Good morning, ladies and gentlemen, and welcome to the Second Quarter 2019 Simon Property Group, Inc. Earnings Conference Call. At this 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. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Tom Ward, Senior Vice President of Investor Relations.

Thank you, Crystal. Good morning, everyone, and thank you for joining us today. Presenting on today's call is David Simon, Chairman, Chief Executive Officer, and President; also on the call are Rick Sokolov, Vice-Chairman; 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 Web site at investors.simon.com. For our prepared remarks, I'm pleased to introduce David Simon.

Okay. Good morning. We had a very productive quarter, and are pleased with our financial results. Results in the quarter were highlighted by funds from operation of $1.06 billion or $2.99 per share. Adjusting for the prior year for a non-cash investment gain [indiscernible] IPCO [ph], ABG Exchange and the impact of external leasing cost, our FFO growth rate was 4.9% per share. We continue to grow our cash flow and report solid key operating metrics. Our comp NOI increased 2% for the second quarter, and total portfolio NOI increased 1.6% for the quarter. Retail bankruptcies in the second quarter impacted our comp NOI by over a hundred basis points. Year-to-date comp NOI has increased 1.8%. And to put this in perspective, our comp NOI grew 3.6% in '16, 3.2% in '17, last year 2.3%, and we continue to comp it on a NOI base of more than $5 billion. Leasing activity remained solid. Average base rent was $55.52. And or leasing spread was $16.53 per square foot, an increase of 32.3%. And we're pleased that our sales momentum from our retailers continued in the second quarter. Reported retail sales per square foot for our malls and outlets was $669 per foot, compared to $646 in the prior year period, an increase of 3.5%, and just to give you a fun fact, we have over 77 properties; that's right 77 properties that if you average their total sales will be over $900 a foot. So 77 over $900 a foot, and you can see that clearly as our report retail sales on an NOI weighted basis of $852 compared to the $669 per foot occupancy would be 95.5% compared to 94.4%, and our average base minimum rent would be $73 -- a little over $73 per foot. New development, we…

[Operator Instructions] Your first question comes from the line of Jeremy Metz with BMO Capital Markets.

Hey, good morning.

Good morning.

David, I was wondering if you could break it down for us to then talk about what you're seeing on the mall front in terms of trends in traffic versus what you're seeing in the outlets, anything that's going better than you expected so far this year, even lagging a bit, and maybe just as a follow-on, what your expectations are that you have built in for Dressbarn here.

Well, I would say, and recon way in the mall business, sales are up, traffic is reasonably good. I say it's -- there's ups and downs, but overall it's up slightly. In the outlets business we're skewed a little bit more toward the tourism. And because of the strong dollar and some of the implications of what's going on in the global environment, traffic there is flattish, but sales are more flattish. And that's really a function of the big tourist centers in the outlet business that are essentially flat where we would expect them to be up. Overage rent is up in the mall business. It's a little under plan in the outlet business. So I'd say, generally, it's, absent the strong dollar and absent what the decrease in overall tourism in the U.S., we would be performing well ahead of our plan. Obviously the unanticipated bankruptcies is something we're dealing with. Yet, even with that, we've produced the 2% comp NOI growth. And I missed your last -- what was your -- well, Dressbarn is, it is what it is. We'll see what happens, insignificant to us in the scheme of our operation. Rick?

The only thing that I would add is that the trends that David talked about are manifesting themselves in the interest that we're seeing from our retailers. There's still a steady stream of retailers that are seeking to find space in our property. And the properties continue to get better through the addition of retailers that are making a difference in our trade area presence.

Appreciate that. And David, can you just talk about the investment in Black Ridge and Allied eSports, just what drove this and what sort of larger opportunity you possibly see here with that?

Well, look, I think we do think obviously there's a huge momentum going on about the eSports and venues. And we have, just like the exhibition theater business, I mean the mall is a great place to host those kind of events, and in a setting like that drives sponsorship income, drive traffic, reinforce our real estate as kind of the place to be for the community. So we've got lots of options beyond just Allied about brining those kind of venues to our real estate. And in fact the explosion on the location-based entertainment area is incredible from kind of where it was a decade ago to where it is today. So we have essentially a dedicated team that's looking at all sorts of operations and venues that we're going to be brining to our real estate that will broaden the mix, invest in the community, increase traffic, bring sponsorship opportunities, food and beverage. And given the department store -- getting those department stores back in a lot of cases or buying them back in some cases gives us the real estate that we've never had before to bring them into the mall. So that's what's really exciting that, yes, it's a lot of work, yes we have to be focused. But we now have the ability, where we didn't have it before, to bring all sorts of those venues into our real estate. So brought a team on essentially just to deal with the, for no better word the location-based entertainment concepts, just to go through that so that we could bring them to the centers. And again, we now have in some cases the real estate to put them in where we didn't have it otherwise. And we can do it at accretive returns. Rick, would you like to add anything?

Only thing I would add is that we've been doing this for over a decade, because we have a very large relationship with Merlin through our Mills portfolio, and we've got a great set of experiences there that demonstrate the viability of our properties for these types of uses. So we're building off of strength to implement the initiatives David just talked about.

All right. And last from me, and just sticking somewhat along those lines is, and looking back at the investment you made in Aero alongside ABG and your experience you've had since that time, how do you think about making similar investments? Would you do it? Would you -- what would you look for just given some of the distress that I wonder if this is something we could see you guys do again here at some point in the near-term?

Well, look, I think it's very possible we're going to be very smart about it, Jeremy. Now, it's interesting because, as you know, we authentic plans grew just to the private placement where we decided to keep our stock, but certain shareholders sold and new shareholders came in, and we decided not to keep our entire interest. So we didn't sell down because we believe in the company. But that stake, based on its current raise in terms of new shareholders coming in, is worth $153 million, and we basically put no money in it. We still have the Aero OpCo, which is -- we own 44%, and it's going to do $65 million EBITDA thereabouts. So I think we're not too bad at this investment. We're certainly as good as the private equity guys when it comes to retail investment. And so I wouldn't rule it out, but I mean we've made a ton of money in Aero, and we love being partners with authentic brands group. And we will work together on other distress situations. And let's face it, there are some out there. So -- but we will get a pie into companies that we think have brand and that have the volume that is worth going to sell. They just bought Sports Illustrated. I think they have got a great the intellectual property there. I think it's got a great future with company like ABG to focus on. We may invest Mad as an example. There could be Sports Illustrated eSports, gaming, food & beverage. And we will be at the forefront to try and to be as creative as we can. Now with our real estate that you cannot duplicate, and again, while we serve the community, we pay significant real estate taxes, significant -- our retailers and us pay significant sales tax. And we are investing in our properties to obviously for our shareholders but also for the benefit of these communities.

Thanks for the time.

Sure.

Your next question comes from the line of Christy McElroy from with Citi.

Hi, good morning everyone.

Good morning.

Just off of Jeremy's last question but maybe from a little bit of a different angle. Given that past experience with Aero and Nautica and the insights that you have gain from these investments, and you have also talked about being on many creditor committees in the past. How are you approaching retailer restructurings and bankruptcies differently than in the past, or maybe differently than what some of the other mall REITs have the capability to do that maybe gives you a competitive advantage with tenant fallout and bankruptcy activity having picked up again this year?

Well, that's a good question. I would say we have another -- what is it called, quiver in my -- what is it -- arrow in my quiver?

Arrow in your quiver.

Arrow in my quiver, I always like reverse when I am supposed to say it.

Robin is looking out.

But now I would say we certainly have the ability to help beyond what you might do on the leases become an investor in a distress situation. So we have the ability. I am not sure we would do it alone, but with somebody like ABG we have obviously worked well with historically General Growth and now Brookfield. So we have kind of the ability together or even individual or some combination thereof to look at becoming more than just a real estate player, but a buyer of these brands. So that's the difference -- that's the majority difference. We also have the ability to underwrite the business pay lot better than we could have. So, we are left in the dark about what the right rent should be in a workout scenario, and we have resources, I mean the folks at the Aero, OpCO -- the folks at ABG are friends with Brookfield, and our team can basically rapidly run through any kind of investment or retail scenario and find out -- get to the bottom of what the right fix is. And I would say to you we were decent at it a few years ago, but now we are pretty good at it.

Okay. And then just with the straight line rent adjustment elevated in Q2 and somewhat volatile over the last couple of quarters. Wondering if you could provide some insight into what's driving that perhaps impacted by some of the lease accounting stuff? And how we should think about the impact to GAAP non-cash rent adjustments for the full year?

Yes. With the new capacity pronouncements, we --historically we have never straight lined our camp even though as you know a lot of our camp is not -- most of it, 95% of it is fixed with a growth in it. And I believe a lot of our peer groups historically have straight lined that. So, we have to straight line that because of the new pronouncement, and that's really the change in that. Again, our content OI Christy as, you know, takes out any straight-line impact. So it's basically cash. And but that's basically all there is to it. When you look at kind of the increase in straight line less the -- now that we can't capitalize our leasing costs, I mean, it's basically less than 1% differential, in terms of our FFO per shares, it's one way to look at it, but the reality is, if you look at the comp NOI, we strip it out in any event, but it's simply we never straight-line comp expense. And that we have.

Okay. So we should expect it to remain elevated going forward, because of the straight line?

Well, certainly this year. Then I think you'll see it more normalized. Now, we also write-off strictly, we have to rise -- when you have a bankruptcy, we've had straight-line write-offs this year, because if you have a tenant that goes into bankruptcy, and yet you certainly any straight-line rent or straight-line candidate, you may have for that tenant. It's going to be written off. So we've had certainly some of that as well.

Got it. Okay, thank you.

Sure.

Your next question comes from the line of Steve Sakwa from Evercore ISI.

Thanks. Good morning, I guess just a couple of questions first, maybe to just start on kind of the leasing environment. I mean, you and Rick touched on it a little bit that there's good demand. I mean, can you just elaborate a little bit more, you said you've been impacted about 100 basis points from bankruptcies this year. And I'm just wondering, David, you just sort of look at the tenant watch list and the, potential tenants, you're still kind of working with the restructure? Where do you sort of feel like we are in that kind of pendulum or timeframe of kind of getting to the end of that and, just 2020 kind of begin to show a little bit of light at the end of the tunnel?

Well, I still think there are a couple up there, without naming names, Steve that we're monitoring. And, we'll have to see kind of where that goes. So it's hard for me to give you an exact, response specifically to the question, other than there are still a couple out there that we're monitoring we'll see how it ultimately reside? I will tell you, not that this is of interest, but it's not a reflection of our business. Okay. And I know that's hard to say, that's hard to. I know that's a statement that many don't believe but if you look at the bankruptcies, each one of these folks, there were things and decisions that they did that led them to that point. As opposed to it, this it's our business, okay. And I won't go through names, but lack of investment, too much leverage, opening two biggest stores going international, when they should have stayed domestic, picking the wrong mark, it's not endemic of our business, and that's the important point, because the reality is, even with these bankruptcies that we've had to deal with, we are comping up, yes, it's not where I'd like to see it, but it's still comping up a couple of percent. And we would have really outperform had we not had the unanticipated bankruptcies. We are outperforming an overdraft in the mall business underperforming and the outlet business because of the tourism that I showed you. So there's pros in that in what we're seeing in sales there, the higher end continue to do well, as I mentioned to you, we have 77 properties, in total, would get you over if you just took the top seven, and we'd be over 900 bucks a square foot, so it's not endemic of our business or our industry. It's each one of these, each one of these has a story and I could spend three hours going through pros and cons as to what decisions they made that led them to that problem. And that's the most important message I can deliver to you. today. It's not quote and again, we're much more diversified than the mall business. But let's talk. It's not the mall business. It's certain folks that ran their business, not in the best way. And yes, we suffer while we re-characterize or reach lease the space to better operators. So I'll turn it over to Rick to add any implication to your question.

And part of that is demonstrated by the fact that our occupancy trends have held up very nicely in spite of all that bankruptcy. And as we detailed in the past, there is still a broad array of tenants that are seeking to come to our properties, whether they're new concepts, whether they are digitally native retailers, whether they are international retailers, we still have retailers that are traditional retailers, like [indiscernible] that are still growing significantly. And we are adding a lot of food to our property. And all of that is contributing to the fact that you're seeing our sales growth, and you are seeing our NOI growth.

Okay, I appreciate that. Thanks. David, just a small point, on the total portfolio, NOI was up less than comp, which is not normally the case. And your share of NOI from investments was down. Is there anything kind of just for us to focus in on as we think about or…

Well, remember, we sold our interest internationally in HPS. That's the biggest reduction. And in addition, we've got a lot of redevelopment going on, you could see that number, we have a number of properties that are basically taking a step back, because of our redevelopment efforts. But those are the biggest ones that jumped out at me, right. So -- and Tom just mentioned to me FX as well. So when you put the -- I'd say those are the three things. So HBS has gone internationally, FX, currency, and then the redevelopment, as you can see, where we have a number of properties that are kind of going down a little bit this year as we redevelop it -- Burlington mall, Ross Park Mall, and a handful of these that we're taking a step back to take several steps forward. So that's basically the map.

Okay, thanks. And then lastly, I just noticed, the average base rent per foot, which, takes into a lot of things, including lease restructurings and others was up a more modest I guess, 1.2% to 1.3%. Anything, we should just be thinking about that number, versus say the least spreads you're getting and obviously the change in occupancy that I was curious on that trend?

No, I'd say it's basically a function of, some of the workouts that we're having to deal with.

Okay, thanks a lot.

Sure.

Your next question comes from the line up Craig Schmidt from Bank of America.

Thank you. I wondered if you could categorize the store closing and then outlet space versus the mall space. Is it, are they experiencing store closing through a comparable degree or the more meaning to the malice?

I would say they're the last few bankruptcies have also had outlet exposure. So, they are more comparable where a couple years ago it was more the mall than the outlets and now, they're similar there's not -- there's not a trend that outlets or better or worse than, than the than the malls and when it comes to store closings due to bankruptcies, I'd say they're. They're more similar in terms of that pattern.

Great. And then obviously very active in redevelopment. I wondered if it is possible to categorize what do you mean you think you're in, in terms of the major anchoring position. I recognize you're always going to need to do it but in terms of this major push for anchor repositioning, maybe what do you need more then?

Well, I never been much of a baseball player but I would say what and I would say the third -- maybe three so he and I hit the number at the same time. I'd say the third inning.

Okay, great. Thank you very much.

Thank you, Craig.

Your next question comes from the line of Alexander Goldfarb from Sandler O'Neill.

Hey, Good morning. Good morning out there. Out there it's not that, it's not like we're in -- it's not like we're in outer space. We are not on the moon. We're [indiscernible] here.

Yes, well…

I think it's kind of like Neil Armstrong. Okay, he is very thoughtful.

Right.

Straightforward guy. Go ahead, Simon.

Okay, perfect steady hand at the landing.

Just two questions here first, David, sort of following up to Christie's question, the jump in; so two-part question on the leasing spreads from straight line rent. So one, how much of the increase of straight-line rent is any of that due to increase leasing activity, because looking at the leasing spreads, they've really jumped over the past year. So I don't know if that's purely mix, or maybe this is the benefit of backfill, but if I look at your TIs over the past year, they've gone up a little bit, but nowhere near as much as the rent spreads have jumped. So just trying to understand how much of the jump in rent spreads is purely just mix, versus its actually you guys getting better tenants, and maybe some of that is leaking into the higher straight-line rent?

Well, we certainly continue to straight-line our rental income, beyond comp. I don't have the breakdown for you, but it does add into that amount we continue. I mean, there's rent spreads, continue to be healthy, obviously, a lot of that will be significantly enhanced, as we're getting back, very, cheap space that we can rent it, I mean, that's going to be the future growth of the company is taking back the some of the bigger spaces and generating much greater rental income from them. And, that's why we're spending the capital. So it all kind of feeds into each other in terms of generating our cash flow future NOI growth, leasing spreads. And obviously, that'll be part of the straight-line, rent income as well.

And I would just confirm your observation that our tenant allowances have been very stable over the years, and there has not been a noticeable increase at all. It's business as usual at the testing.

Should they -- Rick, the rising -- releasing spreads, it just is purely mix, or we should expect these, I mean, just wondering next few quarters, it is going to go down to more in the mid-teens or these going to stay elevated?

That's why you have a job. Okay, you'll, see when it happens, okay, but the bottom-line is that's why we have a job -- the bottom-line is, we are certainly one of the greatest opportunities we've had, as a company and I can't underestimate yet some people could look at, the demise of certain anchors as a sign of, impending doom, we look at -- we'd look at it in the complete reverse, as a significant opportunity, because we are now getting the ability to take that space, and redevelop it with a creative returns on investment and higher rents. And so, I do think that trend will continue. Whether it'll be up five bucks down, that's just -- that's a quarter-to-quarter change. But that is -- that's why we're spending -- that's why we have a $5 billion pipe. I mean, that is our business going forward. And it's important for the market to understand, I mean, that's where we see great opportunity.

Right. Rick, I just want to make sure the budget like this wasn't like a definitional change, or something accounting change. I'm just trying to get to, because obviously, it's impressive. So just want to understand if this is definitional change or accounting change or…

Not at all. Not at all.

Okay. And then the second question is just quantifying obviously got Forever21 pretty small, but overall, your comments about what your guidance has endured as far as headwind stronger U.S. dollar, tourism, all this stuff, where are you guys trending as far as your bad debt budget. So presumably your budget whatever it is 100 basis points or something like that for the year, where are you trending on whatever your budget is, where you are trending on that year-to-date?

I would say we are higher. I mean I don't have exact number, but it's higher than what we -- certainly higher than what we budgeted because we had some anticipated bankruptcies. Unfortunately when we do our model, it's the end of last basically November -- October - November. We are now in July. And we've had a lot of stuff that we had to deal with. So, it's definitely higher than what we budgeted.

Okay, thank you.

Sure.

Your next question comes from Caitlin Burrows from Goldman Sachs.

Hi, good morning. Maybe on the leverage side, net debt NOI has been coming down to 5.1 times now. And I think investors do like to see this. So, I was just wondering what's driving this decision from the Simon side versus spending more on say development buybacks or something else.

Well, look, we try to manage the balance sheet with great care. And so, we do have a -- the pipe we can -- we have not capital constraints on the pipe, but really human resource and permitting constraints. And obviously, we are very focused on supply and demand in those particular markets because as you know a lot the redevelopment efforts are going to be kind of mixed use element. So -- but we can only go as fast as the permits and our human resources can do it. And it does take certain markets specially California where we have a pretty big pipe and in Seattle with Northgate a huge development there -- development that based on phasing, but -- and over a period of time and the approval process there is going very well, but that's a spend that could approach a billion dollars given the opportunities we see with that site. So unfortunately, we got to tear them all down first each time, which were -- I think we will start in eight days, right? So I think that -- to get back to your question, I think the biggest constraint is really just human resources and permitting. So, it's not -- listen we don't want to be carried away with the balance sheet. And as Rick mentioned, I mean we are very -- every once in awhile, we will take on a flyer on development or redevelopment, but we certainly when it comes to -- allowance comes to capital, as you can see over the history of the company we are very, very, very thoughtful on that. I mean we don't bat a 1000 you see I am using the baseball analogy but we -- so we are very thoughtful on that. And then, I think the buyback -- look, we are going to be opportunistic. REITs will always be and I think I read, not to quote Steve Walk [ph] because we don't want to give him a big hit, but I do think REITs are always going to be somewhat limited on buybacks compared to industrial America because of our need to pay out our taxable income obviously to maintain the REIT status. And that's why if you leave with anything in this call is we had paid out $30 billion, that's with the D, dividend in the history of this company, which is pretty damn remarkable I think. Tom, you agree?

Agree.

Okay, so -- and so it will always be something nice to do, but we are always going to be somewhat constrained just because we are paying out so much capital and dividend. Now the reality is we would buy -- we didn't have to pay out on our taxable income and we would be a cash flow machine, we would buy a tremendous amount of product check. So it will always be there for us to be opportunistic but we can't overwhelm given our pay out on the dividend front.

Got it, okay. And then maybe just you do have a history of raising FFO guidance the vast majority of quarters in the past. So, just wondering if you could give some detail on how maybe results played out during the quarter. How that related to your own budget and what prevented you from raising the full-year guidance. I know that in previous set of questions you did mention potentially that bad debt was trending a little higher than you had originally predicted.

Yes, I probably bored you. But the reason we haven't raised guidance this year is a few things. And I will just restate what I said. We have lower lease settlement income than we had budgeted. We have lower distribution income from our interest -- essentially in value retail. We don't equity cap for that. As you know we cash account -- cost accounting. Not to bore you I don't know what you background is, but cost accounting -- cost accounting still exist, correct?

Yes…

If you know how old I am, but cost account -- basically we only book with what cash we get. So anticipate a little bit higher distribution income from our investments and value retail. We haven't gotten -- we have the stronger dollar. Obviously we had unanticipated bankruptcies. We didn't budget SOP though we kind of knew that we might do it, we just -- it's kind of out there and we decided well, it's out there and then obviously the anticipated bankruptcies. On average rent, we are trending above in the mall business, but below in the outlet. And I have explained that basically it's not a function of the business, it's a function of tourism and a strong dollar being basically reduced in the country, and we are not the only company in America that's telling you that. You can see that and from a number of different lives.

Got it, okay.

So that's basically -- so that's what's been going on and why we haven't raised guidance this year.

Okay, thank you.

Sure.

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

Hi, David. Good morning. First of all, thanks for reporting prior to the open. It's nice and refreshing to have it mixed up from deluge of companies reporting after the close. I appreciate the color on FFO guidance. And I wanted to also maybe talk about retail overall and maybe how you are thinking about some of your investments. So maybe first, could you maybe give us an update on your [indiscernible] stake and if you would think about increase that? It looks like that's been a pretty good investment, and then maybe also an update on the test [Ph] consumer facing platform as well.

Okay, so having just been in a board meeting last week, I think that they are doing an excellent job. They are very well positioned. Their balance sheet which continues to be much better than their peer group, and their cash flow their like for like I can't remember exactly what the number was, but I thought it was pretty good given what's going on and continue to sell asset sure of the business. And what we have seen is a company that continues to operate better and better over the years that we have invested. I would say you -- it's unlikely we would ever -- I mean if we go over 30, I don't know if you know the rules, we have to offer the whole company. I would say it's not in our plans to ever to do that right now. But, I mean it's certainly in our option that we would have down the road, but it's not in our plans at all. So, with that said -- and then our SOP, we have -- we are still invaded. We have got 12 retailers, 3000-ish brands on online, we're going through kind of the kink, so you can have access to it. If you are one of our loyalty members, we got another 15 or so that's in the process of coming on board. And our plan is to make it public sometime in the third quarter. And I'd say to you, we've got a lot of interesting things going on with that platform. Beyond just that, but I can't really share much beyond that other than stay tuned. I do think we can have a -- I do you think we can create a real business opportunity for us in this area.

Got it. That's it for me. Thanks for the transparency and thoughts David.

Sure, no problem.

Your next question comes from the line of Nick Yulico from Scotiabank.

Thanks, David. I just want to go back to the topic of redevelopment and also tied into questions about total portfolio NOI growth. And I think we can appreciate how redevelopment and disruptive NOI process with some attractive payoff down the road. But we get a sense of timing of, when this will start to benefit overall portfolio growth because it's not showing up in the numbers this year. And if you mentioned your guess, is that we're in a third inning of this process. I mean, does this mean that it's going to be an ongoing drag on total portfolio NOI growth, or does this change at some point in the next year or so…

Again, just to be clear I -- there are three major elements on that. One is the -- that's where the currency, stronger dollars hurt us. Number two is we sold an asset for when you sell an asset, you don't have the income. Okay. So, and then the third element is our redevelopment. So, the reason that the properties there are relatively flat, and normally, we would see growth there. So I just want you to put that in perspective. So with that said, I'll address your question. Look, I think you'll start to see benefits in 2020 later, but you know, it takes time, I mean, that's -- the reality from a new development point of view. You know, we don't have a lot. So a lot of the driving as a new development was through that line, we did decide to more or less buy the land and also to build also premium outlets yesterday, and the outlet there. So that's a go project. We still have some hurdles to do. But that's pretty much so. So I, and that's open in 2021. And we've got a lot of the International outlets are really open in late 20 and early 21. So it's going to take time. Now, Nick, here's the important thing. You will never hear from this company. We will have a throwaway year. Okay, so even with kind of like yes, it's not that exciting. We're not going to tell you wait for next year. Wait, we don't wait for good deal. Okay, not here. So, yes, we're, it's going to accelerate, but we're worried about '19 and '20 and '21. So we don't have throwaway years.

All right. I appreciate it. That's helpful. Thanks, David.

Yes.

Your next question comes from the line of Linda Tsai from Barclays.

Hi, your weighted average interest cost is pretty attractive at 3.49%. And then in 2020, you have some higher rate debt maturing for both consolidated and JV debt. You know, with the 10 year having trended lower, do you think you'll achieve some interest rate savings on these upcoming maturities?

Hi, Linda. It's Brian. Yes, look, as we look out into the future and looking it through the perspective of today's current interest rate environment, certainly there would be some pickup if we stay in this environment for a longer period of time.

Thanks, and then hopefully heard this correctly, the bankruptcy impact on SS NOI year-to-date was 100 bips, but then given some subsequent comments about fallout being hired, does that mean that the full-year impact on SS NOI would be greater than 200 bips?

Now, I think what we said to you so far, the -- Let me re-state what you just said. So there's no ambiguity. We had kept that live growth to 2%. We, generally, based on our budget would have been a little over three, had it not been from the unanticipated bankruptcies. We're still -- our goal for this year is still 2%.

What's the overall impact of bankruptcies on same store for '19?

We just told the year-to-date, it's around 100 basis points.

Okay. Thanks.

Sure.

The next question comes from the line of Derek Johnston from Deutsche Bank.

Good morning, everyone. Thank you. You've covered a lot. So just one for me if you don't mind, David, look, I like malls, okay. But acknowledging that sentiment on malls have been pretty poor, so far in 2019. Frankly, worse than the fundamentals, and clearly, nobody knows your business better than you guys. So when you look past '19, with 2020 and beyond fast approaching, what is the management team most excited about opportunity wise or strategically speaking?

Well, thank you, very great question. So I would say, the most exciting, the most difficult thing that we -- I mean, in terms of exciting but difficult in terms of work, and execution is the ability to redevelop our centers. And while we're doing with the fifths of the world, the North gates of the world, [indiscernible] down the line is to me, really, really exciting. I mean, yes, it's a lot of work. I'd rather have my feet up on the desk. But that's the most exciting. So, it's -- we have been constrained Derek on how to redevelop a lot of these centers, because we had to run through all these hoops with the department stores. Well, if we've got the space back, and we have their acreage, then we then the only thing constraining us is our imagination, and our ability to get permits, and obviously you got to be grounded by supply and demand. So that to me is the most exciting opportunity ahead of us is to really re-imagine the center now, you're right about the mall business sentiment. Now, Rick and I rolled it up. Rick is a little bit older to know that people have been trying got kill off the malls for clearly to be 60 years, right? So was -- with the current centers, it was the power centers, it was, Walmart, it was Amazon. It was this guy or that guy, look we're resilient. Rick and I are all like cockroaches. Okay, we're going to still hang around. So -- but I do think that doesn't mean that we've got a -- we can't keep re-imagine or places. And I would say that the most exciting. The other thing I would say to you, Derek, that is as exciting to us is because of our high-quality portfolio or high-quality balance sheet, the stability of our cash flow, even with all the turmoil going on in our, the retail world. You know, we have lots of opportunities beyond what we do today. And we evaluate those with keen interest.

Thanks, David.

Sure

The next question comes from the line of Michael Mueller from JP Morgan.

Yes. Hi. David. You mentioned you have 77 assets that generate more than $900 to put the sale. Can you give us a sense as to what portion of your pro rata NOI those assets represent?

No, but well, I'll -- just let me think about whether I should give that word. What you might say, was that Michael, you may tell somebody a joke?

No, no, I got it…

It's well over. You know, it's well over 50%, it's probably 70ish. Give or take.

Got it? Okay. And then maybe push it a little further at the opposite end of the spectrum. How small is the contribution from the assets doing, say, less than 500 a foot?

I don't have those numbers at top of my head, but --

Okay.

But no worries.

70% is helpful. Okay, thank you.

Sure.

Your next question comes from the line of Wes Golladay from RBC Capital Markets.

Hey, good morning everyone. I'm looking at the international properties in the total NOI bucket. And I'm seeing that that's been growing about 4% year-to-date. First question is that largely comparable? And what is driving that strength?

Well, it's largely comparable, other than there may be an expansion here or there. But remember, that's also been impacted by FX. So it's actually probably would be higher than that. You know, had we compared the last year? Most of that, most yes, the dollar has been obviously, significantly stronger, and we had budgeted to be not as strong, and it certainly year-over-year comparison stronger than where it was last year, because the vast majority of that is comfortable. So that guys have --

Would you ever consider putting that in the total bucket and maybe adjusting on the constant currency basis?

You know, I thought about it, and we should do it? Because it would demonstrate the -- I mean, the fact is, I think a lot of people forget about this diversity and the high-quality portfolio we have. By the way, the 77 assets that would average over, over 900 is not has nothing to do with our international assets. They all I'd say by and large, well over 1000 foot. So, we thought about it, but then I don't know it's just, I don't know, we decided not to but I we thought about it, we certainly generate higher comp NOI growth. And I know, others do, do that. They'd lock it in there. So maybe one day, but then you would ask what the domestic business is and we'd be back to where we are today, right?

Can you keep them in the separate lines? But yes. That's why. Thank you.

Yes, no worries.

Your next question comes from a line of Christy McElroy with Citi.

Hey, it's Michael Bilerman, here with Christy. David, I wonder if you can sit back and think about the mall or the retail competitive landscape from a landlord perspective. And you talked about the turmoil and the retail industry is clearly affecting different of your peers in different ways, especially those that don't have the cost of capital or balance sheet. I was wondering if you can talk a little bit about perhaps your market share of retail leasing. And whether you believe you're getting a disproportionate share of retailer store openings or a lower share of retailer store closings, given that relationship and where you stand relative to all the other mall peers?

Well, I actually don't think, Michael, that I actually, referenced to any of our peers in this call, other than to say, we do have the -- we do have some expertise that maybe others don't, when it comes to, it comes to, looking at opportunities or restructurings of retailer. So, look, I would say to you, I don't really think I referenced the peers all that much.

No, you didn't. I'm asking the question about whether you are running the company are feeling and so you're getting a disproportionate share of leasing or a lower share of closings, given retailers' desire to be in your portfolio given a lot of the others things that go along with Simon, including the balance sheet and all the other variability, are retailers more --?

Yes, no, I got the question. And I would answer it this way, and Rick can add or embellish on, I would say simply we've always -- we've kind of always had that position frankly, because of the quality of our real estate. And the fact that the quality of our real estate, the organizational strengths, and so on. So maybe on the margin it's even more important today. But I think that the stability of the organization and the quality of the real estate and the fact that people know we're going to invest in our real estate certainly helps, and certainly shouldn't' be overlooked. And I will say anecdotally, without numbers, and whatever that's worth. I mean landlords do matter. Historically maybe in a go-go time period maybe they matter less. And I'm hopeful that as retailers look at whether it's in downsizing or restructuring or growing whatever the scenario is they do take into account who their partner is. But I think we've always been in that spot, maybe it's slightly enhanced. And I do think the landlord -- the ability to invest, I mean Rick and I run around, we talk to people, they say, "Yeah, we know you're going to take care of your properties." Maybe there's a few retailers that want to put in what I call "The clause" where that if we don't own it they can do whatever the hell they want. At least we try not to do that, but I mean we hear stuff like that. But I'd say that's kind of on the margin. Rick, please embellish.

The only other thing that I would add is that our portfolio creates a lot of profit for these retailers. They are not charitable institutions. I think they do hold us in high regards, witness our result. But the reason we have an ability to interact with our retailers in a productive way is because they make a lot of money in our properties. And when they think about their business it's in their best interest to do business with us. And that's a function of all the things that David's been talking about the entire call about reinvesting in the property, having a stable balance sheet, having all these inventive and innovative plans. It all comes down to having more productive properties. And that's what gives us, I think, an edge.

David, can you talk a little bit about sort of all the 5th platform initiatives. You've obviously had the outlet online business you've done at eSports, the CBD shops, there's a lot of other little bets you're placing in a lot of different ways. I guess how should we think about how you're spending your time on all of those initiatives? And how should we think about the capital that you may put forth to additional programs to drive [indiscernible] assets?

Well, I think you'll see more and more of it, Michael, and can't really quantify it because it is opportunistic. But look, all of this is kind of return based. I mean it's not money that we're willy-nilly just throwing there hoping it sticks, it's not spaghetti up against the wall. But I do think we're going to be as creative and as innovative as we possibly can be with the guardrails that we have historically used, which is making sure that's a good return on investment, making sure that it's synergistic to what we do, making sure that we're betting on the right people and the right product and the right vision. But you will absolutely see more from us in this area. And I'm hoping from that what -- we've been fighting the fight for years that we're more than a mall company. We've always defined ourselves as a retail real estate company from the get-go. Even when we went public we were more than a mall company. We have morphed into retail real estate, we've morphed into outlets, we've morphed into the Mills, we've morphed into international. So we are densifying our business in terms of -- so I am hopeful that with time, even though we are categorized as a mall company. Again, I'm not running from the mall business here. As someone asked earlier, what one of our most exciting things we have is redeveloping all this anchor space. But we are much different than that. And that process and evolution will continue. And we're hopeful that we will be profitable in it like we have in our other ventures out of our traditional business. Not our core business, our traditional business.

This one, sort of strategically, as part of when you spun off WPG, which in hindsight I think those assets clearly would have been a little bit more of an anchor to your growth. You did spin off the open-air shopping center business. I guess as being a retail landlord does that business and the potential to maybe re-aggregate in that space or that's not on the table at all?

I don't think it's on the table. If I understood the question I don't think it's on the table. I think there's a lot of opportunities ahead of us, I just wouldn't rank that as high up there.

And then how does the U.K. which is obviously going through -- the stocks there are obviously having a lot of difficulties given their leverage position. You had Queretaro try to do something. Does that rank high on your list?

I'm more worried about my -- the season is about to start for my team Crystal Palace. I'm more worried about it. And I have another -- I want a solid year this year. I'm tired of watching the relegation fight. So I'm more worried about that right now.

All right, thanks for the time, David.

Sure.

I am showing no further questions at this time. I would now like to turn the conference back to Mr. David Simon.

Okay, thank you and have a great rest of your summer. And we'll talk to you soon.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. Have a wonderful day. You may all disconnect.