Good day, ladies and gentlemen, and welcome to the third quarter 2018 Simon Property Group Incorporated Earnings Conference Call. At the time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to Mr. Tom Ward, Senior Vice President of Investor Relations. Sir, you may begin.

Thank you, Joel. Good morning, everyone, 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; Brian McDade, Chief Financial Officer; and Adam Reuille, Chief Accounting Officer. Before we begin, a quick reminder that statements made during this call may be deemed forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995. And actual results may differ materially due to 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 the risk factors relating to those forward-looking statements. Please note that this call includes information that may be accurate only as of today's date. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included within the press release and the supplemental information in today's Form 8-K filing. Both the press release and the supplemental information are available on our IR website at investors.simon.com. For our prepared remarks, I'm pleased to introduce David Simon.

Good morning. We're pleased to report another record quarter with continued strong operating and financial results. Our investment in our product remains unabated with a long-term view of creating compelling integrated environments with critical mass that service the hub of retail, dining, entertainment and socializing within their communities. We completed several significant new developments and redevelopments in the quarter or under construction and others and announced more transformational mixed-use activity that will further enhance the value of our real estate and grow our cash flow. Turning to the results, highlighted FFO by $1.90 billion or $3.05 per share, an increase of 5.5% per share compared to the prior year. We continue to grow our cash flow and report solid key operating metrics. Total portfolio NOI increased 4.1% or approximately $188 million to-date. Comp NOI increased 2.3% for the year-to-date period. Leasing activity remains solid. Average base rent was $53.88, up 2.8% compared to last year. The Mall and Premium Outlet recorded leasing spreads of $7.59 per square foot, an increase of 13.9%. We're pleased that retailer sales momentum continued in the third quarter. Our Mall and Premium Outlets was $650 compared to $622 in the prior year period per foot, an increase of 4.5%, and sales were strong across the portfolio in the third quarter. Retail sales productivity has increased each month over the last 12 consecutive months. Occupancy at the end of the quarter was 95.5%, an increase of 80 basis points for the second quarter and an increase of 20 basis points compared to prior years. On an NOI weighted basis, our operating metrics were as follows. Retail sales would be $817 per foot compared to $650, occupancy would be 96.3% compared to 95.5% and average base minimum rent would be $71.21 compared to $53.88. At the end…

Thank you. Our first question comes from Steve Sakwa with Evercore ISI. Your line is now open.

Thanks. Good morning, David.

Good morning.

I just wonder, if you or Rick, could you just talk maybe a little bit about the leasing environment? And as you sit here today, looking forward, maybe just reflect on the last year and how you felt maybe a year ago and just sort of give us a flavor for the leasing environment?

Well, we tend to take a longer term view, so we can talk about quarter-to-quarter or even year-to-year, but as you know, we take a longer term view. And I would say, certainly, our long-term view has not changed. The activity has increased from 2017 to 2018. I think there's clearly – for the retailers that are investing in their product, there's increased sales. As you know, we showed you that. And I'd say it's certainly generally better than last year, but again, you've got to take a longer term view. We have more activity going on. There's more new concepts on the restaurant, entertainment, overall retail. You've got the folks that start out on the Internet that want to own physical stores. So, I'd say, generally, the environment is better. But, as you know, we never really were overly concerned about maybe a less robust leasing environment in 2017 because we tend to take longer term views of this. Happy for Rick to add anything he would like to this.

The only thing that I would add is that there is, I sense, an acceleration. Last year at this time, I think people were talking, but there was less aggressive approach to opening new stores. I think as David said, the people that are well positioned are now more encouraged to open stores. Obviously, sales are better, the profitability is better. And we are very well positioned. We don't talk about it a lot, but every day, every one of our properties is getting better because of the capital we're spending.

Okay, David, just secondly, I just noticed on the leasing spreads information you provide on page 22 of the supplemental, there was a pretty big jump in the square footage of openings and a pretty sharp decline in the average rent per foot. I realize these are trailing 12-month figures, but it almost appears like maybe a different set of assets is being compared now. Do you have any comments on that?

Sure. We're – again, I – what's the most important thing that I focus on...

(00:13:38)

... just so we're clear. You got it. And the operating metrics, it's funny. Just to take a step back. So when sales were – it's always like, okay, what's the operating metrics du jour. Okay. And the reality is our business is changing in that we're going to be recapturing these boxes that pay very low rent and we're carving them up. And we're now showing to you that love metrics, okay, the importance of the embedded growth in our business by recapturing these leases that pay very low rent. So we put all of our openings and all of our closings in that number so that you can see the embedded market rent growth that we have in our business.

Okay. Thanks. And then lastly, just in the other income, I know there were different components, and last year, you had some securities gains. And this year, you didn't. But is there is any – there was a big jump in the other income. And I just know there's a lot of different things that run through that, but are there any comments or things you can share.

Yeah. So last year, as you know, we sold the Seritage stock at $48.49 (00:14:59), which I think if I look today, it was a pretty good trade to sell it at that rate. In other income, we did get our business interruption, not all of it, but some of it from Puerto Rico. And that's what's in other income. It doesn't flow through the operating numbers. That was – we always had planned to get that and it's always been in our numbers, but you can't book that until you actually get the cash from that according to GAAP. And then, we got some of that BI in the third quarter.

Okay. Is there a number you could share with us that's kind of embedded in that other income or -

Well, it's the big jump in that – the vast majority of it, yeah.

Okay, it's a vast majority of the $20 million increase.

Yeah.

Okay

Yeah, that's correct. And it really is – now, so you know, we always planned on getting to BI. You just can't show it in your normal minimum rent or CAM recoveries or any of that information. It's got to be in other income.

Okay. That's it for me. Thank you.

Yeah, no worries. Thank you.

Thank you. Our next question comes from Christy McElroy with Citi. Your line is now open.

Hey. It's Michael Bilerman here with Christy. David, can you just elaborate a little bit on Sears. You were named to the creditors' committee yesterday, so maybe talk a little bit about the role that you plan to play there. And you went through a lot of different numbers in terms of the Sears boxes. If you just look sequentially, you went from 59 effectively down to 46, which includes the 17, which are closing. So, there's 13 stores during the quarter that fell out. I wasn't sure whether those were recaptured during the quarter and form part of some redevelopment plan. But just looking sequentially, sub-to-sub, 59 to 46, inclusive of the 17 that are closing. Just to trying to get some color there.

Yeah. Look, I think the thing to focus on, we're putting Sears in our rearview mirror. Okay? So what we're trying to explain – and there are a lot of moving boxes and obviously, the whole situation is a tragic, frankly. Put aside, how it affects us, we think this is a unique opportunity. We're going to redevelop this. We're going to generate positive momentum with the properties due to this. We're going to reinvest in the communities. We're going to be able to drive traffic now from this box. Put all of that aside, we're going to be able to make money on this. Put that all aside, if I may, and just it's a tragic set of events that a company that's been around for so long is in this state of affairs. So that to us is – that's what I think about. It wasn't that long ago, 10, 12 years ago, that 300,000 people worked at Sears. Okay? So I mean, I think we should put that in perspective. But let's focus on what we – the task at hand. And what I'm trying to do – and there are a lot of moving parts, but basically – and what I explained – I'm sure I garbled some because you know I have a hard time spitting out words. But the reality is, we have 33 stores that are closed or in the process of closed at the end of this year. We control 22 of those and 5 of those are in our joint venture with Seritage. Of the 17 that we have unmitigated control, Sears will no longer exist in 2019. They will either be torn down, redeveloped, re-leased, but they'll be in our rearview mirror. So we are effectively down to 29 operating stores. We own 8, Seritage owns 4, and then the 17 are owned by Sears. And we'll have to wait and see what happens on the – in terms of whether they'll continue to operate those or not. Obviously, we're planning for the ultimate unfortunate demise of Sears and we're ready for it. And we have the balance sheet and the capital with intellectual and human resources to deal with these set of events. So, that's what I would focus on. The other thing to keep in mind is that there's also Seritage that owns some in that. And they've done a reasonable job of re-leasing some of their space. So those are the numbers that I would focus on. And it's still moving around because they – some are closed, some aren't, but those are the numbers. And at the end of the day, next year, we'll report 29 Sears stores. That's it.

Right. It sounds like there was at least 11 that are controlled by others, other than you and Seritage, that closed during the quarter, (00:20:32) in that 33 to 22, right?

That's correct. Sears owns the balance of those. That's correct. That's correct.

But the creditors' committee and sort of your role there and Rick mentioned not a big competitor. (00:20:45)

There is no comment that I can have on that where we – for better or worse, we tend to be on creditors' committees with large unfortunate bankruptcies of retailers. So, we have a certain expertise in that. We'll see how it all plays out. But beyond that I can't – I really can't comment.

Can you talk a little bit about international in terms of what's happening there? Obviously, Klépierre, its shares have come down meaningfully alongside a lot of other real estate stocks in Europe. There's obviously been consolidation activity going on there, in part, Klépierre tried to make the bid for Hammerson when Hammerson went after Intu. And now, Intu has its own consortia bid from their main shareholder alongside capital sources. How are you thinking about Europe overall both of your investment in Klépierre but then also consolidation opportunities in that region, whether that would be Simon-led or Klépierre-led?

Well that was – I would classify that as add on sentence, but let's put that aside. I am very comfortable with our investment in Klépierre. They have – I mean, I have to look at the long-term prospects of that company, measured against kind of the short-term volatility. And from a long-term perspective, I don't really see any real change. There's very little new development. They have a lot of redevelopment activity. There are good operators getting better. So our investment is solid, and stocks go up, stocks go down. We take a long-term view. We have exposure in Europe not only through Klépierre but obviously through McArthurGlen and through our interest in value retail. I would tell you that the market generally ignores and underestimate the value that we have outside of the U.S., whether that's Mexico, Europe, Asia. There is no appreciation of the value that we've created in that. That's fine. We continue to do what we do. I don't really – I think we mentioned briefly what Klépierre did on Hammerson, that's in their rearview mirror. I think that's better coming from them. I think the CEO's made that clear to investors. Not much I can add to that. And there's nothing I can add to what's going on with Intu. I mean we don't – as they say, we don't have a dog in that hunt, so here in Indiana that is. So, I continue to think Europe is fine. It's certainly – I think the trend there is similar to ours and that the better assets will get better, and the ones that are smaller unless they're uniquely positioned will be put under pressure, but even the better ones will grow, will offset whatever diminution might have happened on the little ones. So I generally feel pretty good. I mean there are parts in Europe that you might want to avoid i.e. Turkey and other places like that, given that currency in the lira and what happens on that front, but generally, I think it's okay. Look, I'm sure the Klépierre team has a focus on Italy, what's going on there, you have Brexit. So you could certainly take a contrarian view at the right time. We did that in 2012 when we invested in Klépierre. Could we be coming into another contrarian point of view, perhaps, but we're really not overly active other than making sure our investments grow in value.

Good. Thank you.

Sure.

Thank you. Our next question comes from Jeremy Metz with BMO Capital Markets. Your line is now open.

Thanks. Good morning.

Good morning.

Just going back to the Sears boxes in terms of the 17 that you expected to close by year end, the 22, including the Seritage JV. I know it's a little early here still, but can you just sort of frame it out from a timing and capital allocation perspective in terms of how much of this you really think will fall into redevelopment, potentially kickoff some larger redevelopments? And what sort of rough capital investment this could possibly represent?

Well, remember, part of – the vast majority of the 17 of the 22, we actually transacted to get back – when was that?

November.

November. Okay. So remember that just to put that in perspective. So those plans are already moving. I mean, not – just to name a few Northshore, Cape Cod...

Brea,

Brea, Stoneridge...

Broadway.

...Broadway, Midland, just to name a few, so all of those are coming online. And that's why I made the comment that the 17 that we control, Sears is going to be gone. There won't be – you won't – there will not be a Sears. It will be either gone, under construction or will take the box and there'll be a new retailer hopefully open by then, but obviously it does take time. So the 22 of the 33 are basically all under redevelopment. The capital of that is over $1 billion. That's always been in our plan. And there is no surprise there. And so that's – that we are moving at a high level to redevelop those boxes as quickly and as smartly as we can. Then, there's 11 that Sears and Seritage own, that we're not involved in. I think Seritage of those six – and again, there's a lot of numbers here, that's why I'm repeating myself and I appreciate the question, of those six, Seritage has already redeveloped over half of those. So those are moving – they're doing those independently in conjunction with us, but independently. And that's fine. And then, there's five that Sears owns and then, we'll see what happens with that real estate. And I think it's a blanket statement that we would love to own at the right price any of the real estate that we don't control. And so we – patience, seeing how this plays out is important. So I hope that answers it, but it will be well over $1 billion. You'll start to see in the 8-K this stuff as we approve it. I don't know. I'm asking Tom. I don't know. We just approved Cape Cod, Northshore...

There are some in there.

There are some in there. So you're going to see it. We have a busy capital appropriations committee. We approved three or four, Monday, you'll see those in the fourth quarter numbers. So it's all moving, it's all moving quickly. And I would tell you, generally, other than, obviously, to see a retailer like Sears end up where it is, I mean this will be fine for us. We'll add value to the real estate. We wish it would have been done in a different manner, but we have to confront what we have to confront. And I think we'll make this – it'll be an opportunity for us just like everything else we've dealt with over the last 25 years as a public company.

No, I appreciate that color call. And as we see that start to come on to the development pipeline, I mean, is it fair to assume the same kind of yield you've been achieving at 7% to 8% on redevelopments or would it be higher than that?

Yeah. No, look, as you know, every deal is different, but that would be our goal. That would be our goal for sure.

Great, and second one for me. Just going back to the leasing commentary about the environment being a little better here today. Are you starting to see this translate into year leases as well in terms of timing to get deals done, terms, leasing capital, or is it more just on the activity front at this point? And then, in terms of rents, we've talked about this before, but you're not necessarily getting the benefit of sales in an area move online, but you do feel the returns at the store level. So to that end, are you starting to push occupancy costs to account for that leakage or you're looking at other metrics to understand tenant profitability and therefore what a tenant can pay and are tenants accepting that this old model maybe needs to change or is it just more of an educational process on both sides still at this point?

This is Rick. Obviously, you've covered a lot of ground. Let me take it apart. One, our terms, our TA are certainly within the norms that we've established over the years. Our tempo of leasing is accelerating in that we now have more tenants coming in saying, all right, let me look at 5, 10, 15 openings for 2019. That is an acceleration from what we had this time last year. That's encouraging. Our occupancy costs today are the lowest they have been in the last two and a half years. So that's encouraging. And that's taking into account the fact that there is an understatement of sales productivity. All of our leasing agents are totally aware of not that potential but that fact. And as we are pricing our real estate, we are prosecuting that to the extent we can to drive rents. And you've seen our average base rent go up and our spreads are going up.

I would just add though. I mean, retailers are smart and savvy. They are doing what they need to do on their cost structure. And so it's not easy. But like I said, we have a unique position in this industry. We have really quality properties, a lot of scale. We have the ability to think. We have the ability to be patient. We have the ability to say no. We take gambles, we win, we lose, we draw. So we do okay, but it continues to be – it's not – there're still very thoughtful negotiations. Everybody is focused on increasing their profitability. They're no different with us. And we try as hard as we can to create a decent win-win scenario. And then, when we do that, the math spits out. But it's better than it was last year. In the long run, we have no worries about where we're going to be. And I think as we continue to redevelop, we're going to make these properties fantastic. But in the meantime, we're going to be in this spot where it's going to be a thoughtful, diligent, but appropriately focused negotiation between us and our best clients.

Thanks for the time.

Sure.

Thank you. Our next question comes from Craig Schmidt with Bank of America. Your line is now open.

Thank you.

Hi, Craig.

Hey. I noticed on your redevelopment activity, the yields for the Premium Outlet redevs went from 10% to 11% and The Mills went from 11% to 13%. I just wondered what was pushing those returns. And is it perhaps that the leasing is going better at these redevelopment efforts?

I wouldn't – those are hard to like extrapolate trends. I think it's just a function of mix. Nothing that really jumps out. But I'm sure we'll look at it and Tom could answer, but I just think it's probably just mix off the top of my head, nothing major. We do have the ability, I think, to continue to add value through our redevelopment, new development efforts. And it goes up and it will go down, but it will – that gives you the directional idea of kind of where things are.

Okay. So, I mean, it's clear that although the construction costs are going up that it really isn't impacting your returns on these. (00:36:02)

Well, that's a good question and let me just say this. Everything – we are – it's a good point and let me address this, this way. I mean, we have no risk at this point and things always change, but at this point, we have absolutely no risk in what we're building today. You always have contingency in there, but nothing what I would say beyond our contingency, and obviously, our contingencies in our 8-K. We are seeing a general increase in construction costs. It's really a market by market scenario, but the potential rise of those cost are not in any way at the point where we're saying we can't make the numbers work. I don't anticipate that happening, but obviously, we're paying attention to it.

Okay. Thanks. And then, we keep hearing about new technology in both retail and just the retail center. I wonder if there's anything new that might surprise consumers this holiday season, whether it's an unmanned checkouts or mobile apps, making things more personalized, or virtual or augmented reality.

Well, I think, I think we and all sorts of retailers and technology companies are focused on a couple of things, payment, obviously, driving traffic, which could be through a lot of individual personalized promotion, the checkout process and improving that is really important, and then the ease of parking as well. So, lots of experiments, lots of things happening by us and others, by retailers and by technology companies. And I think there is clearly a bounce back on the physical world compared to the pure online Internet, just because I do think payment and ease and convenience can be enhanced by technology in the store environment. So we're looking forward to those introductions into the physical world. I think that will make physical shopping a lot more easier and convenient. And then, obviously, there's so much benefits to physical shopping compared to looking on your phone and trying to buy stuff. And what's fascinating to us, fascinating, and we see it because, remember, we have our (00:39:22) rights, so we can see the high level of returns. The high level of returns that we see from online sales to the physical stores is that never talked about. Okay? But if you wanted to go – write a research report, Craig, that would be the big focus because everybody wants to say, here's the gross Internet sale, but they don't want to tell you the net. They want to hit the physical world. But the returns are staggering, okay, and especially in the product that I'm discussing. But no one wants to talk about that.

So I understand your frustration, but thank you for your answers.

Sure. Well, I'm not frustrated, by the way. Just so it's clear, I'm just saying it's very interesting that no one talks about it. It's just the fact.

Understood. Thanks.

Thank you.

Thank you. Our next question comes from Alexander Goldfarb with Sandler O'Neill. Your line is now open. Alexander Goldfarb - Sandler O'Neill & Partners LP: Hey, good morning. Good morning out there, David. So two questions from us. First, you mentioned the international and you think that it's underappreciated, but just curious, I mean, obviously, in the U.S., you guys have a very efficient platform, but globally, you're definitely spread out. So just sort of curious, how you would compare your overseas platforms' efficiency to the U.S. And then, as you expand into like Thailand or the Middle East, how those markets are initially versus once you get a concentration of assets? Do you really see a material improvement in operations or the Premium Outlets work very well as a standalone or in clusters?

Well, I'd say both. I mean the reality is our joint ventures with the Premium Outlet business has its own group of personnel. So they can add – as they add product to their platform, I mean they get scale. It's safe to say no one – none of our investments overseas has anywhere near the scale and the overhead metrics that we have. I mean our overhead metrics are underappreciated. I mean, Tom, can give you the numbers, but many of our peers are at 10% of NOI and we're at 3%, what, give me the numbers?

We're at 3%.

We're at 3% and they're 8%, 9%, 10%. So all of our places don't have quite that scale. I could certainly – if I wanted to or could, I could certainly probably find a way to scale, but they're doing. And so it is what it is. So they all benefit from adding good product to their platforms. I would say none of them have the scale that we do and we don't impose our scale to them at all. And I don't think that we will, but you can't rule it out. And if we did, I am sure we could do it – we could have better results, but at the moment, everything is good, so we let it go. Alexander Goldfarb - Sandler O'Neill & Partners LP: Okay. And then, the second question is, you guys – in the last call, you talked about converting retail to other uses and obviously, you had the deal out in Northgate where it looks to be sort of cutting the mall in half. As you guys increasingly go through, is there like basically a – not exact percentage but a view of how much existing retail you could do without to replace with things like apartments or hotels or office versus how much you would increase the overall square footage of your properties to add incremental uses? So trying to get a sense of how much of your existing retail would you scale back to increase uses versus how much of the new mix uses would be incremental to the existing retail that's already there.

Well, it's hard to give you a number, but let me look at it this way. Okay? So, I think the greatest opportunity that we have, I think we're in good shape with small shop. There's always going to be a mall here or there that has too much small shops but I think we're in decent shape there. And so what we have the opportunity to do, and we are doing, is we probably – the mall of the future doesn't need five, six, three, it depends on the mall, but doesn't need the department stores. And then, the ability to reclaim that allows us to densify the properties, and I think we have that opportunity in a rather large scale. So, again, this is where we suffer maybe from the scope of what we do and all the activity that we have, but take Phipps as an example. So this is – was that put in the 8-K or not?

Yes.

Okay. So it's in the 8-K now. All right. So, take Phipps, we had one department store, Belk, that was 140,000...?

160,000.

160,000. Thank you, Rick. We are adding essentially 300 plus – well, we have the hotel – the office is 324,000, right?

(00:45:35)

And the hotel is -

(00:45:39)

How big is that? Whatever, okay, so let's say, we're adding 500,000 square feet in something that was doing 160,000 – that was taking up 160,000 square feet. And I encourage you to look at the renderings. Do we have the renderings on our website?

We can get them out.

Okay. We should, let's get them. Do you have the video with me, and Mr. De Niro and the Chef Nobu on our website, and Rick?

That's right.

Because (00:46:09) it's out there. Okay. So we won't, but we will do that. And Northgate, you say the mall cutting to half. I've got to tell you, Northgate is so much bigger than that. And again, we have up to 800-plus apartments.

1,200 apartments.

1,200.

Frankly, we're going to have 1,200 apartments, 600,000 feet of retail. We're going to have probably 600,000 feet of office and the NHL Seattle training facility.

Yeah. So I mean, the scope of some of these things are really large, but if you're looking for – here's the number. I can't give it to you, other than as these – we do feel like there's a lot of fun stuff to do. It's aggravating in the sense that it's – you have to herd all (00:47:05) that catch in terms of accomplishment. But once we built something – I mean, like, once we – now that Phipps will be open hopefully in, and I'm pushing for two years, but maybe two and a half years, I think we're going to be really proud of that and our shareholders will be happy, and Rick and I will have great sushi. So, what else could you want? Alexander Goldfarb - Sandler O'Neill & Partners LP: Sounds pretty good. Okay. That perspective is helpful. Thank you, David.

Sure.

Thank you. Our next question comes from Caitlin Burrows with Goldman Sachs. Your line is now open. Caitlin Burrows - Goldman Sachs & Co. LLC: Hi, good morning. So, your dividend is going to be up 10.5% this year, which is great. I guess I was just wondering, considering your growing cash flow, how are you thinking about prioritizing on development and redevelopment where you're obviously very active versus increasing the dividend and potential acquisition opportunities right now?

Well, I'd say to you that I would expect – obviously, board decision, blah, blah, blah, but we would expect to continue to increase our dividend next year. Clearly, we will be – our redevelopment is really active and that could be increased. Now, again, the reality is, Caitlin, that it takes time. So take Brea, which we control that Sears store. It's going to be unbelievable, but we have another six months of permitting. So, we're able to – I'd love to, like, just stuff it all into – stuff it all into the box and do it all at once, but the reality is we can't because we have external constraints. I wouldn't say necessarily capital constraints at all, but – so I'm looking at Brian and he's saying, we don't have any, but maybe I tend to be a little conservative on that front. But anyway, we just have constraints on doing the redevelopment only because we've got the permitting and so on and so forth. So that continues to be a big priority. Obviously, new development is not – in the U.S. is not wildly active. Though, I will tell you that the deal with Macerich I think is going to be a really good project, but that's a three year project essentially. Okay? So that takes time, and that we are really – we think that's going to be really a good deal. We've got another one in the works in another area of the country and probably two more outlets that we're going to build, but again, those are over – one could be a little quicker, but two years or so. So that continues to be a focus. Internationally, it's basically we take our cash flow there and reinvest it. So it's not what I'd call Simon capital. We're actually not writing. Yeah, we may not get repatriation back to us, but we're basically doing what many thoughtful companies do is they take profits and they reinvest it and have more profits and keep doing it until they can't do it anymore. So we don't see that. And so then the next thing is, look, we're going to – we still have – if the market doesn't like our business or doesn't like what we're doing, we still have a focus on buying stock back. And then, we're not all that active in the acquisition area. We could do a deal here or there. We certainly are interested in reclaiming at the right price certain department stores. And that's kind of how we're thinking about the world right now. I hope that's helpful. Caitlin Burrows - Goldman Sachs & Co. LLC: It is. And just in terms of the time it takes, is there any – I think there's some concern out there with the amount of department store reclaims that you have and everyone else does, that finding new uses is taking longer. Is that part of it or is it not?

Not with us. No, no, no, no. Sorry. No way. That's not our issue. Our issue is execution, permitting. It has nothing to do with demand, supply and demand, and has nothing to do with capital. That's not us. Sorry. Caitlin Burrows - Goldman Sachs & Co. LLC: Great to hear. And then maybe just last quickly. Looks like you guys have $600 million of 2.2% debt maturing in early 2019.

Yeah. Caitlin Burrows - Goldman Sachs & Co. LLC: So, just wondering the plans to address that. And if it were a 10-year unsecured deal, what you think the rate could be?

Well, we'll either use our cash or – certainly our – we have $7 billion available. So, that's just basically standard operating procedure. No big deal there. We could go to the unsecured market. Obviously, there's a lot of rate volatility today. We wouldn't probably do it today, but we'll have to wait and see kind of where the world shakes up. Brian, I don't know if you want to add anything.

Yeah. Look, I think our cost of money today on a 10-year basis would be about $4.8 billion (00:52:47). But we have – as David said, we've got over $7 billion of liquidity, so we have plenty of options to address the upcoming maturity. It is not only maturity we have in 2019.

Yeah. And I would say to you, what's fascinating, we have very, very little debt coming due in 2019 or 2020, yeah, both on the unsecured and secured basis. So, we're in a very good spot to do that. And I would also – again, it's overlooked, but if you look at our peers, internationally north of the border, domestic, Far East, nobody has our balance sheet. Nobody is 5 times debt to EBITDA, nobody. People are 2x of us. Not 7, but 10 plus. Please appreciate that. Caitlin Burrows - Goldman Sachs & Co. LLC: (00:54:03) commentary.

Okay. So, you broke up there, but anyway. So we're in good shape there and we'll see what happens on that front. Caitlin Burrows - Goldman Sachs & Co. LLC: Great. Thank you.

Thank you.

Thank you. Our next question comes from Jeff Donnelly with Wells Fargo. Your line is now open.

Thank you. David, I can't wait for you to co-star in De Niro's next film. I guess a question for both of you, Rick and David. And I'm just curious in situations where you guys have redeveloped anchor boxes, do you have any statistics you can share on the change in foot traffic sales or asking rents of the property since the new anchor opened?

God, we'd have to – I'm sure we could put some together. Here's what's interesting, that we're seeing – and again, I wouldn't like – this is anecdotal. So don't (00:55:03) and I don't know if this means anything and so it's too early. But we've had department store closings in the portfolio. There's no hiding that, right. And we have seen – and again, nothing drives our business – this does not drive our business one way or another because the size of the portfolio. But what we've seen, which is actually encouraging, is that the in-line sales are actually getting the benefit of the department store closures. And we're also seeing some of the other department stores pick that business up. So at the end of the day, like I said, maybe our industry got just too carried away with having all these big department store boxes. As we transition to the smaller, more appropriately sized group, and there'll be centers that lose in that and like we may have one or two that were nervous about, the reality is the rest of that center, and we will get a better and bigger benefit, I think we'll get healthier, and we're starting to see that. But again, I'd say that's anecdotal and nothing to quantify. But we are seeing that in some of these cases, which I think is encouraging. And that's what we want. We don't need all of those. We don't really get much of an economic benefit from those boxes. We've taken over driving the traffic to the center from those boxes as that would have been in the historical reason to have them. So this could be healthy, other than Rick and I pull our hair out, we want every box leased, we want everything redeveloped, the teams moving really hard and everybody is like, we're playing very hard here to make this stuff happen quick. I mean that's the downside is that we – not that we ever have, but we are not coasting, okay? We're not coasting. So not that you should tell sorry for us, but I'm not asking you to, but that's the reality. We're humping and pumping. And I think this will be – I really think other than, yeah, there will be a couple of losses on the scoreboard for us. But at the end of the day, this will be a good thing for us and likely our entire industry.

The one unambiguous result of replacing these anchors is there's no doubt that our total sales and total footfall at our properties is increasing. Just think about David's example at Phipps. When we're done, we're probably going to have tripled the retail sales, plus have all the hotel traffic, plus the office traffic. So in every instance what we're adding is going to be more productive and more dynamic than what we're replacing.

Thanks. And I guess, on Sears, I'm curious, were they current on the rents before they filed because typically retailers build up a pre-petition receivable before they file. But it's sounding like some other landlords that they were largely current, which frankly makes it seem like the bankruptcy started out as a (00:59:03) bluff that if they got called out on.

Yeah. We're not going to have a bad debt reserve. I think that's correct.

Just one last one on Sears. You mentioned about $1 billion of investment for the 22 boxes you're redeveloping. Should people think of that as, I think, a rule of thumb is $40 million to $50 million a box or does that include investment beyond the Sears? I think people are looking for a number there. And I am curious how your return on investment you see in that $1 billion compares to what it's been on prior anchor redevelopments.

I think what I would – the best way to do this is really say to you, Jeff, that we're going to have $1 billion-plus of spend. We've been at this – Tom, $1 billion for how many years? Six, okay. Six years a $1 billion spend. So I think, Jeff, if you look at what we've been doing, we've been spending $1 billion. And if you look at 2015, 2016, some of that may have been tilted toward new development more than redevelopment. It's now going to tilt more toward redevelopment, but it – and I think it'll go up, but that $1 billion of spend is not just those 22 boxes. That's a lot of stuff in there. Okay? So, like, Phipps is a $300-plus-million spend. It'll be over two years, two and a half probably, but two years. And that's not Sears. That was an old (01:00:40) store. Northgate, I mean, the Northgate numbers could be much bigger than that, but again, that'll be over three years. And again, that's not a Sears' box. So when I say that $1 billion plus spend, it's like – it's the vision of what we see on redeveloping our business and it will tilt more toward that. On the other hand, when you add Carson with Macerich and you add a couple more, I mean, I think our spend on average has averaged about $1 billion. It could go up as we add these things. It's not going to go to $2 billion a year, but it could go to $1.3 billion, $1.4 billion. We're doing our plan for 2019. Tom told me not to invite anybody to our planning process. Correct?

Correct.

So I'm officially not inviting anybody. But right now, we're looking at a little over $1.3 billion. So I think it's just more than just Sears. Okay?

Got it. Thanks, guys.

Sure.

Thank you. Our next question comes from Michael Mueller with JPMorgan. Your line is now open.

Hi. Yeah. It looks like sales growth at The Mills has been similar to the rest of the portfolio. So I'm curious what's enabling you to drive the spreads that are significantly higher there?

The Mills, they're very well positioned in virtually every market where they operate. They are a unique mix of full price, value, outlet, entertainment, food, they're all 1.5 million to 2 million square feet. And they just are able to attract a very broad segment of shoppers and they're performing well. There's no real magic, but we have a very broad use of potential users there. And we've been able to keep those things very well leased and they're very productive.

Is the occupancy cost notably different than the other part of the portfolio?

No.

Okay. Okay. That was it. Thanks.

Sure.

Thank you. Our next question comes from Rich Hill with Morgan Stanley. Your line is now open. Richard Hill - Morgan Stanley & Co. LLC: Hey. Good morning, David. I want to go back to a comment you made. I think at the outset, talking about how maybe your international portfolio has been, not to put in your mouth, undervalued or under appreciated. When I look at your development pipeline, it looks like there is a tremendous amount of focus on international. So how are you thinking about that? I think it's just a little bit above 10% right now as a percentage of NOI. As you think forward over the next five years, do you have a bright line test as to where you want to get it or is it just you're going to do good deals when you can find them?

I think, Rich, we don't have a (01:03:50) where we need to be a 12%, 13%, 14%, 15%, 20%, that's not how we look at it. So the reality is – and most of that, as you know, is through development that we've made some strategic investments i.e. Klépierre and McArthurGlen that come to mind. And I would – and remember, we own a decent chunk of value retail. We don't really book any of their earnings. And we've had this discussion, we only book when we get cash, which is cash distributions, which is basically cost accounting for those of you who remember cost accounting, which I do. But long story short, we don't really have a – I don't have any desire to do more. I don't have any desire to do less. I only have desire to make money. So we do think we add value, we do think maybe some of our international partners don't think so, but I think we do. So I think it's more deal-driven, but it's an important part of our business and we will continue to invest in our platforms whether it's Japan, Korea. We announced a devolvement in Thailand, which I think will be fantastic. That opens up that whole country. The tourism there is remarkable. I just happen to do a retail tour in Europe and the interest in that is, the Far East – our Premium Outlet business in the Far East is very – it has a high level of interest from our retailers. So I just think it's going to be how do we continue to drive and make money from our investments there. No desire one way or another. Richard Hill - Morgan Stanley & Co. LLC: Got it. So just one quick follow-up question then, and maybe this is just that in light of (01:06:22) of some global consolidation that we've seen. Do you think landlords have to have global footprint to make money?

I think it can help, but I don't think it's the – and I've evolved on this. I don't think you need it. I think it can help. I wouldn't do a deal because that was a really important component of that transaction i.e., exporting retailers from one level to another. However, it's not inconsequential. So take an example, I've met and I won't name a name, but I was just in Spain with a large retailer. And the fact that we have a terrific relationship with them in the U.S. and Klépierre has a terrific relationship in Europe, doesn't hurt. But if I had overpaid for the Klépierre stake, that relationship wouldn't make it up. Okay? But I think it is helpful, but it's not a reason to do a deal. Richard Hill - Morgan Stanley & Co. LLC: Got it. Thank you for that color. I appreciate it.

Sure.

Thank you. Our next question comes from Tayo Okusanya with Jefferies. Your line is now open.

Hi. So, my question is more numbers focused. I'm just trying to understand the nature of the guidance change. And then, just kind of given the $0.05 beat in 3Q, how comes, it's only the low end of guidance that was raised rather than the high end as well?

Well, look, – I don't know. There's lots of numbers. We're a big company. One deal, one of that is not going to change this that and the other. But obviously, the currency in Europe is a little bit softer than it was. We tend to be conservative. There's nothing to really study or read into that. It was just a number. Okay?

Okay. Fair enough, David. All right. And then -

(01:08:54) As I said, it's just the number. Okay?

All right. Fair enough. And then, any update in regard to just lease accounting targets we should be expecting for 2019? I know earlier on in the year, you've kind of given us some guidance to that.

Yes. That's the same general number. No change in that. We're not going to – we'll make that clear when we give our guidance in February. We'll absolutely make it clear. The number that we've told the market more or less is the same number. There's not going to be much change there. And we'll debate whether we should – we might go a year just saying here's what it would have been before and after just so people do it, but we might not, but you'll see the number. And it's not – and that's really the only thing that's going to – with these other new pronouncements, that's the only thing that's really going to be different. And again, it's not a huge number. Yes, basically, 1%. And it's pretty much over that – so it's 25 basis points per quarter and you can do the math to get to the number.

Great. And then last one for me. Although it's a couple of years out, any other information you can just share about the JV with Macerich?

No. It's a development JV. I think a lot of people from discussions with Macerich are probably familiar with the site. And we take the site over in about a year and then we build. So we're happy to be part of it and we think it'll be a very good LA Premium Outlet Center. So, we don't get the site back until Carson does what they need to do, and the timing on that is roughly a year from now.

Okay, great. Thank you.

Yeah. Thank you.

Thank you. Our next question comes from Haendel St. Juste with Mizuho. Your line is now open.

Hey. Good morning out there. Dave, I guess a question for you on the lease termination environment. Are you guys still – are you receiving early termination buyout offers from retailers? And what's your appetite or sentiments regarding these early buyout offers?

We have some. It was lower this quarter – much lower this quarter than a year ago quarter, right. Actually, you can see it in our 8-K. I don't remember the number off the top, like...

It was $9.8 million for the quarter versus $13.2 million.

Yeah. So, it's down. I'm not a big fan of them, frankly, but we'll do them. I would say we'll do them occasionally. It's certainly – as you know, it's not in our comp NOI because there is a lot of volatility associated with it. I would say, generally, the buyouts requests are down pretty reasonably, Rick, do you agree?

I agree. There has been less activity this period than we had last year.

Yeah. So, it's down. Occasionally, we get it. I'm not a big fan of it. Look, we'll do it for – we'll do it for strategic reasons. One is, maybe we're helping the retailer, two is we want the space back, but it's not what we – I would prefer not to like do a lot of it, but we will do it strategically. And it's basically a function of whether the offer is fair or whether it helps the retailer and what are our prospects for renewing the space quickly. And so all that goes into the blender and then we make a decision one way or another. But we don't run around trying to look for it. It basically comes to us.

Got it. Got it. All right. That's helpful. Thanks. I missed it earlier. I think you mentioned that you did receive business interruption income in the third quarter and you put it in the other income, but I didn't catch-up figure. Did you provide one?

No, no, we didn't, but it's the vast majority of the other income number.

Got it. Okay. And capital allocation, I guess a follow up to an earlier question. You guys did not buy back any stock after being active. It looks like second quarter stock is pretty much at the same level. Anything precluding you there from buying back stock or just maybe storing up dry powder for incremental read there. (01:14:17) Just curious on your thoughts on capital allocation regarding stock buybacks.

Yeah. I just think we're conservative. I would tell you that I want to hug Brian and Andy every day. Maybe I should get a little credit too. I just love our balance sheet where it is. I just love it, love it, love it. I just think it's so cool to have a balance sheet like that. So, we're going to be really conservative, thoughtful. And then, as you mentioned, I mean, obviously, we've got a very active redevelopment pipeline, but I just love, love, love our balance sheet. And I just think that's something that it's got to be unique, it's got to be unique set of circumstances to really do anything material to it.

Okay. Last one, I guess, same-store expense growth in the third quarter, can you provide what that was?

I don't know. I mean I have no idea, but Tom will follow you offline (01:15:34). We don't really do that. It's just our NOI or comp NOI. It is what it is.

All right. I'll follow up with Tom. Thank you.

Yeah. No worries.

Thank you. Our next question comes from Ki Bin Kim with SunTrust. Your line is now open.

Thanks. Just to clarify something you guys mentioned earlier. The definition for leasing spreads and the volume, I think the pool (01:16:05) changed and now you're including anchor boxes. If that's correct, do you have any of those stats under the previous language available just for the sake of comparability?

Well, it's not just anchors, it's everything. It's whatever boxes come in and come out, (01:16:26) whatever theaters we renew, whatever amendments we take. And we just – we sat back and said, look, this is our business and it's important to focus on that because I think the market wants to know, great, you're getting these boxes back, but is there value in that real estate? Why are you paying for it, if there is not value on the re-leasing of that? And that's what we're trying to express. So we had – I will say this, if you look at the earlier definition, we had positive spreads that we think the market would be fine with. But I think the more important thing is to focus on what the future of our opportunity set is. And that's what we're trying to do.

All right. And if I think about Simon and the size and the scale you guys have well above your peers, it's still interesting that on simon.com, you can't buy anything. Have you guys thought about that? Are there any initiatives underway? I could imagine, having something like that could probably help a lot of your data collection initiatives.

Have you been studying what we're up to? A very good question and an appropriate question. And the best answer, I have a really thoughtful answer and that is to stay tuned.

Sounds good. All right. Thank you.

Thank you.

Thank you. Our next question comes from Derek Johnston with Deutsche Bank. Your line is now open.

Good morning.

Good morning.

How is the mixed-use redevelopment at Phipps Plaza reshaping your vision of the portfolios' potentiality? And in your thinking, how many additional large-scale repositionings exist within the Malls' portfolio? And what's your appetite for accelerating these investments?

It's interesting. We've been active now for over an hour and the word's KOP (01:18:38) and King of Prussia haven't come up yet. Our portfolio has a number of those activities. We emphasized before when we get back one of these department store boxes, it's more than just 150,000 to 200,000 feet. It's anywhere from 10 to 18 acres adjacent to some of the best real state in the United States. We are very focused on what we can do with those 18 acres. And you are going to see an accelerating amount of activity in a number of our properties where we have back 22 boxes. David said, we'd like to get back others. We've taken back Penneys (01:19:24). We've taken back Belks. So, you're going to keep seeing that. We have the capital, we have the expertise, we have the opportunity and it's going to be accelerating throughout the portfolio. Frankly, we've been doing this for a decade. The difference is we now have access to these 10 acres to 18 acres adjacent to our properties that can accelerate all of these activities and there are more top of mind for the investment community. So, it's a great opportunity. We're well positioned to doing it and it is, in fact, happening as we sit here talking to you.

Excellent. Thank you. And just a last one, if you could share any updates on digitally native or e-tailer initiatives? I know you have some experience there now and have been doing it for a while. Any early customer or maybe brand retailer feedback that you think is worth sharing?

I would simply say that the store experience – the best way I can – we verbal on (01:20:38) a little bit, so let me be really concise. The best way I can say that is the store experience and the store requirement is back, and that is shouldn't be underappreciated. They all want stores. Period, end of story.

And they are opening stores. We have a very active program right now where we've got probably 25 retailers that started on the internet that have opened stores with us and are opening more, because as David said, they work and they make money.

Excellent. Thank you.

Thank you.

Thank you. Our next question comes from Linda Tsai with Barclays. Your line is now open.

Hi. In terms of the business interruption insurance and other income from Puerto Rico this quarter, do you expect anything material in 4Q as well?

Yeah. We expect to have some more because it comes in over a period of time, but again, all of that was planned in our guidance at the beginning of the year. Remember, we had Puerto Rico down. So, we've been reporting our numbers with basically on average around $35 million of EBITDA, adios, okay, between those two assets. So now, we're starting to play catch-up and happened a year ago. So that's been out of our numbers fourth quarter of last year, all the way up now and we're starting to come back a little bit as we collect the cash.

Would that continue into 2019 as well?

Well, at that point, the property will be back online, so then we'll have it. Then, we'll report it – just start normal NOI that we would get from that property.

And then, I understand that Sears going away is a long-term positive for you and the rest of the industry. As this is playing out though, short term, medium term, do you see store closures or liquidation sales is having a dampening effect on retailers for the holiday season and then, to the extent that the liquidations continue post-holiday?

Well, look, let me restate what I said about Sears. I am disappointed. We didn't want Sears to basically file Chapter 11 or go out of business. But given that it's – at least the Chapter 11 process is happening and given the fact that we could buy some of the real estate back, we're going to make the best of it. And at the end of the day, that could be a positive for us and in terms of diversifying the mix of our properties and so on and all the stuff that we already talked about. There is always a little bit of disruption when you have a liquidation. Just so you know, when you liquidate a store, you've got to follow a lot of rules. We will certainly enforce our legal rights there and hopefully, it will not be disruptive to the other patrons of our shopping environments and/or have any impact on our retailers. But there is a process there that they've got to run by and we intend to make sure they operate accordingly.

Thanks. And then finally, you said you just completed a tour of Europe and I'm sure you visit regularly, but are there any novel retail models or concepts you felt inspired by or (01:24:30) U.S.?

Well, listen, a lot of the – there are a lot of great retailers in Europe, Spain, obviously, Sweden, Italy, France. And so I think what you don't see a lot of is kind of the Internet folks. I mean we're seeing most of that here, but beyond that in terms of Internet – entertainment, restaurants and obviously fashion and apparel, they're fantastic and they're very good people. And we do a lot of good stuff with them throughout the world, Asia, Europe and the U.S. So it's important for us. And I think that one of the benefits we've gotten over the years is that we're now – they recognize who we are and what we do, which may not have been the case a decade ago.

Thanks.

Sure.

Thank you. I'm showing any further -

Okay. Go ahead, ma'am.

I'm not showing any further questions at this time. I would now like to turn the call back over to David Simon for any further remarks.

All right. Thank you. We appreciate your questions and we'll talk to you soon.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Everyone, have a great day.