of Jim Sullivan of Cowen and Company.

I just have a couple of questions on Del Amo. They obviously are very large asset, and I think David in your prepared comments, you talked about a redevelopment or an investment in that asset. Understood you have just recently increased your share in it. I'm just curious if you can tell us whether the $1 billion for this year and next year of redevelopment includes Del Amo, number one. And number two, if you could talk a little bit about your plans for that asset if you feel able to at this point.

Well, the $1 billion does not include for this year, because we still think we are in a spot where we're going to use this year for '12 to plan what we're doing, and part of that depends on outcomes with certain discussions with certain stores, but it's a complicated asset. I'll turn it over to Rick to explain. We have a lots of different options. It's complicated, and it's probably better to show you physically than words, but I'll let Rick take it from there.

Just very briefly, it's midway between Sentry City and South Coast Plaza. It's positioned to serve all of the great communities on the Pacific Ocean that have -- we have a trade here of 1 million people with $90,000 household income. So we believe there's an opportunity to add fashion anchors. We believe there's an opportunity to add some full-line anchors and completely redevelop the property. It's over 2.275 million square feet. So we've got a lot of FAR and a great market, and we're very focused on bringing that forward. And it's certainly going to be part of the capital spending that David talked about in 2013 and 2014.

Our next question comes from the line of Tayo Okusanya of Jefferies & Company. Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division: Two questions. The first one is a Steve/Rick combo. I just wanted to find out what occupancy cost of sales was in fourth quarter. And for new tenants signing leases, what the target is on that number?

The occupancy cost in the fourth quarter for the malls and outlets was 11.8%. And really, the way we price our real estate is a function of who's the tenant, what's the productivity of that tenant, what's the mall, what's the space in the mall. So we have a very focused process and all of those factors feed into it. Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division: Okay. Could you give a range?

It's very hard to do. I think if you look at our -- the leases that we signed, I believe in the fourth quarter were $50 and change starting rent. So that gives you a pretty good barometer of the type of activity that's undergoing in the portfolio right now. Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division: Got it. Okay, that's helpful. And then in regards to guidance, you talked about the $0.07 dilution from GCI. Could you give us a sense on what the dilution is from the consumer marketing initiative, and as well as the downtime from the redevelopment?

We did -- we're not going to give specifics on that, but it's all in our numbers.

Our next question comes from the line of Wes Golladay of RBC Capital Markets.

Rick, can you give us a quick rundown of the new retailers and concepts entering the Simon portfolio?

Well, the ones that are coming in, that we're working with -- are examples of drygoods that's a division of Ron Mauer, Vince from Calwood, Sea Wonder, Running Company is a new concept that Finish Line is working with, Versona from Cato, but I certainly don't want to ignore like you look at a Limited Brands, and they had a great report and they're aggressively looking to get more space to take care of their pink concept, so the fact that a brand is mature doesn't mean that it still doesn't have a significant growth potential.

Okay. And one quick final question. Now that we're 5 years of the peak of the market, are you noticing any pressure from releasing the leases signed 5 years ago?

No.

No.

Our next question comes from the line of Michael Mueller of JPMorgan. Michael W. Mueller - JP Morgan Chase & Co, Research Division: I know you don't like breaking up the portfolio in terms of performance, but can you talk generically about how the mall portfolio is performing versus the community center portfolio and maybe thinking about 2011 and 2012, is the gap any closer these days?

They're both performing better than what we expected in '11. The outlet business continues to have higher comp NOI growth than the mall business. But I'll tell you, I think we're generally pleased with both segments. And the gap is certainly less -- certainly it's been reduced compared to '09 and '10 levels. I think that's safe to say that the outlet business was stronger in the height of the significant economic downturn. So that gap -- that growth rate gap has certainly narrowed. Michael W. Mueller - JP Morgan Chase & Co, Research Division: And that's fair between a traditional mall and community center as well?

In our community center, we don't, you mean the...

The growth rate.

The growth rate. Yes, the mall business grows much better than the community center business. Michael W. Mueller - JP Morgan Chase & Co, Research Division: Okay. And then going back to non-core asset sales. Could you just talk about generically about how big the potential pool of assets that you would like to sell over time is?

Well, I think historically, this year we basically disposed of assets around $500 million. If we could continue to sell $200 million, to $300 million, to $400 million of assets a year in terms of pruning, I think that would be the level that would be desirable.

Our next question comes from the line of Jeffrey Spector, Bank of America.

Few questions. If we could just start off I guess with the big picture, Rick, just wanted to follow up from our ICSC dinner in December. Can you talk about your more recent conversations with tenants, the retail sales seem to be stronger than expected. What is their latest view on these new store openings or new concepts?

I think that David alluded to earlier, it's very much a tenant-by-tenant analysis. Sales were better. There were some pressures on margins. We've detailed earlier in the call a number of tenants that have very aggressive growth profile and there are others that are retracing a little bit and reducing their footprint. Generally, however, the balance sheet remains strong. They are still generating cash flow, and we're still able to drive demand from the types of tenants that we'd like to have in our properties.

So I guess, where do you stand on pricing power at this point? I know David said business is still tough. Is it still a tough negotiation, or you feel like pricing power is coming a little bit more back to your side?

There is never a negotiation that is not tough. I mean, look, we're fighting over the same dollar. And that's been that way for 40 years, and it will continue that way. And ultimately, do we have some better power? Look, as the productivity of our properties get better, as we improve our properties, as our occupancy gets stronger, just fundamental supply and demand, there's virtually no new construction, that certainly plays into our strengths.

And I guess, thinking about the budget and your guidance, I guess, David, your thoughts in the consumer or economist keeps saying that consumer spending is going to slow second half of the year. When you thought about -- I guess, when you finalized your budget, how were you thinking about the consumer?

Well look, I think our budgeting is -- it reflects -- it's round-up, so it reflects the general nature of the fact that we are cautious in how we put our numbers together. So I think in a sense that reflects also that -- what's going on in the macro environment. The -- so I think we take that into account. There's no guarantees in anything, but I do think we take in the fact that it is generally still a very cautious environment. We would -- we have a lot of work to do to make our numbers. On the other hand, we always want to beat our numbers. And we're at the point now where we're giving you our view of kind of what it is, given what transpired with the GCI sale, et cetera. We always want to beat our numbers, but we're generally cautious. So -- and I think that reflects the consumer. This year, you do have a certain added uncertainty with the general election and all that crap that follows with it. And on the other hand, there are reasonable, I mean it's very confusing signs out there, but there are some reasonable ones. Jeff, you're aware obviously of what happened with jobs today. On the other hand, you see more layoffs that have been announced over the last week or 2. So it's -- my view it's still a very confounding, tough environment to kind of decipher through. I do know though that, the program that we have in our internal investments will pay rewards for our shareholders in the future. So that I'm not worried about. And we would like to see better income growth and job growth. That would give us a cushion that we haven't been able to really have over the last couple of years even though we produced terrific industry-leading results.

Great. And then I just want to clarify, David, you mentioned you're going to spend $1 billion this year in development, next year a $1 billion. And I think you also said 2014, is that strictly redevelopments, new Premium Outlet Centers and expansions at your existing Premium Outlet Centers?

Correct idea. That's all in. That's new development and redevelopment.

But not -- just to clarify, not new malls?

Yes, well -- unless you got a site you want to show us where the new malls, I still think are ways away. I think -- I still don't see a real demand for a lot of new malls. Now, Nanuet is a good example. You could consider that a new mall in a sense, but we put that in our redevelopment category.

And then Brazil, should we be -- should we assume it's full price in China, Premium Outlet. Did you day that?

I did not say that, and you should not necessarily assume that.

Okay. And then with the Phoenix announcement...

On both fronts, Jeff, on both fronts.

Okay. And then last question on Phoenix, I guess with your announcement, have you heard anything from your competitors on their sites?

I assume they're -- our assumption is they're going to go full steam ahead, and we are going forward, will have no impact on what they do.

Okay. Actually I'm sorry, one last question. Do you still have the ownership stake in value retail in the U.K. and Europe?

We do.

You do. Okay. Anything with that at this point with the sale in Italy, or you like that small investment, keep it as is, or is there any chance to increase that or do anything more in the outlet front I guess?

We like that investment. In fact, we have an investment at the holding company more or less. And then there's investors in various outlets that in some cases are different than the investors at the holding company. And in fact we just increased our ownership interest in 2 outlets at year end.

In value retail?

Correct.

Our next question comes from the line of Craig Schmidt of Bank of America Merrill Lynch.

I just wanted to push a little more on Del Amo. Do you think that investment could be north of $200 million?

Yes, it could be. It could be. And if you want to see all the options, we'll let you spend. It's at your own peril, but we'll let you spend time with David Contis. And he could -- we could actually use your help, Craig.

And it sounds like...

That will be at your own peril and may take a long time, so reserve half the day.

It's sound like you're talking to fashion anchors. Are they positively inclined at this point?

Everyone acknowledges the importance of the market and the fact that it's not adequately penetrated under existing stores. Obviously, we're now in an environment where people are considering more capital investments, and we're optimistic.

Okay, and then prior to my meeting with David Contis, is it still going to be done in phase, there was one time I thought you'd focus on the northern end first?

It will still be done in phases based on when we can get the right critical mass. And right now, we're focusing on what and how we're going to start it. But it is, again, a very big project, so it is going to take a number of phases and a number of years to bring to fruition.

Okay. And then just shifting gears slightly, in terms of the outlet business, I'm wondering if, like the malls, are the higher-end ones doing better than the more moderately-priced ones? Or are outlets strong just throughout the price point spectrum?

I would say they're generally strong. But the tourist outlets are the ones that are really kicking a**.

With no further questions in the queue at this time, I will now turn the call over to Mr. David Simon for closing remarks. Please proceed.

Okay. Thank you, everybody, and thanks for your patience on the call, and have a good weekend.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect, and have a great day.