Good day, ladies and gentlemen, and welcome to the Simon's - Fourth Quarter 2020 Simon Property Group Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. I would now like to turn the conference over to Senior Vice President of Investor Relations. Please go ahead.

Thank you. Apologies for the delay, getting started this evening, and thank you all for joining us. Presenting on today’s call is David Simon, Chairman, Chief Executive Officer and President. Also, on the call are Brian McDade, Chief Financial Officer; and Adam Reuille, 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 variety of risks, uncertainties, and other factors. We refer you to today’s press release and our SEC filings for a detailed discussion of the risk factors relating to those forward-looking statements. Please note that this call includes information that may be 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 those who would like to participate in the question-and-answer session, we ask that you please respect our request to limit yourself to one question and one follow-up question, so you might allow everyone the opportunity - with interest the opportunity to participate. For our prepared remarks, I’m pleased to introduce David Simon.

Okay. Good evening. As all of us know, 2020 was a difficult year for all of those affected by COVID-19, including our company. Even with the unprecedented operating environment, we accomplished a great deal. We earned $9.11 per diluted share and funds from operation for the full-year, which includes $0.06 per share dilution from our recent equity offering in November. We generated over $2.3 billion in operating cash flow. We acquired an 80% interest in The Taubman Realty Group, made strategic investments in several widely recognized retail brands at attractive valuations, and have already made significant progress in repositioning each brand and increasing their operating cash flow. We raised over $13 billion in debt and equity markets, opened two new international shopping destinations, expanded two others, completed three domestic redevelopments, abated rent for thousands of small and local businesses, regional entrepreneurs, and restaurateurs who frankly needed our help to survive, paid $700 million in real estate taxes, which unbelievably was an increase from 2019 despite losing approximately 13,500 shopping days in our domestic portfolio during the year due to the restrictive governmental orders placed upon us, and that's roughly 20% of the whole year, to put it in perspective, and we returned $2 billion in cash to our shareholders in dividends. These results and frankly, these accomplishments are a testament to the entire team, Simon team for the resilience, relentless focus on operations and cost structure, and the safety of the communities we serve, and obviously, focused on giving back to the communities in terms of what we did from abatement and real estate tax point of view. Now, let's go to the fourth quarter and then we're going to turn the page. Fourth quarter FFO was $787 million, that’s $2.17 per share, obviously, that was affected by the dilution…

[Operator Instructions] Our first question comes from the line of Steve Sakwa with Evercore.

Thanks. Good afternoon, David, or good evening.

Good, good.

I guess, first, I just wanted to maybe talk a little bit about the leasing momentum and pipeline that you talked about. And just - given that things are moving forward, the economy seems to be getting better. Vaccines are getting rolled out. We're not completely out of the woods, but certainly, there's light at the end of the tunnel here. What sort of discussions are you and the retailers having about unresolved leases, and maybe more importantly, new leases to backfill the vacancy that got created over the last sort of 12 to 18 months?

Well, look, I think we’re - as I said to you, we’re expecting to grow our cash flow. Are we back to normal? Not yet, but we're working our way back. Generally, it's still a very serious, intense negotiation on renewals. Retailers are generally cautious. But the ones that want to grow their business are excited, and we hope to be able to certainly increase our occupancy for 2021. And it's going to take some time to obviously get back to where we were in 2019. But the healthy retailers that believe in their business and believe in their plan are making deals, and that we have such a high-quality portfolio between what we have and what we've acquired with respect to TRG that we're going to be - we're going to get our fair share of open-to-buys.

Okay, thanks. And maybe just as a follow-up, I appreciate some of the comments you made around the guidance which I was a little surprised at the tightness of the range just given the uncertainties out there. But is there anything else you can sort of provide? And I realize there is a lot of inputs that go into that number or in that range of numbers? But anything just on same-store growth or occupancy or lease spreads just to give us a little bit of a feel for how much of the deferrals that you provided or abatements kind of come back on line in 2021?

Well, certainly, the abatements better not repeat, okay? So that's step one. I would say to you generally, again, it's - our portfolio NOI growth will be 4% to 5%. We have taken a further reserve, but I'm not going to give you a number as to what we think should be a cushion to whether whatever it is further bankruptcies, additional abatements to the extent that we cut an appropriate deal, we still have some large retailers frustratingly we have not solved. Not because of us, we've tried, but we haven't gotten into the finish line. So I'd say generally around 5% in the comp NOI number. We have a reserve. Sales are really all over the place, so it's really hard to give you a good number there. And we would expect occupancy to edge up. And I gave you - people wanted to hear about how much was retail or I gave you that and we have TRG factored in there. Obviously, we made our financing assumptions. Those were pretty straightforward. We have our share count increased because of the offering. And then we roll it into the blender and that's kind of what's spit out. We have some variability. You're right, the range is tight, but we did - I mean, we did add a reserve to it based upon gut feel that we're, like you said, not - we're turning the corner, it's kind of my phrase, but are we completely out of the woods? Not yet, but well on our way.

That’s great. Thanks very much.

Sure.

Thank you. Your next question comes from the line of Rich Hill with Morgan Stanley.

Hey, good evening, David. Thanks for your time this evening. I want to maybe just spend a little bit more time walking through the line item where Taubman and some of your other investments are held, not because I'm questioning them. I actually think they're becoming increasingly important. So could you just maybe walk us through how we're supposed to think about that line item relative to the full FFO guide for 2021? And maybe how you think you can grow that line item even after 2021 and 2022 and 2023? Because I recognize there's just a lot in there and it seems increasingly important?

Well, look, it flows through - listen, I used to - I'm still pretty good at it, but it flows through our equity. They're all equity accounted, so now in - we show a couple of different things. So we do separate out our retail NOI in our supplemental, so we do, do that. TRG will be in our property NOI next year. We had - we took no financial implications for TRG in the fourth quarter, obviously, I think we owned it for like 12 minutes, right? When did it close?

29th.

29th.

29th all right, I see. I'm always faster than what it is. We took no other than, obviously, our debt increase at the year-end, because we drew down on the term loan to fund it. But from a GAAP point of view, it will be in the equity, all lumped together with our other equity investments. But in our supplemental, we’ll have TRG in our portfolio NOI, and the retailer will be in that separate line item. Guys, you want to add anything else?

No, that’s exactly right. You'll see the retailer results that David mentioned come through the NOI from retailers at this line item, Rick.

Okay. I think I understand that.

Yes.

And, David, obviously, as you said, 2020 has been a remarkably abnormal year. But you've been in a really interesting position whereby you've been able to buy some retailers and negotiate retailers - with retailers. Could you maybe just walk through some of the biggest lessons learned about who you want to be your tenants, how you negotiate with them, how they negotiate with you? I just think it's important as we think about how to model cash flows in the out years?

Well, I mean, that's a tough one, Rich. I mean I could go in a lot of different directions. Listen, when you end up in bankruptcy or near bankruptcy, you've obviously made a lot of mistakes. It just doesn't happen overnight. And by and large, the ones that we bought, retailers that we have bought in bankruptcy. So then we go in there and just run it like we run Simon Property Group, obviously, with the help of our partners. And we make fast, commonsensical cash flow-oriented decisions and return on investments, et cetera. And we have a sense of, just because of our experience in the retail real estate world, what makes it successful, what success real estate they should be in, what's the right rent to pay in spaces and we bring all those - all that to bear. And then obviously, when you're in bankruptcy, you have the chance to deal with leases or other contracts, other contracts that are wildly expensive that you might be able to change. I mean, the most amazing thing, I shouldn't really say this, but there - the most amazing thing is that every retailer that we purchased in bankruptcy, the one - all the tech companies get $0.100 on the $1, okay, that they pay for whether it's services, whether it's for the e-commerce business, whatever it is. And the landlords ended up us included end up getting it in the shorts that's an interesting thing. That would be great to like rethink that whole process. But there - those tech companies are so powerful that they can check you off if you don't play ball with them. So landlords, us included, don't have that kind of power. So I mean, I don't know if I've answered your question. It probably is. You probably have a lot of nuances to it but it's probably I could go on for hours. If you don't mind, let's go on to your next question or another question.

Yes, no. That's it for me, David. We can discuss offline. Just seems like there's a lot of really interesting drivers of growth here and we're trying to get our arms around it. So thank you. I'll get back in the queue. I don’t have any questions. So, thank you.

Your next question comes from the line of Alexander Goldfarb with Piper Sandler.

Good evening David and hope you're enjoying the snow out there.

It's pretty. It gets less pretty when it gets closer to March let me assure. Yes.

Yes. The skiing gets better or so, that’s positive. And so two questions here. First, in the fourth quarter it looks like on your - on that rent collections you have a 90% table that you guys have. It looks like the bankruptcy is leveled off the deferrals, leveled off. And it looks like you guys took about $141 million of abatements in the quarter. Also I noticed that your - you had a big straight line right off and then you had a big lease term. So it seems like there was a lot of cleanup in the fourth quarter. Is that the way that we should interpret it, like basically you guys got to the end of the year, you shouted up and down the hall, say, what do we got here. Let's clean the books and start 2021 in a good way. Or is that not the right interpretation, because you didn't say what the actual operating guidance for this year, you just said you're lobbying for it. But it does seem like you guys cleaned up a lot at year end.

Well, the bottom line is, when it came to abatements we took it in the period that we actually made the deal. And if we had done everything in the second quarter, we would have done it then in the Q3 with. It just took an unbelievable amount of time to get - I mean there was a lot of horse trading, a lot of big accounts got settled as you know in Q4. And it really, I mean, we - it really was when the deal was done. So that's the - yes, we certainly want to go into 2021 and we did as much as we could to finish 2020, but those abatements were done in the period at which we cut the deal and signed up the retailer.

So we shouldn't interpret the acceleration in the fourth quarter as lingering into this year, it was just stuff done in the quarter?

As I think I said there is some negotiations that we still have left to do but I think we dealt with that in a sense in 2020 based on kind of where the deal was headed. So we did use some judgment at year-end in a couple of these cases. But it isn’t done until the cash comes into my bank account, not mine, that was terrible. My bank account at the Simon Property Group representative, okay, so make that perfectly clear, okay?

Yes. It's just as clear. Second question is you always treasure your balance sheet and Moody's already downgraded you back ahead of the third quarter earnings. S&P still has you on negative watch. So just the question here as you guys think about your balance sheet. I mean, on one hand, your debt trades wider than what the ratings would indicate. Obviously, the bond guys want to get the best deal that they can. At the other hand, you guys can access the market. But still how - I mean, if something were to happen, you've got like a two-notch downgrade. Is that - I mean, it almost seems like the market is pricing that in. But on the other hand, you guys got a ton of debt that you were able to issue. So can you just give us some color on, like, the buyers of the debt and how the debt people are looking at it? Are they just trying to get their ounce of flesh while they can? And the way that you've outlined your plan to the rating agencies you'll be able to maintain something that starts with an A, or are there other concerns out there that people are or that the rating agencies are talking to you about that you need to address?

Alex, this is Brian. Look, I think the last debt deal we just did in here at the beginning of January is representative of where we've seen our spreads go. I mean, spreads were in 100 basis points since the summertime. And so I think that the market is representing and supporting time and kind of going forward. With respect to the agencies, we are certainly in deep dialogue with them on regular basis and are comfortable with what they've done thus far, and I think they're looking at our deals and our ability to raise capital, to David's point, in excess of $13 billion last year, as a testament to the company's balance sheet. So I think they're comfortable. Won’t speak for them, but I believe they're comfortable where they're at right now.

Yes.

Okay.

There's just no way we're going to get downgraded, not a chance. So next question.

And our next question comes from the line of Derek Johnston with Deutsche Bank.

So what have you learned about traffic, your tenants, and demand and most specifically in the centers within space that have less mandate restrictions? Are there any inspiring read-throughs or green shoots for those centers with tighter restrictions, let’s say California or North East that you can pinpoint or share?

Well, I would say, you take a state like Florida as a pretty good example. And I mean, you are getting - the one element that's missing is international tourism. But if you put that aside, you're getting some real domestic traffic increases and you're getting - and sales aren't quite what they were last year. But at this time, what you're seeing - I would say to you that like a state like Florida is really showing green shoots, vibrant economy. The only element that's missing to make that really hot would be international tourism. But everything else is kind of clicking along and it’s pretty good. Texas is probably the next closest, but again, it depends. I mean, they're - that also somewhat dependent upon whether it's near the border or not. And what is such a big state that do you have COVID in this one area versus that area. But I'd say Texas is showing green shoots as well. But Florida is a great example of I would say to you that you can - you can’t get on with goodness and you start to see green shoots and the - there's a lot of energy there. And no, I did not get on Super Bowl, okay.

So we did go back, David, to 3Q 2019 and this was the last quarter before the pandemic was known. At that time, the redevelopment buzz and pivot to experiential and mixed use concepts. It was really high and that's the redevelopment pipeline stood at the record $1.8 billion. So how is this pipeline and redevelopment priorities changed besides being much lower? And how do you stack or prioritize redevelopment spend, especially as we see the pandemic escape velocity in front of us later this year? Thank you.

Yes, sure. I'd say simplistically, as we look at restarting the pipe, the pipe didn't go away. We just put it in the freezer. Now we're thawing it out. And I would say to you the biggest change Derek is that we believe in the mixed use component pretty, pretty significantly to the extent that we were adding what I'd call retail. We're probably looking at those plans again to make sure that we're adding the appropriate amount, that's kind of the biggest change. But I would tell you this, I do feel very strongly about this that the high quality suburbs are going to be where the action is in the future. And all of the urbanization two, three, four years ago, the question was why are the suburbs going to exist. Everybody is going to live in urban environment, yadda yadda, yadda, yadda. I'm telling you the suburbs are going to be hot, and our quality real estate is going to be where the action is for those well located suburban centers of commerce. And that's going to be the big change coming out of the pandemic. Next question.

Our next question comes from the line of Michael Bilerman with Citi.

David, my first question is just sort of just talking more broadly about vertical integration. And I know you can't talk about the fact that's been under review right now. But can you talk just a little bit broadly about doing things on balance sheet versus in joint ventures or other structures. And maybe just provide, give an update on some of the retail investments, and maybe give an update too on shopping outlets and how that was set up conveniently before the pandemic and how that has happened. And maybe just tie everything together to the vertical integration and being able to control a little bit more of your own destiny.

Well, listen, I would say that we - whatever we do we look at return on investment and cash flow potential - shareholder value potential and cash flow growth, and obviously top line growth. And each business is evaluated based upon what those particular characteristics are important to that investment. But there’s no reason. You know we’re in a REIT format. There's no reason why we can't make money in other areas that are consistent with what we've been doing. I think we've proven that time and again. Have we made mistakes? Yes, we have. But we've been pretty good investors, and we hope to do that in the future. We're pretty good sponsors, and we have - our relationships between the brands and our partners and - spans the globe, essentially. From a real estate footprint, we're in Europe and Asia, and obviously domestic. The only place I'd say we're really not in is South America. But our retail brands span a lot of places, and we're focused on value. And at the end of the day, Michael, I look at our retail footprint. It does $3.5 billion of commerce, and I look at the value we get for it, and it's probably nothing, and in some cases people view it as a negative, which I can't understand, but they do. That's their prerogative. Maybe there's something maybe we should unlock that value, we’re absolutely going to look at every opportunity to unlock value to the extent we can but we - and figure out the right structure. But the most important thing is to make a good investment. The second thing that is where it should reside, how do you get the value, how do you grow it? And all of those are in the works. Spark is a great example. We believe in the model. We can - we believe that we can run brands across it common infrastructure. We know that e-commerce brands, they spend a lot of money on infrastructure. We know that if you combine those into one entity, you're bound to save a ton of money. We've seen it in the overhead in retail companies, so you know we're at the early days of figuring out what the right structure is. But in the meantime, we're going to make investments that make us money. And believe me, there is value there that will unlock or we'll get the credit for.

And then just the same question just in terms of guidance and I greatly appreciate the transparency of actually putting out a number of guidance which didn't have an answer going on, it's great. If you think about just sort of the building blocks to that guidance, if you look at 2019 relative to 2020, right, you had that $2.50 per share or almost $3 a share, well over a $1 billion decline. You’re picking up at least $200 million going from 2021. But I almost want to think a couple of years of getting back to NOI and FFO and bridging that gap. You threw out $0.15 to $0.20 of retailer investments per page 17. It looks like that was pre-DNA about $0.06. So call it 10 of the 50 increase is coming at least from the retailer side and the positive investments you've made. But maybe you can just sort of break down some of the other bigger components of what's coming back. I'm not - I don't need specific G&A guidance or NOI but there's obviously a pretty big moat of earnings to get back. And maybe you can just share some of the bigger piece of those.

I mean, look, I think the biggest thing is not to replicate the abatements and the bankruptcies. I mean that's the biggest component. But look, our portfolio, again at gross not at share, did over $6 billion in 2019. Right? We lost a $1 billion. And all of the stuff that we did net. And again we’ve worked our unit to what off to mitigate that through cost savings. What's not going to replicate or the cost savings in a sense and the abatements. And we were pretty aggressive in running the ship as lean and as high as we could. And we had no choice even though people across the street were open, we weren't allowed. So we have a $1 billion to make up. Again, this is pre-TRG and I think the biggest thing is going to be the campaigns of the big unknown is how long is it going to take to get lease up, we lost 3 - 350 basis points, 3, what, 380 basis points?

380 basis points.

380 basis points, so we loss 380 basis points on occupancy sales in our vaccine rollout and everything else. I mean, we did our roll up our best guess, our comp NOI is going to be positive. And we've got a reserve but at the end of the day, we're going to make the $1 billion up over time. We're also going to - some of the properties we're going to sell, go away, so that's in there, too. I can't give you - Steve Sakwa kind of poured out and we already gave you - he gave me more - he's got a nicer voice than you do. So I gave him more information than I probably normally would. I'm not kidding. But I mean, that's kind of where we are. We also - we're also dealing with the international shutdown. I mean, they're picking on malls like what happened in the U.S., again without science. But they're also shutting down outlets. But yet they high street open, so go figure it out.

Yes.

So we're still dealing with some crap everywhere. But I mean, I'd say the big thing that won't replicate. We hope is in the abatements, but it's taking on the cost savings and sales and then build up the lease income and bad debt, we put all these numbers in. We also put a reserve just because we have a lot of uncertainty, and we put it in the blender, and that spits out. Can’t add much more than that?

And our next question comes from the line of Craig Schmidt with Bank of America.

I had a question about the redevelopments in the U.S. Should you put your [Rick Sokolov] and kind of run through who you're thinking is possible anchor replacements I realized they may not be retail. They could be wellness, healthcare or e-sports, or whoever. But who are some of the replacement anchors you're thinking in terms of your U.S. redevelopments?

Well, I mean, Craig, that’s a retail - yes I mean, I'm sorry, real estate-specific. But I think what I said earlier is the most important thing. I think some of these we’re re-looking at, with the idea toward reducing the amount of new retail that we might put on board. But also the restaurants and we're making up for that with what I'd call the opportunity for suburbs to get exciting again, and I think that's going to be through a lot of the mixed-use efforts that were already under way. But I think will be accelerated. So, some of the anchors are doing - new deals. I mean, we're talking to Kohl’s. We're talking to [Buy More]. We’re talking to all sorts of those kind of guys, to Dick’s. We still are making new - we've got a couple of Dick’s under way. So and I would hope that some of the more thoughtful entertainment-oriented retailers once the COVID restrictions get back, would also continue to be in our property. So it’s still at work, but I'm hopeful we'll have a lot more of the mixed SKU stuff that we're doing and we're in some hot what I'll call very strong markets for that. Like with TRG in Nashville, we're in Austin. We're very strong in South Florida, obviously Texas. So we're in some of these markets that rent growth and are looking to facilitate growth and we're going to go and make the next evolution of our real estate that's much more interesting with time.

And then I'm just curious how are you interacting with the Taubman management given their properties? And how are they interfacing with the Simon people?

I’d say fantastic. We are on the leasing side talking significantly, both on COVID-related issues, renewal-related issues, new business, as you know, Craig we’ve got new business group dedicated kind of up and coming retailers which by the way, it’s exciting. All of those retailers and this is where I do miss Rick. He could start and your kind to mention him. But I will never do his list. I could never do adjust this. But most of those retailers are looking to grow. And they include from the Warby Parker to Shake Shack on and on. So that's very encouraging. We're talking to the TRG, about that relationship between Bobby and myself is great. In fact well Bobby, he figures out how to get to me very easily. He makes me look a lot with - which is fantastic. I look forward to having some tomorrow night. And I think it's going to be a great partnership. I mean they're dealing with what we've dealt with. In terms of COVID it’s been a tough year for them, but I think we're all looking forward to the future. And we'll go from there. And as you know, they've got - the families got a lot of capital tied up from the TRG and believe me they want to grow that. And to me that's a win-win.

And our next question comes from the line of Caitlin Burrows with Goldman Sachs.

Maybe just on the balance sheet side, could you clarify whether the Taubman debt is included in the debt metrics on Page 29 of the supplement? And if it's not, is it just because it happened so close to the quarter end or something else?

Hi Caitlin, this is Brian. It is not included. The only debt that will be included relative to Taubman will be $2 billion term loan that we drew down ahead of the closure.

And then going forward will it be reflected more similar to other joint ventures that we have or not?

Yes, it absolutely will.

Okay. And then this quarter the metric you guys had shown in the past on debt NOI looks like that's not there anymore. But I think it's about seven times using the net debt from Page 28 and the NOI from Page 17. So I'm wondering, A) would it be higher when including the Taubman portion of those metrics and also what’s your near and medium term targets for leverage?

Yes, that well, the fact of the matter is, I think that statistic you have to be very careful with. And I personally chose that I think we need to look at it again because as you know many of those properties are non-recourse and it overstates leverage. And I think part of our job is to educate the investment community how we look at the business. And Brian and myself, we'll begin that effort this year. But you know look EBITDA - debt to EBITDA, if you look at our - it's not in our financial covenants anywhere. So it's a gratuitous metric that is not as thoughtful as refined as it should be. And we're in the process of refining it to clearly articulate what it is. But you've got to separate what's recourse, non-recourse. What’s in JV, what’s not in JV in a more thoughtful manner, which we’ll embark upon in 2021 so you’ll have a better understanding of it.

And then I guess just considering where that leverage is and you'll educate us on how we should think about it. What's your current interest in making property-level acquisitions in 2021 or under what conditions would you consider raising additional equity?

We have no need for raising additional equity. The balance sheet is in very good shape. Rating agencies are very comfortable with the transaction that we did both to finance, Taubman and the equity deal. Obviously, they put us on watch just because of COVID. It had nothing to do with Taubman or the financial metrics. And I think as we get - as we go beyond the shutdown - remember, we lost 20%. We lost 20% of our ability to operate in the year which is material. And then obviously a lot - not counting the, restrictions that we had to endure coming out of it. I think once we show that we're - we've turned the corner in terms of that, you'll see that negative watch go away. No issue not worried about it one [iota]. And on the property acquisition side, A) if I can buy it at a good value and it's a great asset and a guy wants to sell and if that’s meaningful to our portfolio, we'll take a serious look. But we’re in no - there's no need to do one thing or another, if it's accretive to our portfolio and our financial wherewithal, we’re happy to look at it.

And our next question comes from the line of Juan Sanabria with BMO Capital Markets.

Just a question on sources and used cases, you continue to pay the dividend but at a lower rate than previously, you expect cash flows to go up. So any color or thoughts you can give us around the dividend going forward and other maybe use of the capital? I'm not sure if you have a sense of what could be contributed or used to further invest in retailers at this point, so maybe just a general conversation in sources and uses and then touching on the dividend.

Well, again, our net investment in retail is $330 million. So I think when we have properties that were worth a $1 billion plus, it is what it is. I think it's important to note that we are 400 basis points below our mean FFO multiple as a history of being a public company. And if you look at our retail or what we've seen from retailers and the correlation, they've all had a much greater bounce back in terms of performance on the in terms of performance on the - on their stock year-to-date for the last few quarters than we have. So, we're optimistic that the future will begin to - that are our value will begin to be appreciated again which has been in the past. And frankly, there's no reason why it won't in the future. With respect to this - and the reason I bring up the past is as follows. If you'll look, we work the best case analogy that we're looking at. Again, no one has really dealt with COVID before. And as you know what happened in 2008, 2009 where we had - don't hold exactly to those - these numbers. But in 2008 we were earning around $6 a share. Our 2008, 2009 bankruptcies delusion that we had on issuing stock, high interest rates, I think we earned in the $3.50, $4 range. And then we ended up rolling out of that earning $12 dollars. Okay. Now we're at $9 - we are $9.11. We're saying we're going to earn $9.50 to $9.75. And I'm hopeful that will replicate what we did in 2008, 2009. And not only that we do in 2008 and 2009, but we added immensely to the quality of the real estate. We separated ourselves from our peer group dramatically. The balance sheet got better. All of these same - we diversified, we did this, that, and the other, we grew international - I truly believe all of these things will happen again. That’s what we’re made for, and this is a long way of saying that the dividend tracked basically what we did in earnings. We actually paid scrip dividend in 2009, if you believe it or not. We cut it and scripted it and did all this crazy stuff. And that was - all of that in 2008-2009. I feel like if history repeats itself, given the quality of the real estate, the team, the balance sheet, the diversity, we are going to replicate the same good work we did coming out of that, and we'll do it coming out of COVID. We're already beginning to do it, and that's the important thing. So I think that's a long way of saying, assuming we can completely get out of COVID, you're going to see increases in earnings which beget increases in dividends. And we have the history that ultimately should repeat itself.

Thanks for that. And then just my follow-up on the lease term, can you give us any sense on how lease terms have changed, if at all, during the last few months in your discussions with retailers either for new or renewals, and how maybe that trended over periods of past dislocation, whether it be the financial crisis or the tech wrecking? Just the perspective historically would be helpful.

Yes, sure. I would say, simplistically, certainly prior to COVID, there were more or less the same. There is certainly more of an interest to go a little bit shorter term. So three years and by the way, we're okay with that because I'd rather negotiate two or three years from now than right now. So the lease in 2020, the new stuff that we did in 2020 and some of those renewals, some of the renewals we're doing 20 21 are shorter two, three years. But I think actually that could be in our best interest too because obviously, we've had being shut down and restricted and all this other stuff. We don't have quite the ability to point to sales as a way to increase rent. So I think we’re - and I think it's actually a two-way street. It's working out fine with the vast majority of our retailers.

And our next question comes from the line of Floris van Dijkum with Compass Point.

Thanks for taking my question. David and Brian, maybe, if you could talk a little bit about your debt philosophy, in particular, your mortgage profile - your mortgage maturity profile significantly shorter than your unsecured debt maturity profile. And presumably some of that is due to the fact that mortgage debt these days is less readily available. Maybe if you can talk about some of your upcoming mortgage debt that's coming - as in the fashion center, Pentagon, the Fashion Valley in San Diego, Florida Mall, some of these big JVs, how are your partners talking about the funding of those mortgages and/or the re-upping of the mortgages there? How are the banks doing that? And also I think you've qualified that or you've indicated you've got about $714 million of mortgage debt that's probably in fact we know some of this is already in the news is being handed back. Those are not obviously those premium centers. But talk about - if you can walk us through some of the - your thinking regarding your mortgage debt and do you think you'll have less or more mortgage debt after this year?

I'd say pretty similar are the couple like the Florida Mall Fashion Valley, pretty straightforward doing it. In some cases, it's got 10-year deals and maybe a little shorter. We did what 15 secure refinancing even in this period of time. So I don't find it overly complicated or overly concerning or any risk that there's not the ability, any risk that there's not the ability to refinance stuff. On nonrecourse, there's certain debt that's nonrecourse that may be in professional servicing. That's kind of a contractual right for the borrower which is a standalone entity that’s nonrecourse to SPG. It’s also the right from the special servicer right. So we’ve done - we’ve dealt with those for a number of years. In some cases, they’ll be restructured, mutually agreed to; and if not, and the special servicer would like to own the real estate, we're more than happy to cooperate and do it in a professional manner. We did one just recently, and it's absolutely in the best interest of Simon Property Group shareholders those decisions that we're making on that front. So very straightforward, very professional, honoring the contracts, rights on both sides. Make - hope to make deals in some; if not, then they'll no longer be part of our portfolio, and we wish that new owner the best of luck.

Great.

Maybe a quick one from me, on the duration here. Obviously, our unsecured portfolio benefits from the ability to issue 30-year debt. So that's going to naturally drive the duration higher on a weighted basis.

The other question I guess I have, one of the unknowns from the market is what are the right cap rates for malls in particular? What are the right cap rates for A malls? I mean, I think the market sort of has gone down on the fact that C malls are worth very little and the size is very high cap rates in low values. But the question is more regarding your portfolio. And you've mentioned your low FFO multiple. We've seen you know the Brookfield transaction at a much, much lower cap rate than where you're trading at. As you look at and we also know that there’s a large portfolio owned by West or the Westfield portfolio owned by unified potentially that that could be in play as well. How should the market think about cap rates for malls and maybe give your view on that?

This is a known unknown, right, as opposed to an unknown, unknown, right.

Yes, of course.

I would simply say there's - the cap rate is what we want it to be because I think we're the only buyer out there. So, and I'll look in the mirror and I'll decide what the right cap rates are. I think Brookfield is busy buying out, [indiscernible] busy buying up EPY. And I think we're the only buyer as far as I know. Everybody as herd mentality one way or another, we are buyers of high quality real estate. And the funny thing is, when we decide to buy something that doesn't count as to what cap rate it should be, now we're the only buyer. So, go figure that out. I don't know if that's a known unknown or a, you know, whatever. But the fact of the matter is we're really the only - I mean we're really the only buyer. And yet, everybody wants to point to a cap rate that we're not the buyer. But I don't - I never understood why we're not good enough to be the arbiter of what cap rates should be. But I'll let you figure that out for us. I can't figure that out.

But also presumably, as we've seen a lot in the tech businesses, when you buy something, obviously then that reinforces what the right, so you actually can determine what the right cap rate for your own value can be based on the value you're willing to pay for somebody else?

Well, listen, we did close just a recent transaction and in that - that's a pretty good indication.

Of the transaction?

That's correct. That's correct. So…

Right.

…and any of that. But I want you, Floris, I want you to get back to me and explain why we can't be the arbiter of cap rates. Why it has to be a state pension fund, why it can't be Simon Property Group? I don't get it, okay. Anyway, I'm kidding, but not really. But I'm kidding, mostly.

So you think if I were - sorry, I guess I'm slightly going over.

Yes. You’re over your allotted time. Call anytime.

Your next question comes from the line of Mike Mueller with JPMorgan.

Just a quick one. You mentioned boxes were skewing the 2020 releasing spreads. Could you tell us if they would have been positive if you strip those out and just give us any color on 2021 activity as well?

Tom Ward is shaking his head. Yes, and for those of you who know Tom Ward, you can count on it. They would have been positive, yes.

Got it. And any color on 2021 expirations?

In terms of renewals or appraisal or…

Yes, exactly. Yes, all of the above, yes.

In terms of what percent were done yet or not?

Percentage done, if the trends are consistent. Is there still renewing at positive rates as well?

Well, I don't - I mean, that's factored in. I don't know what - I don't know - I can't really answer off the top of my head on spreads. But what - we have a percent done. Does anybody know off the top of their head?

Like I say, we’re 50% done.

Yes, over 50%, but we can get you more. I've seen it, but I'm sorry to tell you I just don't remember.

No, that’s fine.

Tom could give that to you, the percent done.

And our next question comes from the line of Linda Tsai with Jefferies.

I just want to clarify, in terms of the 4% to 5% portfolio growth, this is overall NOI, right, not same-store?

Correct. We are - given the - I don't know how they show comp anymore given that we were shut down with restrictions. So I made the decision that we're just going to show you portfolio NOI, all-in, because you could argue that none of it is comp because, I mean, how do you - or all of it is comp. I don't really know what to do. So the simple thing is we're just going to show you our portfolio NOI without the comp distinction. So it’s all the real estate, all of the NOI, and hopefully that'll be helpful to you.

Thanks. It looks like U.S. gross contractual rents went down 2% to 3% each quarter from 2Q to 4Q. What accounted for this fluctuation?

Which, Linda?

I'm just looking at like when you take the 3Q sup and you look at the reconciliation page with - and like the first line is U.S. gross contractual rents, it's the same that on the 4Q supp.

Yes. It would have gone down to the bankruptcies, yeah, for sure.

Okay. So the $165 million versus $159.91 million versus…

Yes. I don’t…

Okay.

I mean - why don’t you talk to Tom, I'll give you the more detail but instinctually, I would just say you - it had to go down because of bankruptcies, I mean– but he can fill that in.

But sorry, one last one. You mentioned that the ABG brands generated $3.5 billion in digital sales…

Not ABG. Not ABG, all of our retail brands, okay?

Okay.

So our investment in Penney, Aero, [indiscernible] Brooks Brothers, Forever 21, put it all and $3.5 billion.

Okay. And any sense of what this growth rate looks like going forward?

Well, I mean, I'm kind of torn because it's been pretty quick with COVID, right. Our stores aren’t open but we're shut down for a long time. But it's growing reasonably well.

Okay.

But we have - I think the important thing here is we have embedded in our company an e-commerce company, okay? Now, again I know it's - we've got a complicated structure. We don't own 100% of everything, but we are in at a pretty reasonable scale. We have an e-commerce company that does $3.5 million of digital sales. That’s the most important point. Now it’s up to us and the management team to how to put it all together so the market recognizes the value.

Your next question comes from the line of Vince Tibone with Green Street.

I just had a follow-up to Linda's question on the comp NOI piece. I just want to make sure I understand the guidance you stated correctly. So the 5% increase in portfolio NOI for next year, is that number inclusive of incremental NOI from Taubman? Because based on my math that would make most or all of that 5% increase that you do with Taubman and the legacy Simon assets with either flat or slightly down? Is that fair in clarifying that?

Vince, you’re trying to paint a negative picture my friend. That's just no metric. That's just Simon's portfolio, it doesn't include the Taubman.

Does that work out…

…for the guidance piece.

For the guidance piece. Correct.

No, that I want to make sure I clarify that.

Yes. I accept that. It's a fair question. It's just our existing portfolio does not have anything to do with TRG.

And then in the fourth quarter, is it fair to say the domestic portfolio NOI is pretty close to the old comp NOI definition then?

It's always been, yes. I mean, it’s always been - as you know, our comp NOI is - has been 95% - been frankly 90% - 90%, 95% of the portfolio. So we sat here and I looked at and I go why do we put comp NOI? What do we take out? What do we don’t take out? It's just - it's more - there's just no need for it, especially given what we endured in 2020. We'll just give you the number, portfolio whether it has a redevelopment that's taking the NOI down or we added something to take it - the NOI up, it’s almost irrelevant, it's all on the margin. And again, I know that - I'm glad you clarified that, that does not include TRG and we'll figure out exactly how to portray it for 2021.

Okay. I’ll go with my next question, is going forward, I mean, it totally makes sense from the redevelopment piece just to lump it together but I think next year with Taubman getting added, it would be helpful to have some sense of ongoing operations versus the incremental NOI from Taubman at this point?

Yes. I think that's a fair statement. So we'll - we will figure out if we lost it, we'll make sure that we highlight what the number is.

And then maybe just one more quick one for me. Just can you provide a little additional color on the leasing spreads, specifically maybe comparing or providing a little commentary on malls versus outlets today?

That's a good one. I don't know, do you know off the top of your head?

So there's - malls was - obviously we recorded number of minus 6.8%. I talked about the fact that mix, you think about some of those acres that were in the mix previously, now were driving the mall spread negative, but the preliminary point is positive.

And our next question comes from the line of Haendel St. Juste with Mizuho.

So I guess a question for you on the outlook for retail sales more broadly. We’ve talked to some people who express concern that as COVID subsides, that retail sales from malls and outlets specifically could be negatively impacted because there will be an outsized demand for travel, entertainment, and social gatherings, and that's where consumers will be spending their dollars. And additionally, because of COVID, there's been a lack of new fashion trends outside of leisure, sweats for us to wear comfortably at home, which could make apparel sales challenging for a while. And then there is the concern of the further e-commerce share again. So I guess I'm curious how you're thinking about the near-term opportunity and risk for retail sales here, how that plays into your expectations for rent, and also the projects you're starting and how you're populating those redevelopment projects. Thank you.

Yes. Listen, I can't sit here and make a prediction other than what I said earlier. So I think suburbia is going to be - really make a major comeback. It was all about street retail. It was all about urbanization. I think you're going to see a movement towards suburbs, and that'll be - that’ll spell good opportunity for us. And I'm not overly concerned about people are going to have their disposable income and go here and there. I think we'll get our fair share of the growth that's expected when we get past COVID and resume our normal lives. Not overly worried about it.

Fair enough. Just following up on spread, I know you’ve been asked this question several different ways, but I’m curious overall. Is there anything here in the recent leases you're signing or aren't you seeing the numbers that suggest that spreads could cross here in 2021? I'm curious what your assessment of the prospect of your…

Well, look, I think, I mean, again I think we are - if I could put a lot of these recent questions in perspective, I mean, in evaluating what we think we're going to earn next year is there's science but there's an element of art because we are dealing with a very uncertain macroenvironment predominantly because of COVID and the impacts that it has on the psyche and how much stimulus we're going to have. There's a lot of uncertainties there, so we try to do the best we can to kind of give you a portrait of what we're going to earn. And there's a lot that goes into it. I think it's hopefully we'll be in that range and we’ll execute like we have historically and we'll be in that range. But it's really hard to pinpoint a specific statistic one way or another because there's just so many variables out there and we try to put it all together in this range to give you a sense of what we think the earnings will be next year or this year, I should say.

And our next question comes from the line of Ki Bin Kim with Truist.

Just talk about your development pipeline, the yield of 8%, I don’t think that's changed over the past couple quarters. I'm just curious is that because the projects are pretty much leased and ready to go so there's not much risk to that yield? And secondly, if you had to put new dollars to work, is 8% on development or redevelopment enough to justify it?

Well, the answer is it hasn't changed much because the development - I mean, not much has changed. I mean, it's been in lockdown as you know, in dealing with COVID. So we hope to look at where we can accretively add, and the answer is no. 8%, there is - no guide it’s got to be over 8% or 9%. It’s got to be what's the value of the property, what it's going to do to the property. I mean, if the property is an 8% cap rate property. And you get an 8% return, you're essentially treading water unless you think you're going to suddenly make it a 6% property which is possible in certain redevelopments. On the other hand, if you spend an 8% on a 5%, then you’ve made a lot of money. So it - everything boils down to the specific real estate that we're trying to create over a long-term basis. Now remember, we give you these numbers kind of more or less out of the box. But if you get 8% with growth, I mean, that's a pretty good return, unlevered return going forward. So again, it depends on the real estate.

Okay. And just last question from me, how do you think about - any early thoughts on the kitchen dollar minimum wage and how do you think your retails can handle it and at the end of the day like how much exposure you might be - you might have at Simon as a company?

Yes, I really don't, you know. I'm going to stay out of politics. And we'll - I mean I think we all were frustrated with the - what was trust upon us last year because of the - the way that we got treated versus other boxes and other warehouses. The mall seemed to get the brunt of a lot of the restrictions. We would seem more symbolic than inside. Now the reality is, all I want is a level playing field. Just level it for everybody and we'll figure out how to operate in that environment. And I would just say, if it's level and make sense, then great. Then - I could look at that from two, three, four different vantage points and as long as it's a level playing field. Then that's all of it that I'm focused on - and beyond that.

Your next question comes from the line of Michael Bilerman with Citi.

David I just had - just two other questions. If you talk about sort of the retailers now that you own and obviously with the amount of closures and the malls had obviously their e-commerce sales were rising pretty significantly. You and I have talked over the years about how so much of a retailer's brand was driven by the physical footprint and how you as a landlord, weren't sharing in those e-commerce sales? Especially when your assets were serving as the reason why some of those people may go online and you had expressed a lot of frustration about not getting your fair share of that. I guess now that you're sitting on both sides, can you comment a little bit about how you may be restructuring your leases with those retailers to be able to A) share in those e-commerce sales and what you're doing to benefit from that?

Well, there's no real - I mean it's - there's no real change. I mean, we discuss with a lot of retailers what happens if they buy online return to store. What happens if it shifts from store? What happens if they pick up and reserve it in store? And those are all - we have a pretty consistent approach to it. Even with the pandemic and all the - all of the pressures that we've had to deal with and where it still more or less sticking to what we think is the right approach on that front. So I mean, I’ll never - we're not looking to get our fair share of their e-commerce sales. So I think you mischaracterized it. I think we're just looking to not get hurt when they do sales. But somehow the store is involved in that sale and that’s all that we’re looking for. We’re not - as they do all their business online God bless them, but if the store interaction is important to them we don’t want our sales to be reduced. Because the store is providing a service and they’re in lies in a discussion and it really said that’s ongoing and it’s - and I think we’re making a lot of progress on that front.

Right, if now owning more of the brands, owning more retailers as you sort of get involved and figuring out what is the right split and how would all be handled. And I understand the credit aspect those - where those sales and how it happened whether its returns, but I would imagine that obviously your assets serves a good marketing for those brands? And in calculating what rent you want that retailer to pay based on the sales that they generate within that trade area is something that you would want for Simon shareholders. As I'm trying to figure out how you balance the two sides today?

We've been balancing things for years and years and years that’s what we do. Look I would say for most retailers having the store is extremely important because if they're in a market out of sight, out of mind they're certainly retailers that are going to experiment with shrinking their store print - store footprint dramatically and assuming that they're going to pick up online. Maybe they - maybe it works I think it won't, but we'll see. Some will take their chance and they certainly have that right to do whatever they want as leases expire. But I don't think they'll make it up on the Internet. And the most and the best successful retailers are ones that really figure out how to do both really well and that's the ones that we want to do business with. And our brands we want to be in that category and in some cases we're not quite there. I mean I would tell you that Penney’s e-commerce business is not where it needs to be. On the same thing their store business isn't either. But we're going to mutually go after both elements. I would tell you that the Aero store business is terrific and they're picking up their e-commerce business. I would tell you that Forever 21 doesn't quite have a fully developed e-commerce business. And we want that to happen because we think that makes the store business better.

Right.

Not that complicated. There'll be some folks that are in our industry that will say I've got 300 stores. I've got 400 stores, I can do it a 100 and all the growth will come online. My personal view is I don't think they'll succeed. It's really hard to shrink to grow. That really - that's a really hard thing to do. Now, maybe you have to shrink to survive. But shrink to grow would be a better company that's a tough one. It's few and far between but maybe some can make it work. And if they do God bless. And if they do then they’ll probably want stores to grow again so that we’ll be back at it and we’ll see.

That’s helpful.

But I mean I don’t know if I’ve answered your question. But there’s really - in our frustration is we just want the recognition that - we certainly don’t want to get penalized if the store is a critical component for that transaction to have taken place.

Great, thanks for the color, David.

Sure. Okay, we’ve lost - me and the whole team and our time. So thank you. Happy New Year even though you're not supposed to do it in February and we'll talk soon. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.