Hello everyone and welcome to the Second Quarter 2015 Simon Property Group Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to the Vice President Investor of Relations, Tom Ward.

Thank you, Lauren. Good morning and thank you for joining us today. Presenting on today’s call is David Simon, Chairman and Chief Executive Officer. Also on the call are Rick Sokolov, President and Chief Operating Officer; Andy Juster, Chief Financial Officer; and Steve Broadwater, Chief Accounting Officer. Before we begin, a quick reminder that statements made during this call may be deemed forward-looking statements within the meaning of the Safe Harbor of the Private Securities Litigation Reform Act of 1995, and actual results may differ materially due to a variety of risks, uncertainties and other factors. We refer you to today’s press release and our SEC filings for a detailed discussion of forward-looking statements. Please note that this call includes information that maybe accurate only as of today’s date. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included within the press release and the supplemental information in today’s Form 8-K filing. Both the press release and the supplemental information are available on our IR website at investors.simon.com. For our prepared remarks, I’m pleased to introduce David Simon.

Good morning. We had a productive quarter we completed several significant redevelopment projects, started construction on others, announced even more that will further enhance the value of our real estate. We identified additional avenues for growth through our two new retail partner joint ventures. And most importantly, we continue to produce strong operating and financial performance. Results in the quarter were highlighted by FFO of $2.63 per share, which included a $0.22 gain on a sale of marketable securities. Excluding the investment gain, FFO per share was $2.41, which exceeded First Call consensus again by $0.06. These results were achieved even with the negative impact of $0.04 for the quarter compared to the prior year quarter due to a strong dollar against the Euro and Yen. On a comparable basis excluding the contribution from WP properties in the prior year period and again the investment gain, our FFO per diluted share increased 14.2% or over $0.30 year-over-year. Occupancy was 96.1%, leasing activity remains healthy. We recorded spreads of $10.87 an increase of 18.4%. Comp NOI for the quarter increase 3.6%, which was coming of a 5.6% comp increase in the second quarter of 2014 and for those of you that are interested, we do not include lease settlement income in our comp NOI or new deals such as Jersey Gardens or our recent joint venture activity and we also do not include the impact of recently developed or expanded centers. And finally, we continue to produce strong comp NOI increases year after year as well as continue to operate at the highest margins in our industry. Total sales across the portfolio will increase 2.2% for the trailing 12 months even with the loss of bankrupt tenants. On a comparable basis, the sales per square foot increase for the 12 months…

Our first question will be coming from the line of Ross Nussbaum. Your line is open.

Hey, thanks. Good morning guys. Here with Jeremy Metz. Hey, David with the repurchase from the OP unitholders, who were the sellers of those units? Did you approach them? Did they approach you? How did that work?

A little bit of both, it was associated with the prime transaction loss that we completed in 2010 and they were the sellers.

Okay, so no members of the Simon family sold…

That's correct.

Okay. Okay, and then on the buyback as well, how should we think about it from a balance sheet perspective? If I look at your funding needs against your after-dividend free cash flow, my math is basically you can fund your entire development program with, call it $1 billion of free cash flow a year. So if you continue to buyback stock at this rate, obviously, the leverage of the company would tick higher. So how should we all think about continued buyback versus balance sheet?

Well, it’s a very good question. I think the first – we want that in our arsenal. We are sensitive to – it’s part of our capital allocation strategy. I think you should look at this first step is a trade from one, from our other marketable securities that we had held with no reason to hold those we basically took that capital and reinvested in our business as we wanted to signal the market that we believe and the continual growth of our enterprise. I think it should also signal, we are out of the big deal business. So I think no ones picked that up, but we don't see any big deals on the horizon for us. So we are obviously very focused on the development, redevelopment as you know I mean I stumble I’m not a very good reader of a text, but you look at our activity in the redevelopment and new development it’s astronomical, it’s industry-leading lots of great stuff going on and I think that's the way to look at it. We are price-sensitive, we wanted there. REIT stocks have been very volatile, but I think if the signal that we took one investment and reinforced that we’re out of the big deal business. That's not to say we might find a deal here or there, but the balance sheet is sacrosanct to us, we haven't worked 22 years to do it, we survived the last great recession with flying colors, we quadrupled our dividend and earning per share and all the other stuff that I won’t go through it all, but I think it's a more of a signal and the belief in our business and also signal the market that were out of the big deal business.

Our next question will be coming from the line of Michael Bilerman. Your line is open.

Great. Hey, David, good morning. Just continuing in terms of the buyback, you talk about your business and having confidence in your business. You didn't talk a little bit about discount to NAV and the arbitrage that exists between public and private. I take your comment exactly in terms of flipping out of Macerich that $450 million, putting it into your own stock, which I think has great prospects. But would you think about accelerating or selling interest in any assets to go further into your stock and narrow that discount that exists between public and private?

Well, look, I think the reason - it's more than just NAV. It’s what your enterprise can do in terms of growing your earnings and cash flow, and then ultimately increasing your dividend. I mean as you know I mean, if you strip out the gain in that WPR, our quarter-over-quarter growth was 14.3% which as you know, a lot of people have criticized our size yet we continue to be industry-leading earnings growth. So you’ve got to look at, whenever you invest in something, what's that yield going to get you? And as our earnings grows you know that’s not a bad investment. So it’s more than just the NAV analysis. We also - we will continue to sell what I call lower quality non-important assets to us. We don't publicize it until after it's done, but we’ll continue to prune the portfolio. But we’re not a big believer in selling our top assets to reinforce the value of our company for external purposes I mean we know what we’re worth and we operate - I mean, that’s why we are in this job. We’ll operate accordingly. But selling the top assets at the end of the day those top assets tend to grow the most. And I'd rather have our shareholders own more of it than less of it. We have the free cash flow to take advantage of the arb that may exist between private and public values, and it’s just another tool that we have available to us to take advantage as we look for investment opportunities.

Great. Just one quick one for Rick. The popular press wants to focus a lot on shrinking retailers and closing stores. Can you just give us an update in terms of who are the fastest-growing retailers, the most exciting retailers that you're seeing pick up stores? And maybe just break it up between a larger format and a smaller format store base.

Well, thank you for the opportunity to talk about my list. I think there’s four categories of retailers that we’re really seeing a lot of business with. International retailers, the e-tailers that are looking for a presence in our properties. We recently just announced and have opened Blue Nile and Bauble Bar, and we’re working with a number of others that want to come into the properties. Our existing retailers that are looking to grow through brand extension. Maybe you just saw Dick’s announce the Chelsea Collective this fall. L Brands is rolling out White Barn Candle. And the last are just the new retailers that are coming online and just to - we’ve done deals recently with Mont Blanc, Frye Boots, Jo Malone's, Suitsupply, [Aritskina]. All of these are really exciting concepts that are relatively unique in the number of stores, and that’s going to separate our properties.

Great thank you.

And I would just say this, Michael, what’s exciting – yes, we have had bankruptcies this year, it does take time to replace them. But the amount of new concepts and new entrepreneurs coming into our environment, whether it’s restaurants, the e-commerce going to physical brand expansion is really at a – is that high and our leasing folks. If you seen what we’re going to do at Roosevelt Field with some of the new food operators as well as some of the e-commerce with physical, I mean its good stuff. So I mean in that sense it’s comforting to see that there is whole host of new entrepreneurs they want to be in our own environments.

Yes, thanks.

Thanks.

Our next question comes from Paul Morgan. Your line is open.

Hi, good morning.

Good morning.

You talked about how your same-store numbers don't include your redevelopments. I'm just wondering. At this point right now it seems like you have a very large share of some of your top centers in redevelopments. Is that a drag, having that excluded, given the strength of some of those?

First of all, we don’t consider to drag, you have to put comp numbers in a – Paul you have to put comp numbers in a historical perspective. And you can’t look it one quarter over quarter, you’ve got to look at it over three to five-year period upon. And if you look at our comp NOI increases over that three to five-year period of time, there clearly you would conclude that we have significant outperformance. And I don't look as much as everyone wants to focus on a quarter here and quarter there. I want to reinforce we do have the highest operating margins in the business. We also have the lowest overhead in terms of however you want do it enterprise value – percent of EBITDA, percent of revenues in the business. And that’s why we have the best balance sheet in the business and that’s why we’re able to grow our dividend 15% to 20% a year. So again certainly there are – yes, we’re remerchandising Houston Galleria, and Copley, and Stanford, and Roosevelt Field, and King of Prussia and we’re moving tenants left and right. We encourage everybody to go see the properties and yes, from a quarter perspective it's going to – it's not going to impress some, but I’ll tell you what we’re doing I’m really impressed with internally. But I would encourage you and others to look at comp NOI over a more of an extended period of times than comp quarter-to-quarter.

So I mean if I do that…

But again long story short, yes, we are having some impact on all the remerchandising going on in our portfolio.

So I mean if I take that longer view and look back over the past, say, two or three years in your numbers, is there any reason to think as I look forward two or three years that you wouldn't be able to do kind of the same type of numbers, I guess deeper into the economic cycle?

Well, listen history is a good indicator of what you might be able to do in the future, but we would hope that all the stuff that we’re doing will accelerate the growth profile of those assets. We have to execute, believe me, we are not out of the execution phase, but I would think Paul at the end of the day that these assets are going to grow very, very nicely and we’ll increase our comp NOI growth and meet our historical growth. Now the fact is we’re subject to economic cycles, we’re subject to tenants going bankrupt, we are subject to downtime, we’re subject to sales of our retailers, volatility. So we don't control everything, but we’ve had a pretty good track record. I would hope that would continue, but it's not you don’t follow-up a lot for this stuff. You got to do it each and everyday and our team was pretty good at it.

Thanks. And then just my follow-up on the Sears joint venture. How far you into the process of going through and saying: well, here's what we're going to do near-term, here we’d like to do longer-term. And kind of how – the size of the potential redevelopment and the timing and when we might get some of those details?

Hi, it’s Rick. We are very far along in that process, we’ve already had multiple meetings with Seritage. We have developed, redevelopment plans for each of the assets they are in the process right now of being priced and as they become mature, we will announce them and proceed forward, but they include the addition of specialty stores, mall expansion, adding restaurants, adding boxes and appropriately sizing Sears. Bear in mind in our venture it’s almost 850,000 square feet of additional space if you are going to be able to redeploy along with those TBA auto centers. So it’s a great opportunity and we are well into it.

Thank you.

Our next question comes from the line of Jeff Spector.

I just wanted to focus a little bit more on the redevelopment pipeline. David, I believe you said that $1 billion through 2017, and I know it's been going on for a number of years now. I mean what are your thoughts I guess at this point beyond 2017? Is that – by 2017 you are really at this point touching those top-producing assets? Or do you think you can expand that program beyond?

Well, I think as Rick mentioned I mean I do think Sears gives us whole host additional redevelopment opportunities. We are closer and closer to starting – in fact we are actually starting the Southwest Corridor and Copley, which is not in those numbers yet. We are absent something really out of the expected, we are going to start Copley very, very shortly, we've got fail safes in that investment, but we are moving with speed to deliver that, we think that's great Sears presents a lot of opportunities. We've got outlets that we've done the big ones, we’re doing a bunch of small ones that we need to look at. Rick, you want to add to it.

I would also tell you, we’ve already announced the expansion in Jersey Gardens that’s going to be a major redevelopment, we have announced the expansion of Sawgrass. Right now we're finalizing an expansion of Colonnade, redeveloping the Oasis. And I can tell we are continuing the mine this portfolio and I believe we’ll have a continuing series of pretty substantial value add opportunities across all three of our platforms.

Okay, thanks. And then one of the other focuses that Craig and I have been paying attention to, of course, on the technology front, the winners in the Simon Launch and in particular the SKU IQ. So from where we sit I guess it's just been hard over the last year to really keep track of exactly what's going on here on these different initiatives. Can you discuss either the winners or SKU IQ in particular and where you think this may go?

Yes, look I don't get mad at me Jeff, but I believe we are happy to do – I think we are close to putting together with Skyler and Michael and investor, I don’t know what you call them investor, not roadshow but investor meeting to kind of layout all the investment we made and maybe with not exactly you maybe with somebody else, but well-respected peer of yours and we’ll lay it out for the investment community all that different investments we've made and why. So I think we’re shooting for sometime in October but there's a lot of neat stuff here. These are little - in the scheme of things, little investments, but they run from creating energy efficiency with all of our LED lighting to helping retailers to actually new e-commerce ideas that may go to the mall. So it’s a lot of different categories, different levels of investment, in the kind of the A, B, C rounds. We’re happy to share that data. It’s a lot, though, to do it on a call like this. But we will be sharing a lot of that stuff with our investors.

Okay, thanks.

Sure.

Our next question comes from Ki Bin Kim.

Thank you. A quick follow-up first. Have you bought any more shares post the quarter end?

We operated - if you are familiar, you have to operate under a 10(b) 15 rule once your quarter is completed. We gave guidelines because you can't be in the market during that period of time and the guidelines that we gave to the broker were not met. So the answer is we have not purchased any further.

Okay. The second question, is there any incremental change in trends you're noticing in the outlet business? Maybe not the premium, at more infill outlets, but maybe more secondary, where maybe the pricing gap between full-line mall retailers and outlet businesses or retailers are maybe narrowing? You've seen like T.J. Maxx and Ross doing better. Have the secondary type of outlets - do you notice any less importance or less traffic or any kind of incremental trends?

Not really, I mean I think not really at all. I mean I think our outlet retailers are very focused on finding the right balance between full price in outlet that’s why they are very focused on not overexposing the brand. There have been certain retailers that have had disappointing sales both in full price and in outlet. Outlet’s no different than full price in that if a retailer is not hitting it, it will affect their sales in full-price and in outlet. But no trend in that at all. We have outlets in Cincinnati, Columbus, Indiana, St. Louis, that are all doing just fine. They are affected by retailers that may not be doing as well as they were a year ago, but that's similar to the full price small business as well.

Okay thank you.

Our next question comes from the line of Alexander Goldfarb.

Hey, good morning out there.

Good morning.

Hey, how are you? Just a few questions here David, first just going back to the dividend and stock buyback, certainly as you guys outlined where you want put your money, redevelopment and development seems to be the first and foremost. And then when you move down from there, once you've solved for paying out appropriate with the taxable income, it sounds like your bias is still towards increasing the dividend versus buyback. So I just want to see if that’s the proper interpretation from your comments or if you are thinking that any excess cash may now go more towards buyback versus the strong dividend growth.

Well, the dividend - listen, this sounds weird, but we're highly profitable, right? So as our earnings increase you know our taxable income increases and therefore our dividend increases. Very simple that’s the REIT model. We’re great believers in the REIT model that’s why we are all here. And so our dividend is going to increase. There is just no two ways about it, because we have created a very nice earnings machines as long as we don’t make mistakes about where we invest capital, we’ll be in good shape. So I always like increasing the dividend more than stock buybacks, we had this unusual situation where we basically took one investment and felt the most immediate interesting return would be buying our stock back. I think having the flexibility to buy it in a volatile market, when there is a big disconnect is what will be focused on. But I would continue to expect knock on wood that our earnings continue to move up, we’re going to be focused on increasing our dividend. And it’s under appreciated in the REIT sector, but if you look at our dividend yield compared to our peer group and you look at our dividend growth in the expectations of a higher dividend growth. We look like a cheap stock, so I mean do what you want with that. I guess I don’t know.

Well, which as an analyst we can't do anything with it because we can't own it. But obviously it's good to cash dividend checks. Moving over to Europe, you guys announced the JV with HBC in Germany, and it involves a lot of High Street retail. In the U.S. you've shied away from doing High Street retail. You've stuck to the malls and outlets. So just sort of curious, do you have a different view with High Street retail in Europe that you don't share in U.S. or it’s really again just a pure credit play in focusing on retailers, and you're not trying to do something as far as potential to get at High Street retail in Europe.

Look I think the market in the U.S. with respect to High Street retail is sophisticated expenses, there are lot of guys that have been added for a long-time. We think Europe is a little bit different in that maybe there is more opportunity for us to do that just like the opportunity that we saw with Klépierre at the outset a few years ago. So that’s not to say the HBC thing is a little bit of credit play, it's a little bit accretive to grow vehicle, it’s betting on. I think extremely talented CEO and team in HBC. These guys are entrepreneurs, they are smart, they are sophisticated, they want to grow their business. We are happy and pleased to be their partner and I think that entity ultimately will look to create a broader portfolio. High Street Europe is a little more interesting maybe from evaluation point of view. U.S. is a little more pricey, got a lot more sophisticated players, but we’ll see how it evolves, but we are making I think a good bet where we’ve got very strong partner, strong assets, strong credit and between the two of us that have the nose and instinct for good deals we should find some opportunities.

Okay, that’s helpful. Listen, thank you.

Our next question comes from Vincent Chao.

Hey, good morning, everyone. Just want to go back to the Sears JV. Just curious in the context of investment opportunities, there's a lot of chatter about different retailers doing something with their real estate. Just curious if you are having more conversations with others on structures like the Sears or the HBC deals that you have.

Well, I think there's got to be more than just marking or financing retailers real estate. So for instance I can just contrast – the reason we did Sears is because partnered with them is because it’s all about redeveloping over time those boxes. Sears’ store of the future may be part of it, they may not be, but that’s basically a redevelopment play. HBC that contrast it was, yes, they got a mark out with real estate, but to me we created – if HBC only wanted to just mark the real estate and do credit we wouldn’t have played, we saw an opportunity to bet on a very accomplished entrepreneur great brands and low and behold we did the deal and they are buying the German department store, but we are entering in German real estate in a big way. If it's just marketing real estate or just a credit that’s not really exciting for us. So we’re happy to talk strategically with our retailers about it, but there's got to be more to it than just that. And so I think this world will present opportunities, but there's got to be more than just marketing the real estate whether it's redevelopment or creating a growth vehicle to go do something there's got to be more to it than what is just said.

That makes sense. But I guess I would just – it seems like there would be plenty of redevelopment opportunities beyond just Sears, although Sears offers plenty of opportunity in itself, I guess. But maybe just thinking about other areas I mean can you just comment on the McArthurGlen pipeline? I think there's one project that you were expecting to start here this year. But how does the rest of the pipeline look like for potential additional developments there?

Sure, there is – in Provence, we are in fact we just bought the land, we are starting construction in September after the growing season, believe it or not, is finished and that’s an all systems go deal, we are in the final throes of expand – about to start the expansion in Roermond, which we'll be a partner in with other partners in that project. We have pipeline in Normandy, in Spain with – we are partnering with [Sonali] and we got – we are looking, we are not quite there, but we’re looking seriously expanding Venice. So I would say it's a very active type in terms of new development and obviously to be able to build starting in September in South of France is very, very exciting, very pleasing.

Okay. Just one last, one cleanup question in terms of the guidance. Assuming that does not include any future buybacks, just what's closed already?

Well, Tom and I had this philosophical discussion today. We are a pretty large company, we are going to earn $10 a share this year thereabouts. We have so many ins and outs, we’re just not a portfolio we’ve got so many things going on. That’s our best guess, we put it all on the blender, we give it you and it’s all subject to change quarter-over-quarter. The good news is we hit our numbers, knock on wood. Hopefully we'll continue. We don’t isolate one particular thing over another and we’ll see where it shakes out.

Okay, thanks a lot.

Our next question comes from Carol Kemple.

Good morning.

Good morning.

At this point with your other department store tenants are you seeing any of them want to right-size space like Sears?

Not really, we are constantly in conversations with them and we are doing a number of other potential things involving relocating department stores. For example at Stamford we had a Bloomingdale's that was oversized, we worked with them they built a brand new store, and now we’re redeveloping the old Bloomingdale's into small shops. Did the same thing with Saks at Houston Galleria. So it’s a very dynamic process. We’re constantly in conversation with them, and we’re doing a lot of things as a result of that. But there is not another store out there that has the kind of focused, programmatic approach to decreasing their footprint size.

Okay. Thank you.

Our next question comes from Michael Mueller.

Yes, hi. Just going back to Sears again, what's a rough idea of the dollars that could be invested in those 10 or 11 boxes over time?

I think we’re going to use that on a project by project basis but obviously as we’ve articulated, it’s a substantial opportunity and it would certainly be in a larger amount as opposed to a lesser amount. But it depends on the scope of the individual projects, but that is to come.

Got it. Okay. So it sounds like it could be in the couple - in the hundreds of millions of dollars.

Potentially, yes.

Got it. Then I guess, how does it work? If you demolish a Sears box and do a major expansion well beyond the footprint, do they participate in that? Or is it just to the scope of the footprint?

Each project is differently. But in the Sears venture, they own a part of the Seritage, our venture owns a parcel of land. So the venture would be focusing its redevelopment efforts on the parcel of land that is owned in the venture. And that would be the extent of the activity in the venture.

Got it. Okay, thank you.

Our next question comes from Caitlin Burrows.

Hi, good morning. Just quick question on occupancy and the impact of bankruptcies from earlier in the year. I think we were pretty happily surprised to see that your second-quarter occupancy and same-store NOI were actually somewhat stronger than the first quarter. I was just wondering if you could go through some of the progress on re-leasing that space and when you expect to have made up for the lost occupancy and NOI.

I will just say our goal we are going to – we still think we will come close to our year end occupancy of last year, but its going to be - its not a no-brainer. It could slip what I’d say immaterially, but others may have a different view of that, so I respect that. But we’re trending up we are making progress, and I think we’ve got momentum but it takes time. So our goal is still try to get back to last year. But we lost, what Rick?

940,000

Yes, 940,000 feet, so that’s a lot of work. So we are little bit on the treadmill, but we're a fit athlete and we're running...

David is speaking for himself.

I wish.

I would just add one thing that we are making very good progress going through it and it is an opportunity its hard work it has the short-term impact but the tenants that we are brining in are certainly higher productivity tenants from the sales perspective and so far the rents that we’ve been able to generate or in excess of the rents that we are being paid by the former tenants that when bankrupt.

Got it. Then just also is there anything you could say on the difference you're seeing in re-leasing the space at, say, your trophy properties versus whatever you would call the next tier, and the next tier of your properties?

Look, it's axiomatic that the higher-productivity properties have a broader band of interest, but that’s what we do and happily we're also blessed with a portfolio that is predominantly those strong properties.

Great. Okay, thank you.

You are welcome.

Our next comes from Linda Tsai.

Hi. I'm not sure if this is something you could comment on deeply, but when you look at your redevelopment plans for Sears, do you think you're approaching your plans any differently from GGP or Macerich? Or is it relatively straightforward in terms of figuring out what the property is missing and splitting boxes and adding entertainment?

Look, I think they’re very – they are both very confident developers, redevelopers. So at the end of the day my guess is it’s not going to be all that crazily different. But it’s so much of that dependent upon the location and the local market, but they’re both confident developers. I would probably venture to say it will be similar, but if they are better than us we intend to copy immediately, okay.

Then retail is cyclical and while there's been a recent wave of closures you also noted that there's also a lot of entrepreneurial concepts popping up. Do you think there's anything different about the cycle time around as it relates to maybe omnichannel selling or bifurcation amongst brands catering to high-end or low-end consumers?

Well, look would you say generally there is obviously the whole movement towards value on one hand and luxury on the other continues. The general – the good news about that is we’re positioned in both of those barbells extremely well. But that’s not to say people lose sight of that, that's not to say the middle American mall isn't doing well. Its part of the community, it’s ignored from a media point of view, there's assumptions made about those assets, there is extrapolation because one mall went out of business that all malls are going out of business. But I would say to you that the solid middle malls throughout America continue to do well, serve their purpose. But you’ll clearly see a movement in a lot of retailers from either aspirational higher end goods or value. There is no question about that.

One comment I would make to you on the new retailers we are dealing with is that they are substantially more sophisticated than the crop of new retailers we dealt with say 10 years ago, better financed, much more focused on their niche and it’s been much easier to deal this new crop of entrepreneurs than might have been the case.

Look in today's world we’ll have to be better, we’ll have to be on our game better. So that comes with – okay what industry it’s – let’s say I mean everybody, the rapid changes in the world is putting pressure on every industry, every operator and that’s why you got a strong, people, strong assets and strong balance sheet to deal with it all.

Thanks.

Our next question comes from the line of Steve Sakwa.

Thanks. Just a couple quick questions. Rick, if you look at kind of the sales and leasing trends, is there anything that you can talk about regionally? Any big differences that you see?

Look, there are a couple of differences across the thing in our business. The Great Lakes, Southeast and Pacific are stronger; mountain and New England were a little weaker. The better categories were home furniture, food, personal care, jewelry, and athletic shoes.

Okay.

I mean, I say Steve you clearly – the stronger dollar and the economic upheavals in growing markets, but with wealthy people Brazil, what's going on with China and their focus on obviously Europe with the stronger dollar. I mean it has impacted sales in the high tourist centers and we’ve got them. I mean there is no question. We've got them in South Florida. We've got them in Orlando. We don't have New York City, we have Woodbury which is been relatively flat and that's usually a center that grows every year I think that’s more of all the stuff going on with the center and the tourism, but the tourism centers have had a little softness you see in the hotel industry. So we are not immune to that.

I presume that's not having much of an impact on leasing, just given their long-term nature. Or do you actually think it's impacting leasing at all?

I would say it had no impact on leasing.

Okay. And then, David, any just update kind of the Copley kind of residential project?

Well, I mentioned it briefly earlier which is look we’re doing the Southwest Corridor. We’re finalizing the permit and there which is more administrator. So it is all shaping up to, we start to dig down to support the foundation going up that's all moving should start the Southwest Corridor should start in the next month. So we have certain fail safe, the way that building is being constructed we have fail safes so for instance we are going to do the Southwest Corridor first which is because we’ve got to create a new entrants to create the way to build. We have to go down into the Turnpike so we have to create new entrance first. That’s happening, that’s been approved by us then we go down into the Turnpike then we go up to support this field going up. So we will be making that incremental decision, but once we do the Southwest, we will do that. And then building the podium is where it's really guts poker that’s a year decision from now, but all systems are go and we are cranking, we don’t see any reason to stop. So we – the kind of nice thing about this is that we can stop looking this for the market a year from now and yes we would have an investment in it, but we’ll always be able to go up. I don't see any reason why we wouldn't go up, but we are certainly going to go down and build our way up to create the platform to build the power.

Okay and then just last question. Anything on Deliv? That kind of system just seems to have taken a backseat. Haven't heard much about it. Any thoughts about that or how it's working or…?

I would comment on Deliv that Macy's just recently announced that they are expanding the footprint of stores in which Deliv is going to be working with them. So that is certainly a positive sign and we continue to believe that there is a significant role for all of our properties to play in the fulfillment aspect of an omnichannel retail business, and it's moving a pace.

So Rick, do you think it’s more a function of just consumers not really realizing it exists to kind of get more critical mass?

I think it’s just the function of getting the systems right, getting the retail so the point were they are ready to fulfill from their store that there is a big systems upgrade it’s going on right now across the entire industry. And ultimately there is going to be a seamless integrated experience for our consumers and certainly fulfilling from the store to their home has going to be part of that and Deliv can be part of that solution.

Okay, thanks.

Our next question comes from DJ Busch.

Thank you. Just one quick follow-up on Sears. Given the potential size of the capital spend for some of the Sears projects that you were talking about earlier, if Seritage can't meet its share of the capital requirements, is there an opportunity for you to put up a disproportionate amount of the capital to potentially grow your interest in the joint venture?

Well, that have to be a negotiated – that would have to be a negotiated part of the deal, but it seems to me they have got the balance sheet to be able to do that, but I’m sure we could figure it out as they didn’t.

But is it correct to assume you guys are controlling kind of the process and the strategies at each of the center?

We’re joint venture partners, it’s both – it’s approval on both sides. I’d say we are taking the lead on coming up with the plans and the redevelopment and the different uses. But they are riding copilot with us.

And I would also say to you that we have significant another number of Sears stores that are not in our venture that are in Seritage. And when we meet with Seritage, we’re actively working with them, as we have done in the past to help them redeploy those phases in a productive way and an example of that is King of Prussia, where Dick's now opened and Primark is opening this fall. And between the two of them they will 100% occupy the former Sears store.

And just a follow up on that, Rick. With Seritage kind of taking control of the Sears space and the talks of other department stores potentially monetizing the real estate, do you see any difference in the operations? I know it's early, but do you see any potential impact to the way you negotiate or lease or deal with the anchors if the landlord is no longer the retailer?

No.

Okay. Thank you.

Yes, they don’t have the infrastructure to get stuff done like we do. So I don't see the dynamics changing.

Thank you.

Our next question comes from Ki Bin Kim.

Thank you. Just a quick follow-up. I know most of the conversations are always circling around upgrading quality and reinvesting in your better assets. But given that you do have some of your walls tied into WPG and the history there, and just because the stock price has gotten cheaper over the past year, is there a certain point where a lower-quality portfolio might look interesting just because it's so cheap? Or should we just basically consider this like a permanent divorce?

I don't know even how to interpret your question. We spun off WPG well over a year ago. They are separate independent company, they are focused on the strip center and the B mall business. You can hear that directly from them, we do services for them that ultimately will go away mid next year and their growth opportunities are better discussed with them. I think our focus as you seen over the years, is to buy the bigger assets or assets that we feel we can improve upon, but the primary focus is on our redevelopment or finding different vehicles for growth, whether its Europe, whether its HBC et cetera and continue to grow our business. I said the amount of the big deal business we are not going to buy B assets I think that’s better for others to do given what’s on our plate, but I’m not sure I answered the question, but I tried.

Yes, you kind of did. I was just basically asking if there's a certain price where something like that would be interesting again?

I think that this is better for others to do, but that’s not up to me to.

All right. Thank you.

Our next question comes from Rich Moore.

Hey, guys. Good morning. My question, David, was kind of on the flip side of that. You have 200 assets. If you rank them all, does it make sense to get rid of 190 through 200? That kind of thing?

Well, we are always doing that, we just do it – we don’t do it ahead of that so we have a deal that’s closing mid-August that was a lot work and we just didn’t want to deal with it. We are closed on another deal so we do that all. Rich, I know if you looked at our history sold a bunch of stuff so what we get, we’ll always sell assets, always part of…

Okay, so are you marketing things actively, or is it just sort of an opportunistic? Yes? Okay.

Yes. We market. We've marketed - the two that I am referring to were marketed, yes.

Got it. Okay. Then on the lease term income you guys got this quarter, it was kind of big. I'm curious; I know you can't tell each quarter what's going to happen. But is that something that's going to pick up here you think in the last two quarters of the year? Are there more discussions you're having on this kind of thing?

There could be a few deals here or there. But if you look at it year-over-year, year-to-date it’s not all that different 2014. So it’s lumpy towards lumpy but I don’t think it’s going to be all that different, Steve right? From

But the same as 2014.

Same as 2014 that’s the business that’s lumpy in terms of quarter-to-quarter it actually relatively consistent year-over-year.

Okay great. Thanks guys. End of Q&A

I would now like to turn the call over to David for closing remarks.

Okay thank you. Have a wonderful last few weeks to summer. Sorry to have ruined your Friday on a summer Friday. Enjoy.

Ladies and gentlemen thank you so much for your participation in today’s conference. This concludes the presentation. And you may now disconnect. Have a great day.