Simon Property Group, Inc. (SPG) Q4 2013 Earnings Report, Transcript and Summary

Elizabeth A. Zale - Senior Vice President of Corporate Affairs and Communications David E. Simon - Chairman and Chief Executive Officer Stephen E. Sterrett - Senior Executive Vice President and Chief Financial Officer Richard S. Sokolov - Director, President, and Chief Operating Officer

Ross T. Nussbaum - UBS Investment Bank, Research Division Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division Josh Patinkin Christy McElroy - Citigroup Inc, Research Division Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division Jeffrey J. Donnelly - Wells Fargo Securities, LLC, Research Division Steve Sakwa - ISI Group Inc., Research Division Ki Bin Kim - SunTrust Robinson Humphrey, Inc., Research Division Vincent Chao - Deutsche Bank AG, Research Division Cedrik Lachance - Green Street Advisors, Inc., Research Division Michael W. Mueller - JP Morgan Chase & Co, Research Division Omotayo T. Okusanya - Jefferies LLC, Research Division Haendel Emmanuel St. Juste - Morgan Stanley, Research Division Daniel Oppenheim - Crédit Suisse AG, Research Division Benjamin Yang - Evercore Partners Inc., Research Division Craig R. Schmidt - BofA Merrill Lynch, Research Division Jeffrey Spector - BofA Merrill Lynch, Research Division

Good day, ladies and gentlemen, and welcome to the Q4 2013 Simon Property Group Inc. Earnings Conference Call. My name is Allison, and I'll be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I'd now like to turn the call over to Liz Zale, Senior Vice President of Corporate Affairs. Please proceed, Ma'am.

Thank you. Good morning, everyone, and welcome to Simon Property Group's fourth quarter 2013 earnings conference call. Presenting on today's call is David Simon, our Chairman and Chief Executive Officer; Rick Sokolov, our President and Chief Operating Officer; and Steve Sterrett, our Chief Financial 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 also note that this call includes information that may only be accurate 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 Investor Relations website, investor.simon.com. With that, we will start the call. And I would like to introduce David Simon.

Okay. Thanks, Liz. Good morning. We had strong results to wrap up 2013, which also was our 20th year as a public company. First, let me talk about the quarter's strong performance. Given the growth in our core business, we continue to see a positive impact on our growth strategy, which basically is comprised of investing in our existing assets to expand and to meet the retailer demand, enhance productivity, continue to develop new outlets and make smart, thoughtful, accretive acquisitions. FFO was $2.47 per share, up 7.9% for the fourth quarter compared to 2012. Our FFO exceeded the first call consensus again by $0.05 per share. For our mall and Premium Outlets, comparable property NOI growth was 5.5% for the quarter, driven by basement rent increase; occupancy, up 80 basis points to 96.1%; and the continuation of positive sales from 2012. Our releasing spread continues to grow. It was a positive 16.8% or $8.94 per square foot, with much of the improvement driven by better leasing execution in the malls, while Premium Outlets spread continues to be robust. Mills comparable NOI was up 11% for the quarter, 10.8% for the year, driven by all the other factors I just went through. For the year, our FFO in total was $3.2 billion, an increase of $321 million from 2012. This resulted in a per share FFO growth of 10.9% to $8.85 per share. This was $0.46 above where the consensus started in early 2013 at $8.39. Our performance was driven by thoughtful capital allocation, and I'm proud of the execution of the team. We opened 5 new Premium Outlets this year, 3 in North America and 2 in Asia. We invested, in total, $942 million in new and redevelopment projects in response to retailer demand and customer needs. These projects are all off to very good starts, and we'll increase the productivity of our assets. We completed $1.05 billion of acquisitions, including the expansion of our European presence, with the investment in McArthurGlen's Designer Outlet assets and the management development company. We also, in January, acquired our joint venture partner's remaining interest in Kravco Simon, which is -- owns 10 assets. We now own 100% of King of Prussia mall, which is an iconic asset with a major expansion in the works. We strengthened and we also disposed the 49 core retail assets, as well as announced our spinoff transaction, which we'll talk about in a moment. We see strength across our portfolio and platforms. Occupancy continues to rise, which is a sign of retailer demand. The majority of our existing leases are under market. Ongoing NOI growth is supported by our ability to replace underperforming retailers. And as a final note on the operations, our operating profit margin grew by 60 basis points to 71.7% in 2013. In the quarter, the fourth quarter that is, we broke ground on Premium Outlets in Montréal in early October and construction is underway. It's cold up there, but it's still -- we're still working. Construction also continues on new developments in Vancouver, Minneapolis and Charlotte. Less cold and our pipeline includes 6 additional new outlets expected to start construction in 2014, 2015. Redevelopment expansions are ongoing at 25 properties in the U.S., Asia and Mexico. We opened 2 in the fourth quarter, the shops at Nanuet, Walt Whitman in Long Island. Please go visit. Well executed, thank you for the team -- thank you to the team. Also, open expansion and number of other properties in the fourth quarter, including Orlando Premium Outlets at Vineland and Johor Premium Outlets in Malaysia. Construction is ongoing to expand-enhance some of our most productive properties, which please do not lose sight of Roosevelt Field, Woodbury Common, Houston Galleria, Lenox Square, Del Amo and Desert Hills just to name a few. Overall, our multi-year pipeline of new development and redevelopment expansion projects will continue to drive growth NOI and in the future. And our pipeline continues to -- we expect to invest approximately $1 billion annually through 2016. To give you a quick international update, Klépierre will report next week. But I'm proud of the fact that the company, with our help, has implemented a very thoughtful strategy. We've strengthened the balance sheet. We've improved operations and focused on cash flow growth. We have now signed and we were instrumental in the deal with Carrefour to sell smaller assets in order to focus on larger and more productive centers. We are exiting the office business. That will be completed shortly, including selling the headquarter building. We've strengthened the management with the hiring of Jean-Marc Jestin as COO. And we're focused on capital allocation among their different markets and continue to work on leasing and marketing opportunities. Together, the European retail recovery is stable and continuing. And then just to finally mention that we did close McArthurGlen. I was actually there at both places this week, a day with McArthurGlen, 2 days with Klépierre. The opportunities -- McArthurGlen are there. We've got development and expansion projects to consider and continue to be impressed with where Klépierre is headed. Now just to talk briefly about SpinCo. We have -- as you know, we won't go into much detail today about it, but we plan to spin off our strip center business in 44 smaller enclosed malls. We believe this will create additional value for Simon Property Group shareholders and be a good investment vehicle for SpinCo. We have yet to name the names. SpinCo is not the name, okay? SpinCo is not the name. And we're open to any ideas out there for any names. Please send them to us. We expect the transaction to be effective in the second quarter of 2014. We'll provide further updates as it's available, but everything is moving absolutely according to plan there. Fourth quarter capital market activity, we were busy. We closed or locked rates on 10 new secured loans, totaling approximately $2.2 billion. Our share of that is roughly $1 billion. Including in the fourth quarter activity is the $1.2 billion refinance at Aventura Mall at a rate of 2.75. In January, as you know, we announced and closed a bid offering of $1.2 billion of senior notes with a combined weighted average duration of 7.5 years and an average coupon rate of just under 3%. Demand was very robust for these bonds. We're using the proceeds for general corporate purposes and to repay debt, including the unencumbering of $820 million mortgage on Sawgrass Mills. Dividend, we increased the dividend again in the first quarter, $1 to $1.25. That's a year-over-year increase of 8.7%. SPG, which not including SpinCo, will now pay, as you know, at least $5 in 2014. Now I would just take a moment to talk about something and I'll turn to '14. I'd like to make an announcement regarding our management team. Steve Sterrett, our long-term CFO, will be retiring in March of 2015. So he will be staying on board through another full fiscal year in our process. It's hard to overstate the contributions that Steve has made to our company. And I know I speak for everyone when I say we will be sorry to see him go. As many of you know, Steve has been with the company for 20 years during the period of extraordinary growth. Throughout it all, Steve's contributions have been immeasurable. We will conduct a search during the next few months for Steve's replacement. Expect to consider both internal and external candidates. And having Steve available for the rest of 2014 in the audit cycle will helpful and ensure a smooth transition. And he will still not be able to beat me on a consistent basis in golf. Now let me just talk about 2014. I'm sure he'll have a response to that, by the way, but let's talk about 2014. Guidance is in a range of $9.50 to $9.60. This represents at the midpoint growth rate of 8%. This is based on comparable NOI growth of at least 4% for a combined mall and outlet portfolio. This FFO guidance is on a comparable basis for 2013 and ignores any potential impact of SpinCo. When SpinCo is effective, we'll provide updated and adjust the range for SPG, as well as provide a range for SpinCo. And now let me conclude. We had a great year, a great fourth quarter. We continue to prioritize the creation of the value for our properties, our retailers and our shareholders. We believe we have very great prospects for 2014. And we're now ready for any questions.

[Operator Instructions] And your first question comes from the line of Ross Nussbaum of UBS.

I'm here with Jeremy Metz. Can you break out the terms for the Kravco purchase, as well as for Oyster Bay and Arizona Mills, how you broke out the consideration for those?

Well the Kravco purchase was a -- basically, we had to put in a call at a combined cap rate of...

A little bit over 8%.

A little over 8%.

And as well as 113%.

113%. And we -- what was your next question?

On Oyster Bay and Arizona Mills, how did the consideration break out between those assets?

Well that was a private negotiation, and we will not be going through that.

Okay. And then lastly, when can we expect an update on SpinCo management? Can you talk a little bit about that?

We got initial comments from the SEC, so we're in that process. We are -- have identified both an internal and external candidate that we're having serious discussions with. And now we would hope to conclude that over the next few weeks. And as soon as we do, I'm sure it will be part of our filing. The board's pretty much set, and it's going according to plan.

And the next question comes from Nathan Isbee of Stifel. Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: The portfolio continues to perform very well, but there's clearly a lot of questions swirling around shopper traffic, shopper habits, et cetera. Could you maybe comment on what you're seeing? Are we seeing a sea change in retail as characterized by Starbucks last week? And what do you think this impact could have on your business over the next few years?

Well, look, we've been doing this for quite some time. And I think we have to put the fourth quarter sales into perspective. First of all, and these are just some thoughts off the top of my head, we are absolutely believers that our business will continue to grow. But let me just talk about the fourth quarter because I do think we were at the point of a little bit of overreaction. Clearly, in '13, there was a move toward global goods, which happens in certain cycles. And as the second half of the year came about, I do think the consumer was relatively cautious. We had a short season. There was, obviously, lots of weather issues for certain parts of the country. And I don't think what's put in perspective, which I listened to the pundits on TV and elsewhere, not just on TV but elsewhere, but between the confusion of ObamaCare and taxes did raise pretty materially for the consumer, you have what I'll call a -- I don't know if it was a perfect storm, but you have a lot of this stuff all come together or that basically resulted in the consumer being very cautious. The pundits, I've heard this stuff about malls in the Internet, obviously, having the right retailers, the right customer service, the right look and feel of the properties will continue to hold our own in that space without question. Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: Okay. So you're not seeing anything at the ground level that indicates shopper traffic is roughly 50% over the last 3 years or anything like that?

50%? Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: Well, that's what ShopperTrak says.

Well, let me talk about -- I'm not going to name names. But we don't use them, and we don't know how reliable a lot of those traffic numbers are. And we'll leave it at that. The answer is, all I can tell you, Nate, is look at our results. That's all I can tell you is look at our results. I think you know at this point, doing this for 20 years and continuing to beat everybody's expectations about the profitability of what this company can't produce, I would suggest to you that things are not what others say they are. And I'll leave it at that. Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: Okay. I mean, in the -- over the last few years, you have discussed various initiatives of helping and embracing online and developing something at the Simon level. Any update on that?

Well it would take 30 minutes on this call, but we're happy to go through that in great detail. We have a significant amount of initiatives that we're embarking upon to improve the consumer experience, whether pre-mall or during mall visit. And we are absolutely embracing technology and how it can -- how it could be used effectively to make the consumer more satisfied during their visit or as they come to the mall. The retailers feel the absolute same way. And there's probably 20-plus things that are ongoing in this company, individually, collectively with the mall industry, as well as in conjunction with the retailers that we're working on. But it's -- there are so many that I can't do it at this call, but we're happy to share those as they get rolled out.

And your next question comes from Josh Patinkin of BMO Capital Markets.

I'm trying to get a better sense of what the opportunity to consolidate McArthurGlen managed funds look like. So it's obviously not programmatic, but can you give us a general sense for the total size of the enterprise and what could come up in the next few years?

Yes, they're a leader in that industry. I think we'll have opportunities to grow that business through new development and extensions of existing assets, as well as acquisitions of assets that either they manage and own a small piece of and/or others that do. But it's really -- I'm not in the position to give you a specific number. But as you know, we've taken our platforms over the years and run them significantly. It reminds me of the outlet business when we entered into it in 2004. We have roughly grown. We have -- if I could put the numbers correctly, we have increased the cash flow of that business roughly 4x. And needless to say, you take the 4x plus the reduction in cap rate, and you'd see the value created there. I think it's harder to develop in Asia, but a great team, good people and we'll just take it a step at a time.

Okay. And then more globally on outlets, you built a lot of centers last decade. And so is there a big sea change in the leasing conversation as you approach tenure rollovers? And do you think higher occupancy cost will become more acceptable to merchants in that business?

I'll turn it to Rick to [indiscernible].

Absolutely, we are seeing an ability to increase our rents. We have significant demand in the outlet sector. If you listen to the retailers, there are many retailers that are entering the sector for the first time as an additional prong and bare growth strategy. And where you have a lot of demand you're able to drive rates, our properties are very productive. We're making them better. And that does give us pricing power.

And your next question comes from Christy McElroy of Citi.

So I wanted to go back to Nate's question and ask it a little in a different way, more from a leasing perspective. As we sort of hear more from retailers about the integration of their bricks-and-mortar business with their e-commerce business, so I'm thinking about the longer-term omni-channel initiatives. I'm wondering if you could give us some perspective on how the changes are impacting sort of the leasing cost and how you would expect it to evolve over time? So first, how the retailers are thinking about occupancy costs. You addressed it a little bit in terms of the outlet, but I'm thinking about the [indiscernible] either -- just thinking about the sales within the 4 walls of the store versus sort of the value of that locations, the overall.

I think the good news for us, as mall owners, is I expect them to drive traffic and distribute through their store. So what it means, I believe, over time is that, that store location will become more valuable because instead of building a bunch of distribution centers or trying to figure out how to get various online purchases to the consumer, the most effective and perhaps cost-effective way for them to do it is by using their existing store. Now that means that they're going to have to have a better handle on store and create algorithms in terms of what can be distributed out to the store or not. But I think what it's going to ultimately mean is that they're going to drive purchase -- drive sales through those stores, which, as far as we're concerned and what's in our leases and we'll continue to be, is those sales will be generated from that store. So I don't -- now if they have the store that's losing money, they're not going to keep it open, but that's been that way for 30 years, 40 years. So -- but that's what I anticipate.

The only other thing I would add and I think it's a very significant advantage to our retailers and in David and my discussions with them, they are very focused on it. It's the ability to fulfill their orders online out of their stores and reorient it to whatever store has the appropriate inventory, that's going to have, in their opinion, significant margin enhancement possibility because they won't be able to have less markdowns by selling at full price goods that might otherwise have to be discounted in various locations. And they're all spending a great deal of time getting that backbone in place to effectuate that.

The one thing that people have questioned is whether they're going turn these stores into showrooms. And the fact of the matter is, I talked to a very prominent retailer CEO about this issue. They lose sales when they do that, okay? So -- especially when it becomes apparel. So I don't believe that if they want -- if this retailer continues to have an enviable bricks-and-mortar strategy that they are going to get in a point where it's a showroom because people want to -- continue to want to make sure that the size looks right on all that other stuff, okay?

So as it becomes more of a supply-demand of that location issue versus an occupancy cost when negotiating the rent, and how do you attribute as they further integrate their business with e-commerce, how do you attribute the specific sales of that store when reporting up to you?

It's easy. They'd have to keep track of it. That's simple, if it goes through their POS, and it's going to have to if the stores –- that the inventories in the store. That's a simple exercise. We have audit -- yes, we have audit rights, okay?

David, I have one quick question just in terms of -- and I recognize the deal with the problems[ph] are it's a private transaction. So there certainly was a time where they didn't want to take your stock pretty forcefully. So I'm just curious how that transaction came about and what your plans are now that you're on those parcels of land in terms of the timing of potentially doing something on that site?

Look, we -- even though we obviously have had issues over the years with Taubman, we've always had what I call a good professional relationship, certainly, as the dust is settled from several years ago. So again, I can't really comment on that other than -- let me talk about the property. We're very excited about it. We are very interested in working with the town of Oyster Bay and our partner, Castagna Realty. We're going to work with the residents, come up with a development plan. Also, at the property that we own with Castagna Realty, together, we think there is an absolute way to create a win-win for the community and for us and our partner. And it's great real estate. So how we got there is really not important. I'm convinced that's in the best interest of our shareholders, and I'm convinced that Taubman feels the same way. So that actually can happen where you can have a win-win for both companies.

And your next question comes from Alexander Goldfarb of Sandler O'Neill. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Just two questions here. The first is the other big story, apart from the Internet this past season, was the Penney closure. And if you look at the 33 stores they closed, you could say, okay, they went through the whole thing and they could only find 33 stores. And Sears, for the all the years they've talking of rationalizing, the Sears are still open. So should we read this as the various department stores have done these big reviews and these are all the stores that they've closed or your sense is this the start of a wave and over the next several years we're going to see a lot more of these big-type announcements?

Well, I mean, I think it's a function of what the retailer ultimately is able to do. But the store closures for us is a kind of a normal standard operating procedure that we deal with. We've had retailers clearly -- not necessarily the scale of a couple of that you mentioned -- but we've had retailers coming out of business for years. And so, again, yes, it does add to the workload but we find a way to get the job done. And I think you're right though, Alex, is that they went through the portfolio, generally. And what we understand, which I'm not sure is for us to say, but we understand that, that was the list that was actually generating negative cash flow. So I think you're right in the sense of that a number of these retailers continue to have profitability and even in stores that are not as overly productive because for whatever reason. So, as an example, and I don't know maybe we'll have this, but people talked about small malls, B-malls, the Internet. But our comp, in the fourth quarter of our comp, NOI increased for the SpinCo malls was 4%. So that speaks to the ability to continue to move the needle forward despite all the noise. Now, look, the fourth quarter sales, I gave you that. I do think a lot happen all on the fourth quarter. But the consumer, between the uncertainty of ObamaCare, the increase in taxes, wage growth continues to be anemic, they spend on durable goods, they slowed down in the third and fourth quarter across-the-board. I mean, whether it was the high-end, the middle-end or the lower-end consumer. And that happens. Don't panic. We'll deal with that. So, at the end of today, I can't speak for the future of those two that you mentioned, in terms of store closing, but what we understand is that that's the analysis that led to the 33. But I'm not 100% certain on that, okay? Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Okay. And then the second question is regarding SpinCo. I mean Simon is going to be the platform for the initial, I believe, 2 years. Is Simon Brand Ventures, the income that's generated from that, is that something that SpinCo will have access to beyond that or is the understanding that SpinCo is going to sort of have to try and replicate that NOI stream after the -- if, in fact, it ends the relationship with Simon as the supporting mall platform?

Well, all of those revenues are at the property level. So they'll continue. Now, ultimately, if they -- remember, just to give you SpinCo, the strip center business will be in SpinCo. SPG will do some back office activity for the strip center business. SPG will act as third-party property manager for SpinCo malls. And all of that revenue that, that group generates goes to the property. So, ultimately, will be the decision for that team to decide whether or not they want to continue after the 2-year period, to continue to use SPG as a property manager. But there's no reason in my mind that they couldn't, if they chose not to do that -- that will be up to the team and the Board there -- that they could replicate the vast majority of that income.

Your next question comes from Jeff Donnelly of Wells Fargo.

David, maybe I think you should name SpinCo SteRRETT in honor of Steve's service to you.

That rolls right off the tongue.

It does, it does. Actually, did I hear you...

Honestly, I probably shouldn't say this publicly. But I'll go ahead, sometimes I get into that box. But the hardest thing about SpinCo is coming up with the appropriate name.

Right. Yes, so if you have any suggestions please send them our way.

I don't have any good ones. But, actually, did I hear you correctly? That you said NOI growth at SpinCo was 4% in Q4? And maybe are you be able to share other operating metrics of leasing spreads and occupancy as well?

Yes, that'll be in the final filing. But the fourth quarter -- we thought you might ask that so we had that number for the fourth quarter. But that kind of stuff will all be in the filing.

And I guess maybe doubling on Alex's question about the Penney's and Sears closures risk. When you look at those two situations, I mean, I think people had kind of ultimately handicapped or call it ultimate exposure. Do you guys have the sense of what percentage of those stores that you have, might not be cost-effectively retenantive?

I didn't catch the last part.

What percentage of the stores we think may not be cost-effectively retenantive if they close. I would tell you that we're spending a considerable amount of time. And as we've said before on these calls, we have our plans in place, we have identified replacement tenants. For example, we have one tenant already lined up to occupy one of the Penney closures, yet this year, at a positive economic impact on that property and a positive sales impact. So we are as prepared as one can be to take advantage of any opportunities that present themselves through the activities of the department stores when they decide they don't want to do it. Over the years we've dealt with over 80 of these things. So, as David said, this is not new to us. We'll just keep doing what we've been doing at historically.

And maybe I can stick with you Rick, on -- sort of following up on Christie's earlier question. Just, historically, retailers kind of wanted the landlord to stay out of their way, as it relates to retail sales. Are you seeing retailers become more receptive to working with their landlord around their e-commerce and retail sales platform? I mean is that part of the leasing discussion or even specifically addressed in the lease or that's sort of a separate conversation, sort of an add-on, if you will?

Well, two parts to that. In our lease negotiations, we're incredibly mindful of the role that our stores play in the distribution of their goods, whether online or store-based. And, frankly, if that store is any part of the distribution channel for that sale, it's going to count in our sales. The retailers understand that, and the retailers are emphasizing the convenience and location of their stores as a significant advantage in their ability to maximize their contacts with the customers and their sales. So they very much view their stores as an integral part of their business going forward and they are working with us in a cooperative way to try and maximize.

Well, I will just say, Jeff, simply, that we have both mobile and desktop, et cetera. We have a system called Retailer Showcase that basically presents offers from the retailers to our consumers. They can get it in mall, they can go on our website or whatever. We do that. I think the last number that I saw, probably 50,000 offers over the year that we present to our consumers. We get those offer -- we don't make them up, we get them from that retailers. So, absolutely, there is a significant amount of coordination, as you would expect, between us and the retailer, to improve and enhance their business. I believe we're just at the scratching of that surface. That is part of our job, to facilitate more productivity for the retailers of stores, and at the same time, trying to do that and increase rent. I mean, it's not the easiest thing. But they know that we want them to be very productive. We work hand-in-hand with them. And I think technology, generally, will be a wonderful opportunity to make that relationship easier to execute.

And just one last question. I'm curious, internally, when you guys are handicapping -- I'll call it exposure to anchor closures -- what are the metrics that you guys look at internally? Is it four-wall profit, is it sort of store format or market size or approximated to their distribution centers? I mean is there, I guess, a better methodology than maybe just sort of overall sales productivity that you find in forecasting?

Well, sure, because you don't know how many -- how they cover -- historically, the department stores advertised in a market. They allocate that advertising a certain way. So you've got to have a handle on that. But again, on a specific store, we're going to have a sense as to where that is, based upon lots of discussions over the last few years. Corporately, and where they're headed, we have some insights but it's no different than people that has follow them and covered them. I mean, we're not necessarily privy to all that's going on in what they're doing. I mean we have, obviously, good relationships with our major anchors. But we're not privy to anything that's probably not common knowledge. But we have the several years and years of dealing with them, how they feel about certain stores.

And your next question will comes from Steve Sakwa of ISI Group.

Just a couple of questions, David and Rick. As you kind of look at the rent spreads, those dramatically improved over the course of 2013. And as you look at the rollover for the next, really 3 years, your ending base rents are just a shade under $40. And when you add in the CAM, you're probably close to that $53. So, it would seem that you're releasing spreads ought to continue to accelerate. Is there anything that would, outside of a sales decline, which it doesn't seem to be happening, is there anything that suggest that leasing spreads wouldn't continue to tick higher from here?

We certainly anticipate that we'll be able to continue to grow our rents as we have historically. The other thing I would tell you is that we're spending a lot of money making these properties better. And so, when you look at a very gross sales number, that's made up of a whole lot of individual stores. And as we renovate our properties, bring in better tenant, our tenants, we believe, are more productive in our properties, and that gives us some incremental ability to drive rent. So we don't envision that slowing down.

Okay, and maybe sticking with you, Rick. Just kind of on the tenants and how you're thinking about repositioning the properties. I don't know if you have a specific number. But as you look at the mix of tenants in the mall today, what percentage is apparel and what percentage do you think that'll be 3 years from now?

At this point, I think our apparel percentage is going to remain fairly stable. Now, the tenants that make up that apparel percentage could change dramatically. We have some tenants that are reducing the size of their stores, and we have entrants coming in like Czar, H&M, UNIQLO, that are in slightly bigger formats. But there's not going to be a sense of a significant decline in the amount of space allocated to apparel. We are allocating space differently. Look, last year, we opened 36 restaurants across the portfolio. That's a major focus, to be able to extend their stay in our property, give the consumers a wider range of dining alternatives and just make the properties more experiential, which is obviously a focus of our retailers and us. So, the mix may change, but I think apparel is going to stay fairly stable, while the components may change.

I probably shouldn't say this, but it's interesting, as I travel the world and understand -- probably not as much as I should do -- but the occupancy cost that we have in the U.S. is relatively benign compared to when you see it elsewhere in the world. So it's an interesting thing for us, to pause to think about what the opportunities to continue to grow that rent are. But we've got to be absolutely sensitive to the retailer and making sure they profit in their environment as well. So, our occupancy cost, generally, in comparison to kind of where the other shopping centers, owners have in the world, they're relatively below at least what those would indicate the rents are. So we'll see how that evolves over time.

And they have been relatively stable for the last 3 years even though we've been able to drive our rents.

Okay. Well, let me ask, I guess, one last question for maybe the newest member of the senior stores, Steve. Hopefully, you'll get your qualifying card here and get something new going. I went to the balance sheet and kind of debt refinancing. So, obviously it's been very favorable. Just how are you thinking about kind of the balance of debt maturing this year and into '15, and kind of what's your thought in terms of kind laddering and kind of where you want to be on the debt curve?

Well, it's Steve, it's pretty well laddered already. As you know, as part of the SpinCo announcement, we did state that we expect to raise $1 billion of debt through SpinCo, with those proceeds coming to Simon before the effective date. So if you couple that with our bond yield in January, that's the majority of our capital raise, in terms of dealing with bond expirations. We also unencumbered Sawgrass Mills as part of the use of those proceeds. So, we're in really good shape for '14. We've accomplished most of the capital plan. And in '15, we're ordinary course of business, we have bonds coming due every year. You should expect us to be a regular issuer in that market. But obviously the secured debt market is also important to us as well, so you'll see us in both.

And your next question comes from Ki Bin Kim of SunTrust.

Steve, thanks for all your help over the years. Given just some of the clouds around fourth quarter consumer activity in the malls. I know you guys don't typically do this, but would you be able to provide a pure fourth quarter 2013 over fourth quarter 2012 tenant sales trend?

Yes. It was flat.

And just a follow-up. I know you've mentioned the SpinCo same-store NOI, but from a tenant sales perspective, how does that look like when you split out the outlets, A malls and B malls? It doesn't have to be the fourth quarter, but maybe the year-over-year, the total trailing 12 months.

I'm sorry, I didn't really understand the question, Ki Bin.

Okay. So the trend in your tenant sales of 2.5% year-over-year, trailing 12 months, how does that look like, like if you had to stratify it between outlets, A malls and B malls?

Well, I mean, we shared some of that with you when we announced SpinCo. That gives you a general direction for that answer. And as you'll see, once SpinCo is done and effective, you'll have the SpinCo data and you'll have the SPG data. So that'll all be there. That gives you a sense of direction where it is.

Okay, and just last point. Should we expect negative sales at all for SpinCo in the fourth quarter?

Yes. I mean, we gave you that at -- whenever it was. December, we showed you that.

Several years of history.

Yes. I can't can remember the exact number. But it's right there, it's public document. I assume it's on our Investor website. It's all there.

And your next question comes from the line of Vincent Chao with Deutsche Bank.

Just want to go back to the retail side here for a second. A lot of talk about the sales trends, but obviously profitability is very important. And just given the number of pre-announcements that we've heard this season, I'm just curious if you think we should be expecting a higher level of seasonal occupancy decline in the first quarter here than we've seen over maybe the last few years, where perhaps the plans were a little bit more conservative.

We don't see that at this moment. Things change over the year. But we don't see that necessarily. Obviously we have a good handle on that. The only thing we don't have a handle that could change that is bankruptcies. But based upon our existing status of where we are with our discussion with retailers, we don't see that. Obviously, a bankruptcy here or there may be able to impact that on a faster basis.

And going back to the discussion around e-commerce. We hear a lot about Macy's and Nordstrom and companies like that, that are very forward thinking about their strategies. I'm just wondering how you think the smaller retailers that maybe don't have the same scale or infrastructure can evolve in a new environment, to be able to kind of compete with the e-commerce.

Well, the fact of the matter, and you can see it in technology companies' results, is that it is relatively a lot less expensive to create because of the cloud and the way apps work and so on. It's relatively less expensive to create the combination, become more technology-oriented than it has in the past. Lots of ability to share services in the cloud that you wouldn't otherwise have to invest in. So I think maybe the mom and pop has a harder time. But generally, any retailer that has a kind of a reasonable store base can compete very affectively because the cost of technology is -- you don't need routers, you don't need servers, you don't need a bunch of software guys cranking this stuff out like you used to. The fact is, if we had done MerchantWired today, with different technology, we'd probably be successful. But we overpaid for the hardware. So, I think, as long as they have a reasonable store base, we're going to be able to create the appropriate coordination between their bricks and mortar stores and how they want to deal with online shopping.

And frankly there is no retailer that we meet with that is not very focused on doing precisely that. Some of them are further along in their implementation of those strategies, but every one of them is focused on more affectively integrating their online with their stores.

Your next question comes from Cedrik Lachance with Green Street Advisors.

Just another set of questions. Have you seen retailers expand their footprint in order to better distribute goods than they would be selling online. I'm thinking about, of course, the footprint in the malls.

It's a good point. What I have seen them do is think about their stores as a point of distribution along as a store. So whether they're now looking at stores just for the sake of having the store and a distribution, I wouldn't' say that thinking is there yet. But clearly, existing stores are being thought as a way to distribute and kind of the e-commerce platform. So I do think that thinking -- and that's a different level for many different retailers, but I actually do think they're thinking about it very seriously.

So how many such distribution centers, if you will, would a retailer need in a large metro-area?

Okay, I'm not in a position to say that. But it depends on the retailer.

And the funny thing is they're not talking about using drones to ship their goods.

I'm sure that's going to be an interesting transition. Just getting back on the disposition of 14 non-core assets. Can you give us a little bit more detail in terms of which property tied and cap rates?

I don't have it in front of me. But a few smaller shopping centers, a couple of outlets. So we'll continue to do that as well.

Were any of those considered to be spun out into SpinCo?

The answer is none of those were in the SpinCo because we already had contracts. There is a couple of strip centers that may or may not be sold before SpinCo is done. So, if that's the case, we're going to -- ultimately, the portfolio, as we said to you in December, when we announced it, will change a little bit. Part of that will be because of a couple of fails here and there, and a couple of them will be because we may or may not get a consent. But that could still happen.

Okay. And then a final question on the relationship with anchors. So, a couple of weeks ago I think Sears announced that they would be leasing space to Dick sporting goods, King of Prussia. It's obviously, by far, the best mall in the Philly area. When you think about your ability to recapture stores from Sears, and Penney in particular, versus the decision that they may ultimately make to lease to what is effectively a power center tenant into what is, by far the best mall, and particularly in the metro. How are thinking about what is the right price for you to pay to recapture that box? And what can you do to influence their decision on the retailer that will come into their center or into their box?

Well, I mean, the simple answer is it depends. Each case is different, to be honest with you. So in that case, we cooperated with Sears. Given the location of that store and what our plans were on the future redevelopment, we thought it was a win-win for us. We're happy to have Dick's in there, and it was a good transaction for Sears. In some cases, because of location of stores, we may want to do the development on ourselves -- by ourselves. In some cases, we'll let them do it. And if -- in fact, we may -- in most cases, we have approval rights, so each case is very different. Believe me, we have understanding of each one to a great level. But in that case, we just saw it as a way to be cooperative with Sears, way to help them all, great for the consumer, and as you know, we think Dick's is great. We do a lot of business with them. So in that case, we said, "Perfect, let's go. We'll help you, we'll cooperate."

So you didn't try to acquire the box back from Sears?

No, we did not, and Sears will continue to operate there as well. So it's -- Dick's is taking the upper level, and Sears is going to actually, we understand, kind of create the store, the future, so to speak, in the lower level, so that's great. And we'll continue to work with anchors like that as well. There's lots of little tactical things that are going on with all of our anchors about getting rights to put restaurants in. On some of the frontage of the -- just to bring up an example, in Briarwood, we're putting a couple of restaurants, and we do that all the time, like in front of Macy's. And so all of that stuff is out there to do. In some cases, we facilitate them if they want to do a lease. So the simple goal is, "Let's make the property better for the consumer," and it will take all sorts of different forms. We wouldn't rule out partnering with somebody on a redevelopment of their box if that circumstance made sense for both parties.

Your next question comes from Michael Mueller of JPMorgan. Michael W. Mueller - JP Morgan Chase & Co, Research Division: And I guess, going to the Mills for a second, I was wondering, can you give us a little more color on the 11% comp NOI growth? And was it a handful of assets? Was it broad-based? I mean, what was really driving those numbers?

Look, they have a -- they're major markets at 16 assets. As you know, the focus on value for them, value-oriented retailers, has been tremendously successful. You've got the outlets at Orange, that conversion from more of an entertainment center to an outlet center has been terrific. Ontario is on fire. Sawgrass, needless to say, is -- continues to be behemoth. Potomac Mills, we brought a couple of restaurants in Opry that's not in the comps.

It's not in the comp, yes.

Opry has been fantastic.

You know the run hole.

You can see it on the run hole. So lots of things go there, just a lot of things happening here to make the portfolio -- by the way, we added Macy's at Gurnee Mills as an example, so...

But Mike, this is Steve. It is rent. It's really saying it's higher occupancy, it's growing rents. Michael W. Mueller - JP Morgan Chase & Co, Research Division: I'm sorry. So it sounds like if we're thinking about '14, '15, you're probably still getting above average growth out of that part of the portfolio?

I think it will be good. I'm not going to do 10% -- where not going to do is 10.8% for the year. So don't put that in your numbers.

And your next question comes from Tayo Okusanya of Jefferies.

Steve, also let me add my congratulations. It looks like really you have one year left sort of to finally go shoe shopping before you lose your steady paycheck.

Tayo, if I'm going to go shoe shopping, I'm going to go with you. That's for sure.

Sounds good. Two quick questions. First of all, just to get around commentary, a lot of retailers are saying Christmas was weak. I know David made a couple of comments about what could change your initial outlook for 2014, would be on a potential for more bankruptcies or things of that nature. But I just -- and then for everything you're seen right now, are you seeing kind of on the fringe tenants talking like that about potentially closing shops or things like that just based off the tough holiday season?

Not really. This is always the general time where you may see a few of these pop-up. But no one -- in fact, there's a few that have been in the edge for a number of years and actually turn their business around even last year. Look, I think the consumer -- I read something yesterday on the plane back from Europe that consumer is still under a pretty decent amount of pressure. Higher taxes, more regulation, uncertainty of ObamaCare, spending on durable goods a little bit in the first half the year, higher rates potentially, I would think, and they took it easy in the third and fourth quarter, as you've seen across the board. So we are still in a tepid recovery. The fascinating thing I read, last year, forget the federal government, in the state and local governments, there were 40,000 new rules and regulations in the state -- in the United States of the America. So that is going to slow the growth of America, 40,000 new regulations throughout this country at a state and local level. That's going to slow us down. So we have a tepid recovery, even though some of the broad-based numbers look better. The fact is it's still a very cautious environment. But we're producing terrific results in that environment. And that's the facts. We produced great results in the Great Recession. We had cash flow that was flat. So despite all of that, that noise out there, we can only do what we're capable of doing. We can't control the outcome of an anchor business plan or not. We can just be ready to go to work if, in fact, these things are thrown in our way.

Got it. That's helpful. And then the second thing is we also heard about Matt Lentz had also kind of left the company. Just wondering if that role was -- there's going to be a replacement for him or if there's going to be any changes around the CIO position.

The answer is we brought someone in to -- help the internationally. We're -- Matt was helping Stanley Shashoua who has been terrific. Stanley is great, speaks 5 languages, maybe 6, unlike the team here who can actually speak English, but he's great and he's helping me. And in the sense, he really took Matt's role on our International business.

Got it. Could you talk -- a little bit more about just Stanley's overall background and what he's kind of done in the past?

He worked for both real estate and investment banking companies. So he's been -- he's a young guy compared to me probably, but he's been -- he's got great experience. And he was instrumental with the McArthurGlen deal. I had to put him on that deal because of the complexity, and he really helped us get there with another kind of great guy here who actually came from the Mills, but moved to Minneapolis when did that deal. Brian McDade -- the 2 of them, grabbed that -- along with our General Counsel, grabbed that deal and took it to the finish line. And so the good thing about the -- we have kind of the what I call younger folks that are really taking a lot more responsibility in the organization and doing a great job.

And your next question comes from Haendel St. Juste of Morgan Stanley.

A couple of questions on SpinCo. So several of the SpinCo properties are encumbered with CMBS debt that has near-term maturities, West Ridge Mall in Topeka, Chesapeake Square in Chesapeake, Virginia, and...

Yes. Those are all being refinanced.

As we speak.

As we speak.

Okay.

So that is your question?

Well, I was getting to it, right? So there's 4 or 5 of that list with near-term debt maturities. So should we assume that all 5 are in that list of being refinanced or the candidates for dispositions?

No, they're all going to be refinanced absent -- one may not be -- one is further out there. I don't know, I don't -- yes, but they'll be refinanced.

Okay. And you've quietly gone about proving your U.S. portfolio in recent years. I'm just trying to get a sense how to process slows down post SpinCo. How do you think about your U.S. portfolio or disposition strategy after the spinoff of SpinCo?

Well, for SPG, we'll continue to call properties like we have for year-after-year. SpinCo, I think, again, I'm not going to be in charge there. But I think I would expect SpinCo to sell a couple assets here and there. And I think it's -- that's business as usual. I mean, we'll always continue to sell assets at both companies. I can't necessarily -- as a Director, I'll have certainly my point of view on capital allocation and reallocation. But I would expect both companies to continue to sell assets like we have in the past.

And your next question comes from Dan Oppenheim with Crédit Suisse. Daniel Oppenheim - Crédit Suisse AG, Research Division: I was wondering -- I guess, there's been enough questions about some seasonal trends here, with normally season closings in the first quarter. I guess, in the other side of that, at over 96% occupancy here, you're likely to have some sort of backlog in terms of retailers wanting to get in. I just wonder if you can comment a bit in terms of conversations with retailers looking ahead in terms of Del Amo as that opens up next year and just others, just how you think about that in terms of demand, just in terms of -- just if there are to be any vacancies in terms of sort of backfilling or -- adding there.

We still have very strong demand. And in fact, the response to Del Amo has been terrific. We are going to be able to move that up significantly in price point and with the quality retailers. And retailers still want to expand. Retailers still want to have great real estate that will help their brand and we're seeing no real slowdown in that conversation. And in fact, and we've said this in other calls, a great amount of the time that David and I spend are basically dealing with retailers that we cannot accommodate in the size they want or in the space they want at our property. So demand remains high.

Dan, this is Steve. I'll just add one point. We tend not to get into the 27 different variables that go into our forecast for the year, but I will say that our plan in 2014 is that occupancy year-over-year will be up at the end of '14.

Your next question comes from the line of Ben Yang of Evercore.

David, you've talked in the past about the disconnect between sales and NOI that for one, you can replace the underperforming tenants. So I was just hoping -- I mean, Steve made the comment about occupancy being up in '14. Would you guys consider at all just disclosing what the same-store NOI growth is as implied in your '14 guidance because it just seems like that could help alleviate some of the concerns surrounding core growth in light of volume sales, pressured customer?

Yes. Let me interrupt you there. We did, actually.

Oh, did you?

I must have bored you by the time I got to that. Our -- that's quite all right. I understand that our opening comments may, in fact, bore some. We are projecting, for '14, to have comp NOI up 4% or above. So I -- if that answers your question -- 4%.

Got it. Sorry I missed that, and...

That's all right. I am not offended in any stretch of imagination.

Maybe I missed this one also. Did you disclose the cap rate for the Arizona Mills transaction?

We -- in fact, we said we would not, and we did do -- we did say that earlier. That's okay.

And maybe a final question, maybe going back to Cedrik's comments on Sears. Do you think that the anchor subleasing dynamic will accelerate in the coming year? Is that also -- is this a model that only works at the A malls, or do you think we could see this type of activity ramp up at the B malls?

I think that there is going to be a concerted effort by Sears. They've done it historically over the last few years, and they're continuing to be focused on it to try and get their stores to where they are most efficient. That doesn't -- and I think that is frankly not specifically limited to any particular quality spectrum of their stores. And as David said, where we think it's in our best interest, we'll cooperate. If we think it is not in our best interest or the malls' best interest or the consumers' best interest, we'll try and influence a different direction on Sears' part. But I don't think their efforts are being focused on any particular quality type.

Got it. And are you in current negotiations to do this in any other of your malls with Sears or maybe even at Penney's currently?

We're having a constant dialogue with both companies about all the real estate. And frankly, as David said earlier, we hopefully -- that provides a lot of insights into what they're thinking strategically with respect to the stores, and we're trying to work with them to come up with positive outcomes.

Your next question comes from Craig Schmidt of Bank of America.

Just given Steve's retirement date, I'm wondering if that's a good indicator -- when do you think the debt markets are going to get tougher?

I don't know. I see the tenure coming back down. So Craig, I will say that the debt markets are in really good shape right now for us. Now I always caution that by -- I think about the little commercials. Your results may not be the same, but for us, the bond market is wide open, the mortgage market is very good, the bank market is wide open. So -- and having already put away now quite a bit of our 2014 maturities, we can start to tackle the '15 stuff and feel good about the opportunity to continue to roll down our weighted average borrowing cost while increasing our duration. I think it is interesting in a debt portfolio that's $28 billion, $29 billion. We've lowered our borrowing costs 23 basis points in each of the last 2 years, and that's a pretty meaningful contribution to profitability.

With no reliance on closures, yes.

Yes, it was almost no floating rate [ph] here to date.

I mean, that's the important part. I mean, we -- if we want to reduce our earnings growth, we would have 20%, 30% of floating rate debt. We basically have virtually 0.

And I guess, one other thought on the cost of occupancy, I know that's been touched on. But 11.5% still seems low, even when it -- considering it's Premium Outlets combined with malls. Where do you think -- and I realize it's a moving target, but where do you think that could normalize out your cost of occupancy? Or do you think it's going to remain sort of in the mid-11s?

Well, this is the $64,000 question. Like I said earlier, I mean, it is interesting to me that occupancy costs outside of the U.S. are much, much higher and -- so answer is I don't know other than it does give us some very good feeling that we still have a way to continue to grow our NOI, because essentially, the biggest opportunity we have is to -- marketing our leases to market and being able to replace underperforming retailers with better ones. Besides the -- obviously, and I know, Craig, you've been out seeing a bunch of properties, and I appreciate that, that you have because you get a good sense of what's going on here, which I do think, because of the size of the company, sometimes people lose focus. But all that's going on -- but that's going to drive our business. That -- but I can't put a number on it and -- but -- and we're here to create the right partnership with our retailers because we believe in repeat business with them. But this is confidence that we still have the ability to execute even with a tepid consumer comp NOI growth.

Yes. I would just say, in the properties I visited, I've been very impressed, and you sort of forget sometimes that there really is a skill to managing these assets. And some of the things I've seen in the last couple of weeks have been very impressive.

Yes. Look, I mean, you -- I know you went to Del Amo, right? And I'm sure you didn't really believe we were redoing Del Amo. I know you've been asking about this for -- I'm sure you asked the Mills pre-acquisition for years. And then I know, once we bought the Mills, it took us a few years and one Great Recession to overcome, but it's going to be a great, great mall.

No, I think what you're doing and just bringing in Nordstrom's could be a real game changer because there's clearly an unserved audience there.

And your next question comes from Jeff Spector of Bank of America.

Just a follow-up to Craig's question. I guess, when you're sitting down with tenants and negotiating new leases, I mean, is there a target occupancy cost?

The answer is that we're very focused on the maximizing of rents and it's less about a target occupancy cost because it takes into account the size of the space, the use of the tenant, the quality of the mall, where is the space located in the mall, what's the sales projection for that tenant. And all of that goes into setting the rate that we think is appropriate. And believe me, the process is granular and we spend a great deal of time on the nickels, making sure that we try and get it right. But we don't go into any given spacing, we want 12.5% of sales from this space and 18% from this space. All those factors go into how we set the rent.

Okay. That helps. And then, Rick, I guess I know there's been a lot of discussion on JCPenney and Sears. But just one thing I was thinking about when I was going through this up on anchor big box openings, it is interesting when you look at the list compared to what, say, years ago when we saw a number of department stores closings. I mean, do you feel better today there's more options? I mean, I really haven't heard yet great evidence if somebody's anchors are definitely a benefit to the mall, but I would imagine, it just seems like a pretty good list, including -- like I noticed Wegmans at Montgomery Mall.

Yes. Well, look, we have a whole dedicated team and frankly, David and I have been pushing all of our people to go out and kept as broad a net as possible, so we have as many options identified as possible to make things work. And frankly, Wegmans at Montgomery Mall has been terrific, Fairway Market at Nanuet has been great, Fresh Market at The Falls, but that's just one category. David mentioned Dick's earlier, Arhaus Furniture. We just have a lot of different users that, as we've said earlier, we've gone through our portfolio and have these users identified, so that if an opportunity presents itself with an anchor box, we can move efficiently and quickly and effectively to get it filled.

Yes. And the difference, Jeff, also is that when we have a significant turmoil in the department store business, say in the late 80s, early 90s, I mean, there's been episodes of -- a lot of turnover. There was also a lot of new stuff that was being brought to the market. In today's market, you essentially have no new -- I mean, of a significant quantity, no new development, whether it's strip centers and malls, they have a little bit in the Outlet business as we all know, but you have no new product coming on the market. And it's -- yes, I know there are a few, but in the real sense of stuff. So -- and you also have obsolescence occurring, which is -- by the way, we -- they've been telling folks for several years that we expect an obsolescence. When you put together the inventories tight and sure, there'll be some headaches associated with that, but that's in a -- that's a better spot to be in if, in fact, there is significant anchor turmoil than say, in the early 90s and a couple other, the episodes that Rick and I have had to deal with.

Then the last thing I'll say on that is that frankly, success breeds success. So once we're able to get one of these new anchors in our properties, they open the store, what invariably we have found is they've been more successful than they thought they'd be, and that makes the next conversation for the next opportunity much more easy to have and finalize.

Thanks. And then I just want to clarify, I know, at the beginning of the call, David you're talking about traffic counts, I think it's important to clarify -- I think you used the word -- you don't participate with the company mentioned. When you say that, are you saying, just to confirm, Simon does not provide data to these companies? Is that correct?

They are -- they -- yes, they -- first of all, we don't use them. We rely primarily on parking counts. We do not use them. I think their -- I'm not sure about their sample base. You'll have to ask them. I think it's narrow. And I don't -- the retailers that use them, I think, it's a small subset. But I mean, look, there are lots of people that make pronouncements and tell you this, tell you that. All we can do is just report quarter-after-quarter what the results of our business produce.

Okay. And then my last question, I know you may not be able to answer it, but into these things with [ph] Calbman, I guess, did anything -- was there any discussions on the 2 different St. Louis Outlet Centers?

I think, Jeff, everything I've told you about our deal has been disclosed.

And your next question comes from Nathan Isbee of Stifel. Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: Yes, just a quick follow-up, a technical question. You mentioned that the online sales fulfilled at your malls will count towards sales. On the flip side, if somebody buys 6 pairs of shoes online and returns 5 of them at your malls, is that a net deduction to sales?

The answer is no because it didn't occur at the POS. Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: So even if they returned it in your mall, it would not?

Correct.

Correct.

Ladies and gentlemen, I'd like to now turn the call back over to Mr. Simon for closing remarks.

Okay. Thank you. Sorry, the call dragged on that long. Steve has been a great part of the group. We've got another year to torment him. So I'm sure you'll see him around, and we'll make sure that we'll want to go the extra torment for the next year. So anyway, thank you. Have a good one.

Thank you. Ladies and gentlemen, this concludes the presentation for today. Thank you for your participation in today's conference. You may now disconnect.