Ladies and gentlemen, welcome to the Q3 2015 Simon Property Group Inc. Earnings Conference Call. My name is Julie and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of the conference. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. And now I would like to turn the call over to Tom Ward, VP of Investor Relations, please proceed, sir.

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

Good morning, we had a productive quarter. We opened started and completed several new projects and closed our joint venture with HBC including the acquisition of certain cop-op department store which will serve as another avenue of growth for us. And most importantly we continue to produce strong operating and financial performance. Results in the quarter were highlighted by FFO of $2.54 per share which exceeded the first call consensus by $0.07. These results were achieved even with the negative impact of $0.04 in the quarter compared to the prior year quarter due to the strong dollar. On a comparable basis excluding the loss on the extinguishment of debt in the prior year period FFO per diluted share increased 12.9% or $0.29 year-over-year. Key metrics, occupancy was 96.1%. Leasing activity remains healthy. The malls and outlets recorded releasing spreads of $11 per square foot, an increase of 18.4%. Comp NOI increased 4.3% in the third quarter of 2015, an increase 3.8% year-to-date keeping us on track for full year guidance of 4% comp NOI growth. This is on top of our industry leading growth of more than 5% in 2014. As a reminder we do not include lease settlement income in comp NOI disclosure or new transaction. We also do not include the impact of recently redeveloped or expanded centers. Total sales across the portfolio increased 1.8% for the trailing 12 months even with the loss of bankrupt tenants. On a comparable basis the sales per square foot increased for the 12 months ended September 30 was 2.7% positive. They were strong in the mall, but effective in the outlet business due to the strong dollar as had on sales activity from the international tourist in property zone; the Canadian, Mexican borders as well as traditional tourist markets. At the…

[Operator Instructions] The first question comes from the line of Michael Bilerman from Citi. Please go ahead sir. You are live into the call.

It's Michael Bilerman here with Christine Kilroy. David, your comment about the stock buyback, being I guess it's a volatile stock market and some uncertainties in the debt markets; isn't that exactly the time where you should be exercising your fortress balance sheet and significant cash proceeds to be able to buy the stock. I know high insight is 2020, watching the stock go up $27 but I'm just curious about the mentality at that point in time about not being aggressive at that point.

Well, Michael I think stock buybacks, in terms of the marketplace reaction to the may be overstated. What I'm most interested in at this company is growing our earnings and our dividend and maintaining our balance sheet, improving our properties and enhancing our relationship. So I don’t look at it quarter by quarter basis. We are more focused on growing our earnings per share and our dividend. And the fact is that in August the market was very volatile as you know the debt markets gapped pretty significantly. We chose for one quarter to be cautious. I have no regrets about that because our number one priority is to grow our earnings and our dividends. And that to me is more important and I think that's what the market should value more importantly than what one's buyback activity may be from one quarter to the next. We remain committed to it while we're going to be opportunistic about that because we continue to believe. I'm terrible at reading from the script. I can barely get the words out. But as you know our activity in redevelopment and new development is not hypothetical. It is ongoing and I think prudence in that category of the buyback is appropriate. And again I think our number one priority is earnings growth and therefore dividend growth. And then buy stock back when we feel like it's a real opportunistic time.

And that Christine has a question as well.

Sure.

Hey David, just thinking about the Simon venture Group stuff and we appreciate the in-depth look at that business earlier this month, beyond just sort of the small financial investment you've made, what do you view as the primary benefit of this business to Simon, over the longer term as consumers shopping habits continue to evolve and maybe you can sort of give us a sense of how big you think that your investment in this business could reach over time?

Well, let me just talk about what I think the goal is, ultimately it's to help connect with the consumer. The mall business is historically as always felt like the, our job was to get the box reach to the right retailers and let the retailers do most of the connecting and driving most of the traffic but I think the industry has a evolved, where we've got to become the driver of traffic and we've got to connect with the consumers. So what I'm looking for in that, those investments and that connection with technology is, how do I connect with the consumer to drive traffic and make their shopping trip more enjoyable or more effective, two: how do I help the retailer do that as well and then maybe third, is there some new concept or new retailer that ultimately can proliferate our portfolio through these kind of connections. And if we can accomplish those two or three goals then I think we will have succeeded. And it's all about trying to take the mall box making a smart connected box to help our retailers and the property owner connect with the consumer so that their trip is better, more efficient and more productive which we think will lead to sales growth. So that's the goal. We may do a little bit here and there that's a little far afield like funding the new retail or restaurant concept because we think maybe that has potential down the road and in terms of size, we're not going to get carried away but it's really hard to pinpoint right now exactly how big that can be but we have a sense where we're kind of, will ultimately be in the mid-20s by the end of this year, maybe we'll do another type of investment like that next year. So it wouldn't shock me if we are in there 50+ range by the end of next year but that's just a swag.

Thank you for your question. We do have another question and it comes from the line of Jeff Spector from Bank of America. Please go ahead sir, you are live into the call.

Great, thank you, good morning. I guess, just thinking about the bumps throughout the year, David what exceeded your expectations and how were you thinking about the budgeting process for 2016? I guess can you compare year-over-year, your mindset?

Well, I think what's interesting before the end perspective, first of all is that as you look at our earnings growth we have had an increase in lease settlement income but we've also had the negative of the currency negative from our foreign operations. If you put the two together over ’14 we've actually had a negative $0.05 variance. So, the increase in the lease settlement income from ’15 to ’14 offset against the reduction in earnings that we've taken from our foreign investments due to the strong dollar, net-net year-to-date has been a negative $0.05. So you have to put that in perspective. We've had good rental growth, good leasing spreads. We are obviously had a lot more bankruptcies in ’15 than we did in ’14 and the other impact we've had on the negative side is that we've lost certain amount of percentage rent from the outlet business because of the fact that the strong dollar has also heard tourism shopping and we've seen that impacted more in the outlet business, the outlet tourists centers then we had in the mall business. The mall comp sales have been a better than our expectations and our leading portfolio in terms of that. So the fact is we always though year in and year out, that's what makes us a little bit unique, we always had some positives, we always had some negatives and we somehow manage to hit our numbers, exceed our numbers, produce very strong industry leading results. I'd also say to you as we look into next year, I mean the key focus for us frankly is we have anniversary the stronger dollar. So that will not be, the negative it was this year and the big focus obviously is going to be leasing up the bankrupt…

Thank you, that's helpful. Good timing on the, yes?

I hope it answered your question but I'm not, but we've got work to do and we have one thing about comp and alike, if you look at nine, I'm sorry, if you look at ’13, I don't know 5%, what we have guys 5%, ’14 we had 5%, this year we are going to have 4%. So we are building it up a pretty strong base and we didn't have any down years of non-performance to build it off, right. So it's great to build also base if you had non-performance but we haven't had that frankly and in the great recession our comp and ally was relatively flat which was industry leading as well.

No, it's very helpful, thank you and good timing on the Del Amo because I know Craig has put in a request to visit it.

Come on down.

Great. And then my only, my one other question was just on your previous comments on the redevelopment pipeline. We believe you've mentioned through ’17 or you at the point where you think that pipeline could continue a billion plus beyond ’17? Are we correct on that?

Yes. I feel pretty good about that. Yes.

Beyond ’17 or not yet?

Yes, no, no.

Oh beyond? Okay.

No rest for [indiscernible], so this morning, we're going through our budget cycle now which is a lot of fun but this morning we were going through our capital plan through ’16 and ’17 and ’18. And we don't see it abating, it’s actually in’17 it will be higher probably around $1.5 billion, and in’18 in that range. And the big unknown is how fast the Seritage things happen. We are not, it’s a joint venture. So it's not just the question of how fast we can go but also how fast Seritage can goes and how fast Sears can go which is clearly we're trying to influence but we don't have complete control in that but we certainly have a lot on the drawing board to do there.

Great thank you.

Thank you feel question. We do have another question it comes from the line of Caitlin Burrows from Goldman Sachs. Please go ahead you are live into the call.

Hi, good morning. Earlier this year, mall REITs were of course impacted across the board by retailer bankruptcies but your same-center occupancy was down 80 basis points this quarter which is actually more than the first and second which seems surprising. So, I was just wondering if you could talk about what drove that year-over-year decline in occupancy to remain in the third quarter and how you expect it turn going forward.

We had more bankruptcies in the third quarter. So, Jones went out, just more bankruptcies and then we've also opened up a few centers which had some decrease. We just saw people understand, we don't, in our statistics we put in new centers. The minute the rent in terms of occupancy or new expanded centers. They're not in our comps, NOI growth but they are in our sales per square foot and they're in our occupancy. So part of that decrease was also that we added some new centers and some new expanded centers which actually drove our occupancy down, [flat plenty depth] as well.

Got it and then like you're mentioning before, you guys have had consistent pretty strong same store NOI growth but do you think that this creates some easy occupancy comp for 2016 and that should be able to help you even more?

Nothing is easy, if you see my grade here recently. Nothing is easy. Well, I won't say anything about gold but we did read this retail report; we found your list of 100 malls curious, so I assume the real estate folks didn't have much to do with that but we're happy to help you.

It will. Our retail team that put it together.

Right and you quoted traffic statistics which I would encourage you read the footnotes from your source.

We will do. Thank you.

Thank you. Happy to help.

Thank you for your question. The next question comes from the line of Paul Morgan from Canaccord, please go ahead.

Good morning. Just on the sales trends, I mean could you talk a little bit about it, I mean whether and to what extent the tourist markets were drag due to the dollar or maybe looking at any differences between the Mall and the premium outlet portfolio.

We're not going to run from this. We're just going to tell you reality. We have unbelievable tourist centers. In our outlet business, Orlando, Woodberry, throughout Las Vegas and those generate a lot of tourism dollars and the tourists because of the strong dollar, you know was quiet. The high end luxury retail market in say New York City and Miami has been hurt as well and we saw that have an usually, it has very little impact but we saw that a little bit more in the outlet business and very little in the mall business. We think it's more or less temporary these are great assets, has no impact on retail demand and we've seen a space that comp NOI growth but that’s why the sales metrics are a bigger reaction from you than they are from me, but we tell like it is. So they had an impact on our retail sales per square foot but we don't think it's going to have an impact on our ability to continue to grow comp NOI growth.

Okay that give some other question I guess which is just, if you look at the public retailers a lot of them or at least stocks have gotten hit pretty hard over the past several months and as we head into the holidays I mean as you talk to them engage with them about, they're open to buys for next year. I mean how is their sentiment? Is it been shifting at all? Is this just kind of sort of the shift in market share between different retailers or is there anything more kind of systematic in terms of, maybe how they're approaching their growth over the next year or two?

I'd say this, it’s retail dependent but they are better retailers who are dealing with the stronger dollar which has it short term impact on them and second, the fact is our GDP growth is anemic I mean we are growing our general economy 2% below, I think retail can’t avoid that fact. The good news is we outperform not because we cater to generally the better consumer and what I think we've seen from the better consumer this year is a little bit move toward which happens in cycles, a little bit more toward durable goods than non-durable goods which has the impact of making kind of a flattish comp sales growth increase but like I said the mall business, we had very strong comp NOI, I'm sorry comp sales, retail sales growth this year and which was offset as I said only by the tourist centers in the outlet business. So net-net we are up 2.7 but if I isolated just the mall, we'd be up much higher than that and that is a testament even though in the anemic GDP growth the better consumer is spending even though there's been a significant increase in durable goods purchases but retail right now is generally a challenge but we're producing results and we intend to continue to do that.

I mean would you Would you say it kind of hasn't translated into a meaningful shift in the appetite for space in your centers as people talk about next year?

Not really. I think the opportunity to growth their business in good real estate for better retailers is strong and I don't see the current environment affecting that.

Great. Thanks.

Sure.

Thank you for your question. The next question comes from Ross Nussbaum from UBS. Please go ahead.

I am here with Jeremy Metz. Hey David, when we met the other day, you talked a little bit about the amount of money that consumers are spending in your mall for every minute they are there saying there's like a one-to-one ratio, I am curious if you've done any work to think about spending of millennials and teens versus say their parents to sort of further dig into whether the impact of the internet and technology is going to be a growing problem just from a generational perspective?

I don't have in front of me but yes we've looked at, you know the typical generational gaps, that you would see Baby Boomers Generation X and so on, yes I don't have that in front of me but those numbers are-- it's not it's not what you think it. I mean in other words, there was not a big differential between Generation X and millennials. The one thing we're starting to see is the Baby Boomers probably more of a trend on their decreased expenditures than anything else. Again, I think the millennials offer great opportunity for us because they're looking for, they are generally going through their increased income opportunity over the next decade. It's a huge population base, greater than even the Baby Boomers. These folks will get married. They will have children. They will move out of urban environments, especially with, the more difficult living conditions that's going on a lot of urban environments. They are, we believe loyal mall shopping consumers. And we're making the mall generally a better experience for them to be at. So I don't think there's a big differential. I don't have the numbers in front of me. It did grew up in the mall environment. They're comfortable with the mall environment. And as their income grows and as they aged and have kids, I think they'll be loyal mall shoppers, especially given the environment we're creating.

I appreciate that. I think Jeremy has got a question as well.

Sure.

Just two quick ones. In terms of the lease cancellation income, it was the high suspend long time. David, earlier you mentioned Jones. I was just wondering if there is any other tenants in particular to maybe drove, I think Forever 21 was in a few supersized locations. They were looking to downsize, not sure if they were a part of it this quarter?

No Forever 21. It’s basically, the big one was Jones. There were couple of others that year to date that we dealt with but I hate going through retail. Retailers on that it's somewhat confidential. The good news is lease settlement income does have been slow, the good news is that it's not any time we do that we still have this space. So if I get three years of rent and then I get the chance to lease the space back again, I mean that’s a good business, there is nothing wrong with that and to put the earnings in perspective I mean may not have caught the original response to the earlier question, net-net when I look at the stronger dollar from our foreign investments versus the increase in a lease settlement income from ’14 to ’15. I'm in the whole $0.05 year to date. So please keep that mind as you think about our business.

And then just switching gears quickly, Highwoods recently announced they were looking to sell Country Club Plaza. I was just wondering is that something Simon would be interested in or any thoughts on where that process is at?

I understand that there is a process. I think it's a good real estate. It's got a good position and it's marketplace. But beyond that I am not informed in terms of numbers or anything else or profit but I understand there's a process and it's always been very good real estate, good market.

Okay, thank you.

Sure.

Thank you for your question. The next question comes from the line of Jeff Donnelly from Wells Fargo. Please go ahead.

Good morning. Just may be sticking with leasing, I'm just curious, David, do you think the increase in lease settlement income you are getting foreshadows potentially more space coming back to you guys after the holiday season through bankruptcy?

I actually think it’s tailing down. As I look at what generated the list it’s a couple of odd things and our watch-list is actually the guys that we were worried about is kind of happened and done that. So it's out there it's possible but I actually think next year it will be less, it will be less impacted by bankruptcies than we were this year.

Okay and switching gears, I'm just curious for your take is Macerich has taken to joint venturing some assets at a low to mid four cap rate that we've been told are fairly middle of the pack for them. Does that pricing in the market maybe lead you to feel there might be pockets of your portfolio where you are open to JVs or even selling out of some assets entirely to expand your repurchase initiatives?

I don’t really, I want to rephrase it. I only want to comment on what may switch did so.

I'm just curious as a comp for transactions in the market, does something in the 4s compel you to say, gee, maybe you'd look at selling your assets to fuel repurchases?

I don't know. I mean the fact to the matter is where we are very comfortable with what we're doing. We sell our assets, there generally is complexity when you go to joint ventures. We like to do joint ventures when there's new opportunities because there is, it's easier to justify. So for instance, just to take a few with that, we're pleased to be part of a new joint ventures on a couple of the new developments, like Brickell and Clearfork, very good partners. Great real estate. That was the only way we could do that. I like those kind of joint ventures where it's more new opportunity than otherwise we sell assets, we sold a bunch of assets, don't forget we did a significant spin off of our strip centers in our smaller malls. I don't I don't rule it out. I don't think we necessarily, it's not our priority to do. The priority for us is to grow our innings, grow our dividend, execute our redevelopment development pipeline. And we have the buyback and I don't think we necessarily need the capital from existing properties in terms of a joint venture that execute on the buyback.

Speaking of JVs, I guess you teamed up with Hudson Bay to acquire, was it Galeria Kaufhof Stores? What can you tell us about those properties and just maybe what are your plans of those locations down the road?

Well, it's great. Mostly city center real estate in Germany, which is a very strong market, very little retail space per capita as compared to the U.S. as an example. It's got built in growth even if it just stays kind of the credit lease that it is but we think there is some ability to redevelop some of the stores take back some of the front edge, much like we are doing with some of the department stores here in the U.S. And it's a strong cash flow business appropriately valued with some redevelopment upside.

Thank you for your question. We do have another question and it comes from the line of Ki Bin Kim from Robinson Humphrey. Please go ahead.

Thanks. Just going back to your retailer watch list comments, last year when we had RadioShack, Wet Seal and Deb Shops and Delia's and some others, how early did you have a read into that they would go BK overall?

Those particular ones?

In general. I was just curious how much of an early warning sign does the watch list provide to you?

Pretty early.

We certainly can see this coming a long way away based on the trends of what their leasing activity is or sales activity, when they probably reported they are looking for new equity, so none of these are surprises but as David said the ones that want to away, they had been on the ropes for years and years and they just ultimately ran out of the incremental equity sources and out of file.

Okay. Maybe if you could put it in an easily digestible number. You mentioned 1.3 million square feet that was impacted this year. In broad numbers, what does that look like next year?

It’s hard to predict what next year is going to be but as David said we anticipate that the next year will certainly not be as large year on bankruptcies as we had this year.

Thank you. The next question comes from the line of Vincent Chao from Deutsche Bank. Please go ahead.

I know we spent quite a bit of time on the impact of the dollar and tourism sales, but just curious if you could maybe give some more specific color about Miami and then specifically Brickell Center.

Well, Miami is feeling some of the heat from obviously Latin America but actually the leasings at Brickell.

Brickell is doing very well. It's opening fall of next year. We've been announcing periodically the tenants that are starting up with the wonderful mix of designer tenants and restaurants and it is anchored by Saks with the Cinema. And if you have been down there, it's a very incredible project with two condo towers, the East Hotel and two office buildings in addition to the retail in a market that is really the financial center of that market. So we're very excited about it going forward.

Okay, so safe to say no impact on demand despite some of the maybe tourism impacts in the near-term, so similar to your comments for the other overall.

I think what I said earlier is consistent with that retailers. Now look, that's going to attract the better long term thinking retailers. So the fact that tourism is a little soft right now; doesn't detract the better retailer. When I say better, I'm not just talking mix, but just they're better retailers. So I was just trying to explain to you, what's been reported in our sales per square foot but I also made the comment to you, I don't think that is going to detract from the demand of our real estate and our ability to drive comp NOI because we're going after the better retailers. And the better retailers will work through a quarter or two of sales volatility for whatever reason. And that's the point I've been trying to make to a lot of folks a lot of time over retail sales. Retail sales is interesting, but not a predictor comp NOI growth and we've done all sorts of regression analysis. I've talked about this ad nauseam, but we report the facts for you to have, but it doesn't detract from the ability to generate increased cash flow, because that's more supply and demand oriented and what the market rent of our space rolling over is, and what that particular location is, and we got a good space and a good mall, you're going to be there to generate, given that rent will lower, that rent has been there for seven years. You go look at where that rent was rolling over seven years ago. So and that's why we are re-leasing spreads of 11 bucks a foot. That's the focus. The volatility of retail sales is more interesting from a retailer point of view less from the landlord. So, take New York City street retail. There is volatility in that retail sales there but has the market value of that real estate changed. Probably if you talk to a lot of people, they would probably tell you, no.

We have another question from the line of Mike Muller from JP Morgan. Please go ahead.

A couple of questions here. One, you may have indirectly answered before but what was your share of the lease term that you booked this quarter?

It’s in our supplemental.

The share of it is because I thought that was the consolidated amount?

Well, if it is consolidated, that's our share. We may have a little minority interest in that. But if it is consolidated, it's our share, right?

And then secondly on the outlet development side, can you talk a little bit about the returns you are seeing when you compare Europe starts to US to Asia and how you think about the pecking order of opportunities?

I would say that the due development in Europe tends to be a little lower than -- our developments here around a 11% return on cost generally. In Europe they may be a touch lower, say 8 or 9 to start with. And in Asia we really don’t do unless they are double digits because you got tax impact and we want a better risk adjusted return. I would say they are probably around the 12% or 13% range.

Got it. Okay. And I guess as you are thinking about opportunities going forward, is it more skewed towards the US for new starts at this point or do you think you're going to see a little bit more pickup in Europe?

Europe, like I said, we're really excited on the Provence deal, 90% of it's -- it's a big project and a big market that hasn’t seen a quality outlet like that. So that's good news. There are two or three others through McArthurGlen that were making good progress, and one in Spain that we hope to start construction in '16, as we go through the permitting. So that's up there as well. Another one in the western part of Paris that we are making good progress on, other one in Belgium where we are making good progress on. And in Asia, we've got two or three others that are a little more difficult to predict but we've got our second one in Malaysia that we’re confident that we will get started as well as Mexico. In Mexico we expect to start one next year as well. So we're making progress.

The next question comes from the line of Carol Kemple from Hilliard Lyons. Please go ahead.

How does your volume of temporary and pop-up tenants for this holiday season compare to the recent past? And then historically do you know what rate of those tenants convert to a longer-term lease once their temporary lease expires?

The pop-up, generally, they don’t convert -- the main pop-ups to decide whether they want to do a longer term deal. But I would say, generally there is an increase this year, primarily because we have a little bit more space from the bankruptcies that we've had this year. But Carol, just to remind you, we don’t include that in our occupancy. It's got to be a year in that, but there will be more activity in pop-up stores for the season just because now we have got a little bit more vacancy due to some of the bankruptcies.

And I was thinking of your American Girl Store that's open in Castleton, I've seen where they are basically doing that to test the Indianapolis market. Are you seeing more retailers not just doing a pop-up store for the season but more so to actually test the market?

You are starting to see a little bit more of that. I think that's safe to say.

We do have another question that comes from the line of Ryan Peterson from Sandler O'Neill, please go ahead.

I just wanted to ask about the Houston Galleria and the Houston market and if you guys have seen any change in the shopper demographics there or the retail sales trends more generally and what your expectations are going forward?

In what sense?

Just whether you think that Houston will be hit, whether retail is kind of the second impact of oil prices there?

Our Galleria is such a great asset. It tends to -- it's kind of the unambiguous number one. For market of that size, it's kind of unambiguous number one shopping center. So it tends to whether any economic downturn generally, but I will say this. Our retailers are not immune to a little bit of a down economy and Houston is also a big tourist market for the Mexican nationals. So there might be some slight sales, retail sales impact. But it will have no impact to the long term great asset that Houston Galleria is as well as we're doing a significant amount of transformation of that asset with the new Saks store, the new Saks Wing, the new Webster's which is going to open in the next thirty days or so. We have a lot of phenomenal stuff going on there, but sure because retail sales be marginally impacted there. Sure, but Houston Galleria tends to continue to way outperform just because it's such a great asset. Rick I don't know if you want to add anything.

I think it is very well positioned and as David said, it's got the unique mix of anchors, restaurants and small shops in that market and it's been very enduring over cycles in the energy belt for decades. And if anything, well I think Houston generally has become less of a -- I would certainly say twenty plus years ago, was more boom bust. But with the medical, it's with the universities, the medical facilities there, it's much more diversified economy than just oil and gas.

We do have another question that comes from the line of Steve Sakwa from Evercore ISI. Please go ahead.

Just two quick questions. I know you've talked a bit about the weakness in the US and all that business. But just what about stuff north of the border, south of the border? Just how kind of are the international assets performing?

I'm sorry I didn't hear your first part.

Sorry, is that better?

Yes that's better thanks.

I know you've talked about the weakness in the tourism markets for the outlet business here in the US. I'm just curious how the assets in Canada, Mexico, over in Japan, the few that you have over in Europe, how are the non-US ones performing from a sales and leasing Perspective?

Again I don't want to overreact. I mean there is a little bit of softness due to the strong dollar U.S. tourism. You're seeing that in all sorts of businesses, hotel business whatever, maybe we are dealing with it. But the fact is the international properties are actually performing very-very well. Europe retail sales is actually relatively impressive, in the Klepierre portfolio, the outlet sales that we have with McArthurGlen are very impressive. Japan, you see that's in our 8-K. They are very impressive, up about 7%. Korea, a little bit soft, I think the only market that's a little soft is Korea, a little bit because they are not the stars, but whatever the last version was. Mars whatever and the Chinese consumer they're probably going a little bit less to Korea for the time being. But I would say Mexico sales are, we've go one asset. Canada is great. Toronto is terrific. Montreal is finding its market increasing. So generally those centers are very-very, we've been very pleased with those results.

And I guess the second question, you sort of briefly touched on Klepierre. I didn't really hear much on the call but just how has the integration gone? If you had to kind of rank on a scale of 1 to 10 of just all the things you want to do, where are you guys in the process of transforming the combined company?

You mean with respect to Corio?

Yes Klepierre Corio and just kind of overall business [multiple speakers].

I just want to -- look, they brought Corio, we don’t know and then so we are not integrating with them. I just wanted to distinguish. I would say, look, they've gone, over the three years we've owned it, they have done a lot of transformation, selling a bunch of stuff, buying a bunch of stuff. That's pretty much packed them. The big focus next year is really operationally which they through osmosis or improving their capabilities of doing that, and that's been the big focus, I'd say in '16. Now that the integration with Corio was pretty much done. The sale of the big Carrefour portfolio was done and so I think it's going to be an operational story. But we are not operating the business, we're providing strategic input and I think they've done a very good job of gleaming whatever nuggets of strategy we are able to impart and ignoring the ones that have no value. What, sometimes we don’t have the right strategy. So they are doing a good job. But I think operationally there is, I would say they are the first to admit, they can continue to improve just like we can. And I think that's a big focus for them in the upcoming years. But we are not integrating. I they are running their business.

No-no, I understand that. I'm just saying sitting as Chairman you kind of can sit at the top and look at what they are executing strategically and just trying to figure out how much of the playbook has been done and how much is left to do?

Well, there is always a gap in terms of how we might do things versus how they do things there. I still think there is room where they could be operationally better and that will take longer for them to achieve, but I am confident that they will get better. And we will help out as much as we can. They are pretty good and they are doing a good job.

The next question comes from the line of DJ Busch from Green Street Advisors , please go ahead.

Just a quick follow-up on the Hudson Bay partnership. Is the opportunity set to do deals like a Kaufhof greater abroad versus here in the States? I guess how do you see that investment growing from a geographic perspective?

I do think perhaps the international business may offer a few more opportunities, but they are very creative folks along with our resources dedicated to it, so I wouldn’t rule out domestic opportunities but I would say maybe marginally more opportunities internationally than here. But I wouldn’t rule out domestic opportunities as well.

And then is the joint venture open to kind of retail leaseback opportunities outside of the traditional department stores as well?

Yes.

Okay. And not to belabor the point on international, the softness in international tourism, but the mills operating metrics were pretty impressive again. I think those are obviously greatly influenced by Sawgrass. Is that similar to your comments on the Galleria? Is Sawgrass one of those assets that kind of bucks the trend?

Yes. But we did feel a little bit of softness there as well. So all of these asset is about to trend, but they might have again the retail sales, not the cash flow may have some short term impact. But Sawgrass had a little bit of softness as well. It is not immune.

Thank you for that. We have no further questions at this time. So I would like to turn the call over to David Simon, Chief Executive Officer for closing remarks.

Thank you so much and we will talk to you soon.

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