Simon Property Group Inc

NYSE:SPG

Earnings Call Analysis

Record Performance and Future Prospects: A Strong Q2 for Simon Property Group

In Q2 2024, Simon Property Group reported record real estate NOI driven by increased leasing volumes, occupancy gains, and retail sales. Funds from operations rose to $2.90 per share, a 4.3% growth from the prior year. Domestic NOI grew by 5.2%, while portfolio NOI, including international properties, increased by 4.8%. The company also raised its full-year guidance to $12.80-$12.90 per share and announced a 7.9% increase in the quarterly dividend to $2.05 per share. Upcoming developments include fully leased Tulsa Premium Outlets and expansion in South Korea, enhancing long-term growth prospects.

Strong Financial and Operational Performance

The second quarter performance of the company was robust, boasting the highest level of real estate net operating income (NOI) in the company's history. Key drivers included increased leasing volumes, higher occupancy rates, and increased retail sales volumes. This resulted in a 5.2% year-over-year increase in domestic NOI and an impressive 4.8% growth in portfolio NOI, including international properties.

Occupancy and Leasing Momentum

Occupancy rates for malls and outlets reached 95.6%, with The Mills coming in at 98.2%. This is an increase of 90 basis points from the previous year. The leasing momentum continued, with over 1,400 leases signed covering roughly 4.8 million square feet. New deal volume accounted for 30% of this activity. Retailer sales per square foot were reported at $741, bolstered by events like the National Outlet Shopping Day, which drew over 3 million shoppers.

New Developments and Expansions

The company has been keen on expanding its footprint. In August, they will open the Tulsa Premium Outlets at full occupancy. Additionally, a significant expansion at the Busan Premium Outlets in South Korea is set for the fall. The first phase of a luxury residential development in North Gas Station is also underway, featuring 234 units that will complement the mixed-use destination.

Financial Health and Dividend Growth

The company maintains a strong liquidity position with $11.2 billion available. This was partly bolstered by refinancing 10 property mortgages worth $1.1 billion at a 6.36% average rate. For investors, the dividend has been increased by 7.9% to $2.05 per share, payable on September 30. Furthermore, the full-year guidance was raised to $12.80-$12.90 per share, reflecting better than expected performance despite some retailer restructurings and lower-than-expected land sales.

Outlook and Guidance

Looking ahead, the company is optimistic. They foresee ending the year with portfolio occupancy north of 96%. With robust leasing activity and high demand, the management is confident about the company's resilience and growth potential even in uncertain economic conditions. They highlighted the company's unmatched position to capitalize on market opportunities, especially during potential economic downturns.

Earnings Call Transcript 2024-Q2

[Operator]

Greetings. Welcome to Simon Property Group's Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to Tom Ward, Senior Vice President of Investor Relations. Thank you. You may begin.

[Thomas Ward, executive]

Thank you, [ Shari ], and thank you all for joining us this evening. Presenting on today's call are David Simon, Chairman, Chief Executive Officer and President; and Brian McDade, Chief Financial Lance.

A quick reminder that statements made during this call may deem 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. Our Conference call this evening will be limited to one hour. For those who would like to participate in the question and answer session, we ask that you please respect our request to limit yourself to one question.

I'm pleased to introduce David Simon.

[David Simon, executive]

Good evening, everyone. I'm pleased with our financial and operational performance in the second quarter. We are seeing increased leasing volumes, occupancy gains shopper traffic and retail sales volumes resulting in a company's highest level of real estate NOI for the second quarter in our company's history. Demand for our space from a broad spectrum of tenants is strong and steady. Our company is focused on creating value through unique and disciplined investment activities that will continue to deliver long-term growth in cash flow, funds from operations and dividends, as you've seen by our recent increase in our dividend per share, and importantly, make our properties better for the communities in which they operate.

I'm now going to turn the call over to Brian, who will cover our second quarter results and the full year guidance in more detail.

[Brian McDade, executive]

Thank you, David. Second quarter funds from operations were $1.09 billion or $2.90 per share compared to [ $1.800 billion ] or $2.88 per share last year. SFO from our real estate business was $2.93 per share in the second quarter compared to $2.81 in the prior year, a 4.3% growth. Domestic and international operations had a very good quarter and contributed $0.12 of growth. As a reminder, the prior year included a noncash gain of $0.07 from investment activity related to ABG.

Domestic NOI increased 5.2% year-over-year for the quarter. Continued leasing momentum, resilient consumer spending and operational excellence delivered results exceeding our plan for the quarter. Portfolio NOI, which includes our international properties at constant currency, grew 4.8% for the quarter.

Malls and outlet occupancy at the end of the second quarter was 95.6%, an increase of 90 basis points compared to the prior year. The Mills occupancy was 98.2%, average base minimum rent for malls and outlets increased 3% year-over-year, and The Mills increased 3.9%. As David mentioned, leasing momentum continued across the portfolio. We signed more than 1,400 leases for approximately 4.8 million square feet in the quarter. Approximately 30% of our leasing activity in the second quarter was new deal volume. Our traffic in the second quarter was up 5% compared to last year. And importantly, Total sales volumes increased approximately 2% year-over-year.

Reported retailer sales per square foot in the second quarter was $741 for The Mall and premium outlets combined. We hosted our third annual National outlet shopping day in June, and it was very successful for shoppers participating retailers. More than 3 million shoppers visit our premium outlets and Mill centers over the shopping weekend. Feedback from shoppers and retailers following the event has been great. Since launching this unique event three years ago, participating retailer and shopping momentum has built each year with more than 475 retailers this year, and we look forward to an even a bigger event next year. Our occupancy cost at the end of the second quarter was 12.7%.

Turning to new development and redevelopment. We will open our Tulsa Premium Outlets on August 15 at 100% leased and we will also open a significant expansion at Busan Premium outlets in South Korea this fall. We also started construction the quarter on our first phase of a new luxury residential development in North gas station. This project will include 234 units and add other elements that further transforms Northgate into the ultimate live, work, scape, stay in shop destination. At the end of the quarter, new development and redevelopment projects were underway across all platforms in the U.S. and internationally, with our share of net cost of $1.1 billion and a [ net ] yield of 8%.

Now to the balance sheet. We completed the refinancing of 10 property mortgages during the first half of the year for a total of approximately $1.1 billion at an average rate of 6.36%. We ended the quarter with approximately $11.2 billion of liquidity.

Turning to the dividend. Today, we announced our dividend of $2.05 per share for the third quarter a year-over-year increase of 7.9%. The dividend is payable on September 30.

And now finally for guidance. We are increasing our full year 2024 guidance range to [ $12.80 a $12.90 ] per share compared to $12.51 last year. This is an increase of $0.05 at the bottom end of the range and $0.02 at the midpoint and reflects overcoming approximately $0.15 per share from certain retailer restructurings, low-release settlement and land sales, land sales income this year.

With that, that concludes our prepared remarks. Thank you, and David and I are now available for your questions.

[Operator]

[Operator Instructions] Our first question is from Jeff Spector with Bank of America.

[Jeffrey Spector, analyst]

I guess my only question at this point, as I circle back in, I guess, let's focus on the consumer, given you service the consumer across various formats from the malls to [ prem ] outlets to mills. What is your latest thoughts on the consumer today? Clearly, the market is panicking that we may see a consumer-led recession. And maybe if you could tie it to what you're seeing from retailers and how they're acting today?

[David Simon, executive]

This is David. I'll take that. So Look, I think we can pretty consistent for well over a year that the lower income consumer has been under pressure for quite some time, primarily because of the inflation that's affected. So that continues to be the case. They are very focused on managing their bills and discretionary expenditures have been obviously not where we'd like to see them. So we're optimistic that we're going to cycle out of that for the lower-end consumer, given the inflation picture that we see now, which is relatively benign.

It's way too early, Jeff. We haven't seen a slowdown in the higher-end consumer. Obviously, the market is -- in an interesting point, we have not seen the wealth impact all impact the higher end consumer so we're still pretty sanguine about it. I think as you know, we kind of budgeted at the beginning of the year, flat sales. We're a little bit above that. So we've got a little bit of cushion. But the higher end or the better end consumer, I think, is in a good spot. Their liquidity is in a decent spot. So we don't expect anything dramatic. But obviously, they're going to take their queue from what's going to happen in the overall market and what the employment picture looks like.

So in summary, I think we're going to cycle more positive in the lower-end consumer. And I think the higher-end consumer steady as she goes currently. Jeff, you can always ask another question. But Tom [ runs ] a pretty tough [ instruction ].

[Operator]

Our next question is from Samir Khanal with Evercore ISI.

[Samir Khanal, analyst]

David, I guess what are you seeing in terms of leasing or pricing power? I mean, are you seeing any tenants taking a bit of a pause or taking a bit longer to sign new leases given what's happened with the macro? And I guess, any color on July would be also helpful in terms of traffic or sales.

[David Simon, executive]

Yes, I don't have color on July. We don't really get those numbers until August 20, which is my birthday by the way. But usually 20 days after the month. So no early returns on that.

So we had a deal committee meeting, Brian, a week ago. And when I am told -- Okay, I don't participate in these because I would probably be disruptive. But what I am told it was the best new deal committee need we've had ever. So I think what we're seeing is demand and what I said earlier in my opening remarks, demand is strong and steady, not abating. It's really unabated. Obviously, retailers and solar, we were all sensitive to economic conditions. So as those develop, we have to be sensitive to them. But as we currently speak, we had a great deal committee, and the team is working all cylinders. So that's kind of the news from the front.

[Operator]

Our next question is from Caitlin Burrows with Goldman Sachs.

[Caitlin Burrows, analyst]

Maybe just following up on that retailer demand side. So portfolio occupancy has increased nicely over the last year. It sounds like leasing remains strong. You just mentioned the best new deal committee. So that would support further occupancy increases. I'm just wondering versus the current 95.6%, how much further upside do you think you have? Or is there some reason to expect this rate of increase can or cannot continue going forward?

[Brian McDade, executive]

Caitlin, it's Brian. I think we're pretty comfortable thinking that we're going to end the year north of 96%. Certainly, still a little bit of noise out there. But given the robust demand in the type of environment we think we're more than 96% by the end of the year -- I'm sorry, I was just going to add. I think Obviously, it's also not just the occupancy number that's also replacing retailers that are performing with better retailers. So it's a mix issue, too, which the team is very much focused on. Go ahead.

[Caitlin Burrows, analyst]

I was just going to say bigger picture, like Brian, you just mentioned, north of 96%. Is there any reason to think maybe based on what David said, that's kind of a ceiling? Or there could still be continued upside potential?

[David Simon, executive]

Well, I'd be cautious and that's a pretty good number for us year-end. What was the [indiscernible] knows every number, but [indiscernible]. So it's a pretty good increase from last year.

[Brian McDade, executive]

95.8%.

[Craig Schmidt, analyst]

85.7%, not that [indiscernible] [ so maybe there's an upside ].

[Operator]

Our next question is from Alex Goldfarb with Paper Sandler.

[Alexander Goldfarb, analyst]

David, certainly good to hear you on the call. I hope that the recovery and all the stuff is going well. Just a question for you, big picture. Jeff kicked it off in a number of -- my peers have all asked the same question. But as we look at the environment today, certainly, there's a lot less retail availability. There's been a big shakeup not only among the retailers themselves, but also the landlords and certainly, cost for new development has gone through the roof. So as you look at the picture today with the economic concerns but also at the same time that the tenants seem to be in better capital positions. Are you as worried today when you see weak economic data? And does that impact the way you think about expanding, putting money to work and how the leasing conversations are going? Or do you think that we're in a better situation or worse situation? Like how do you judge where we are now, just given that the environment seems to be different than it has been over the past few decades.

[David Simon, executive]

Well, thank you, Alex, for the thoughts. And let me just answer your question. So I frankly think that, listen, it sounds like I'm talking -- our book, which obviously you would expect us to do. But we have never been better positioned. So if we do -- so I don't look at the current uncertainty and even a potential recession, no one wants to go through that but given how we're positioned, I think we're in an absolute unequivocal position to improve and better our company. So Again, we don't want to go through a recession, but if we do the gap between us and everybody else just gets bigger and bigger our gap, if you look at kind of where we started three years ago and that's where we are today, the gap is pretty damn big. We only did the [ better ] -- and that's a testament to the team and everybody else. So and honestly, I'm not looking at a current potential recession or tough market as any basis to slow down.

look at an example, we just started construction in North [ Bay ] building 234 partners. We expect to do another phase of that probably in the next time as we go through the pricing. So from our standpoint, we're not slowing out if the economy slowed dramatically, the gap between us and just about everybody else will only get bigger and that gives us opportunities to do some interesting [indiscernible].

[Alexander Goldfarb, analyst]

And you see the same confidence from your retailer, from your partners, your tenants or they're [ waffling ]?

[David Simon, executive]

I think the better retailers that are -- we have a number of retailers that are really good financial standing and I think they take a longer view just like we do. Not everyone, but I would tell you the majority of who we're doing new business with is definitely taking a longer term here. So they're looking to gain sales and market share as well. So we're certainly not on the defensive into the kind of the turmoil over the last few weeks. And if anything, we'll step up our investment activity but not foolishly, I mean we'll do it like we do everything else. But we don't see it as a reason to [ reign ] in at this point.

[Operator]

Our next question is from Michael Goldsmith with UBS.

[Michael Goldsmith, analyst]

You continue to drive nice NOI growth driven by both occupancy gains and higher rents. Now we've talked a little bit on the call about occupancy potentially approaching a potential ceiling. So do you see increasing pricing power was that to maybe offset that? I'm just trying to get a better understanding of how the algorithm kind of looks in the coming quarters.

[David Simon, executive]

Well, again, occupancies, like any statistics [indiscernible], and again, to be clear, we do think we'll increase our occupancy. The bigger opportunity for us is, again, to continue to increase better than mix. So -- and that drives, obviously, the better the mix, the higher the sales, the higher the sales, the more likelihood that you're going to have higher rents. So that's the big focus as we continue to merchandise our properties.

Brian, I don't know if you want to add anything to it?

[Brian McDade, executive]

Yes, Michael. Look, we continue to see pricing power. Roughly rents are similar where we've seen escalation last year that we talked about [indiscernible] for new deals. That's continuing as we find more and more retail and update mix, it drives demand as it ultimately drives our pricing power. So there's a reoccurring theme here [indiscernible].

[Operator]

Our next question is from Craig Mailman with Citigroup.

[Craig Mailman, analyst]

Maybe shifting gears a bit. to the balance sheet and just the rate environment here. Just your thoughts generally with a 3, 8, 10 year, Did that at all changing your view on kind of the upcoming debt maturities in the back half of the year and how to fund those versus how much cash to keep on hand versus David, maybe your commentary about the gap between you and others, your ability to be on the offensive to make investments now that if we do go into recession by the time they're done, you're kind of on the other side of it, and you're well positioned. So I'm just kind of curious -- I know it's a broader question, but just how the kind of the softening rate environment here, does that change anything you're doing or how you want to be positioned on the margin?

[Brian McDade, executive]

Craig, it's Brian. Look, one data doesn't really change our financing plans for the year. We're sitting on $3.1 billion of cash. We have [ $1.9 billion ] in maturities in the back half of the year. Current plan is still to refinance those out with cash on hand. But to the extent we were to see opportunity to do alternatively or the market opens up with tight spreads. Certainly, we can access the market in the back half of the year as well. There's no current plans to do so at present.

[David Simon, executive]

Yes. And I would just say, look, we got $11 billion of liquidity. So obviously a lower interest rate environment does increase our earnings potential. There's all sorts of [ stats ] associated with the lower interest rate environment. But by and large, that's beneficial to real estate. So if that's the case, that's going to be better than what we planned initially for this year and what we're thinking for next year. So that's good news in a nutshell. But again, remember, we're not living mortgage to mortgage, we're a different kind of company. So we don't have the Holy Toledo, to say another word, only [ Toledo ] we can't refinance this mortgage. So anyway, so -- but by and large, as rates go lower, that's better for this company.

[Operator]

Our next question is from Juan Sanabria with BMO Capital Markets.

[Juan Sanabria, analyst]

Just curious on the investment front, you clearly sound more bullish or wanting to invest more capital in [indiscernible]. But just curious about external acquisitions with the statement that you said that you're only going to kind of widen the gap between yourself and others. Would that make you want to wait because there's going to be a better maybe spread down the road between your performance and those of others or not necessarily?

[David Simon, executive]

Well, it's a good question, and that's what I would just say judgment comes into play. I mean we have been as you know, right, if because there was any material we disclosed it. We haven't really done anything external for quite some time. And we're going to just be looking at quality stuff where we can add value that's appropriately priced. And up until this point, frankly, we haven't found. So that doesn't mean that we're discouraged but we'll keep doing that because that is an element of what this company is good at. And we would like to add quality where we could add value at the right fronts. And if it's not at the right price, or if it's not at the right quality, there's just nothing there for us to do. We're not -- we're basically out of the portfolio business. So as far as I can see, I mean, things change, but I just don't see us buying another big portfolio that we'd have to slap off a handful of properties. So we're really going to be selective. And -- but again, it's going to be at the right price and if we can't get it at the right price, then we've got plenty to do, and that's -- we'll keep our liquidity and keep doing what we're doing.

[Operator]

Our next question is from Ronald Kamden with Morgan Stanley.

[Ronald Kamdem, analyst]

That was just to you, David, as well. Just a quick one for me. Just -- could we double click on some of the strength that you talked about in the portfolio maybe breaking it down between maybe Malls versus outlets or some of the tourist centers as well would be helpful.

[David Simon, executive]

Well, Ron, I think you're seeing broad-based demand across all of our platforms. So it's difficult to kind of give you an individual kind of thumbnail to it. But certainly, we see -- we [ overindex ] in our public business generally towards international [indiscernible] very strong for us that's a driving factor kind of in out let business results. But certainly, retailers are doing business across all 3 formats. You're [indiscernible]. So the demand is broad-based from all retailers across all three major platforms of ours at this point [indiscernible].

[Brian McDade, executive]

It's kind of interesting. I just don't think there's like a unique trend. So it's not Florida or Texas, it's not outlets or malls. It's not in closed versus outdoors. It's really very property-specific and I would say that the quality and the good stuff is getting better, and it's almost our traffic, which is a good indicator. It was pretty much across the board. So I said there's no unique unlike coded, where when you came out of COVID, it was Florida kind of the smile states and whatever. I think it's really the -- it's really property specific. And it's not -- so you could have a great property in XYZ city and I'm not so good on an excellent XYZ City [indiscernible] is they're tale of two stores. So I really think it's property specific, and I don't think there's any one particular trend to focus on at least in this quarter. We might have a better sense of it by year-end and see how things shake out, but not right now.

[Operator]

Our next question is from Haendel St. Juste with Mizuho Securities.

[Haendel St. Juste, analyst]

My question tonight is I wanted to go back to the strong and broad-based demand you mentioned you're seeing for space across the portfolio. I was hoping you could provide a bit more color on the size of the backlog of leases that are coming online and maybe some color on the timing of that? And is there also any update you can provide on the 3% or at least 3% domestic NOI growth from last quarter for the core?

[Brian McDade, executive]

It's Brian. As we think about demand, we've got a signed but not open pipeline of about 300 basis points. You heard David talk about mix, and so we are moving some tenants around, so that's not all just additive. There'll be some coming out of the bottom of that for sure. But that's just a further indication of the work that our team is on and demand for space to have 300 basis points time to not open pipeline for us. So really kind of that defines or kind of really gives you a really good sense of the breadth of what's out there for us as far as demand for space.

[Haendel St. Juste, analyst]

The 3% at least [indiscernible]?

[Brian McDade, executive]

[indiscernible] No, we don't update that as we go. We established at the beginning of the year Haendel and try to do our best to exceed that number, which we have thus far.

[Operator]

Our next question is from Vince Tibone with Green Street.

[Vince Tibone, analyst]

How much do you think changes in the stock market impacts consumer spending at the higher end? Just from your experience over the years? Like at what point does stock market volatility really start impacting consumer behavior in consumer sales.

[David Simon, executive]

I think it's more -- that's -- I wish I had an [ outer ] [indiscernible] -- I don't. But I'm sure we could get AI to do something for us. I would -- my history would suggest short-term fluctuations mean absolutely nothing. But over time, [ a down ] market for have 6 or 9 months, you're going to raise in consumer spending. So I do think it's going to have to take the downward trend or the volatility is not going to really impact the consumer in the next short period of time. But if you see it for several months, then I would expect us to see some slowdown in consumer spending. So it does take time, [indiscernible]. And I think that consumer is used to seeing some volatility, and they have some probably built-in gains that they never thought they would have, right.

So when companies get value in Trilliums, I remember when a $50 billion market cap was there and when companies get valued at trillions and that's a lot of retail. I hope those retail investors are smarter enough to sell and then spend the money in our malls. I mean, that would be a good cycle for us, okay? So I think even if these levels were in pretty good shape. If you have kind of a longer downturn, then it's realistic to think that consumer spending is going to be reined in. Offsetting that, obviously, will be low inflation, lower interest rates and you could potentially see a scenario that we dealt with precolor. So it's -- there's a lot of variability out [indiscernible] and -- but I don't think short-term fluctuation is going to have an immediate impact.

[Vince Tibone, analyst]

If I could maybe ask one quick follow-up along those lines. Like just how should we think about the sensitivity of Simon's cash flows to tenant sales? I mean, with all kind of COVID changes. It seems like most of that's unwinded at this point. But kind of just -- yes, is there any guidepost you can share like how much rent or how much of your total revenue rather is made up of over 10 percentage rents? Or just how much volatility is there on your business from -- if tenant sales were to [ break ]?

[David Simon, executive]

Yes. Look, Brian may have a number. I would just say, big picture, a lot less coming out of COVID but higher probably than [indiscernible]. And so I don't know what percent that is. Brian, if you don't, we'll -- we could probably give that number to you. But it's certainly a lot less than when we started in [indiscernible] but higher than probably pre-COVID.

[Operator]

Our next question is from Greg McGinniss with Scotiabank.

[Greg McGinniss, analyst]

For my question.

[Unknown Executive]

How long are you going to be?

[Greg McGinniss, analyst]

Do you really want me to share that?

[Brian McDade, executive]

No.

[Greg McGinniss, analyst]

So we noticed that the overall same-store NOI growth this quarter was healthy but largely driven by the consolidated portfolio. We had international NOI was down 1% year-over-year. JV revenues down about 4% versus last year. Is there anything in particular that's impacting the international and JV assets this quarter? And do you expect to see those return to year-over-year growth in the back half?

[Brian McDade, executive]

Greg from an international perspective, Greg, last year, we did recognize a onetime performance fee in our [ McCarten ] [indiscernible] business to sort of third-party managed capital there. So that did not repeat this year. So that's why you see a decline in that line item. That will normalize itself just by sheer operation going forward.

[David Simon, executive]

I would just say our international assets, both in Asia and in Europe are pretty much on plan, if not a little bit better. So [indiscernible], as you know, reported last week to better results. And they're obviously nicely positioned going forward. And Europe and Asia is -- I mean, there's some movements in the different countries. Japan have an extraordinary growth because of a couple of other markets flat. But generally speaking, international that's got good [indiscernible] and as Brian mentioned, good comp NOI growth this year and pretty much on budget.

[Operator]

Our next question is from Floris Van Dijkum with Compass Point.

[Floris Gerbrand van Dijkum, analyst]

Question on value retail. I know you guys own a stake in that. It's sold at an incredibly low cap rates to [ Catterton ], who I think is the investment arm of [ LVMH ]. Could you maybe talk about maybe -- and I think that's -- it's a different market, obviously. But if you could talk about the cap rate environment in Europe versus here and maybe also the long-term nature of some of these big luxury brands? And do you see them putting money to work at those kinds of cap rates? I mean I guess they have already on Fifth Avenue, but in the mall business as well in the U.S. in your view?

[David Simon, executive]

Let me try to unpack that a little, okay? So [indiscernible] -- I would say, first of all, [indiscernible] very smart investors. And value retail unique structure. So I don't think you can look through their investment that was at a significant discount to NAV to get to a cap rate without really having intimate inside knowledge, which you and I don't have, okay. but they're very smart investors. And I don't think this is a -- so that's the first point I'd like to make just on that question.

Second is, I think, again, it depends on what brand you're talking about, whether it's luxury or higher end or whatever, a better, moderate every retailer is different. Everyone is looking to increase their sales and every brand is different. So you cannot paint the luxury investor by one broad stroke. So -- and even within some of the larger groups, their brands are different. You may have one brand growing, one, shrinking, what have you. I don't expect -- and again, [indiscernible] is also owned by the principals of Canada, so it's not just the group. I don't think there is a trend for them to suddenly invest, got some money in retail real estate, but I could be wrong. And I think it really depends on each brand and what their strategy is.

[Floris Gerbrand van Dijkum, analyst]

And if I may follow up, I mean, are you having -- how are your discussions going with your institutional partners here in the U.S. in the mall business? Are they are those partners happy? And would you -- are there opportunities for you to maybe buy some of them out? Or are they pretty comfortable owning some of those top malls that you typically JV with them?

[David Simon, executive]

Well, I would say overall, we hope in our relationships with our institutional partners is excellent. And again, it's there is very hard to paint a broad brush. I would say, by and large, most are very complementary, very happy to be our partner there's always an asset here or there that may not fit with them long term. But I would say, generally, it's kind of business as usual with our institutional investors.

[Operator]

Our next question is from Linda Tsai with Jefferies.

[Linda Yu Tsai, analyst]

On the 300 basis points of signed but not occupied, what does that represent in dollars? What's the timing of that coming online? And would you expect this to compress going into next year?

[David Simon, executive]

Linda, most of that's going to be back-end weighted to -- there'll be a little bit this year. Most of it will really manifest itself next year, just even where we are in the year. and how retailers traditionally position their store fleet to get most of it opened before back to school holidays. So most of it is going to be back end weighted for next year or front-end weighted for nature, excuse me.

[Linda Yu Tsai, analyst]

And would this sign but not occupied be down year-on-year at the end of next year from where you sit today?

[Brian McDade, executive]

It's really difficult to predict what's going to happen 12 months from now so -- it is what it is right now. Ultimately, as we continue to kind of move through -- we've seen some consistency in that number and in some increase, right? When you're talking about it is about 200 basis points a year ago. So you see an increase over the past 12 months to get to 300 basis points today.

[Linda Yu Tsai, analyst]

And what's that represent in dollars?

[Brian McDade, executive]

I don't have that number in front of me here.

[David Simon, executive]

Yes, that's usually not something that we're not going to really disclose because then [indiscernible] leases up and annualize the number, but it's a big number.

[Operator]

Our next question is from Mike Mueller with JPMorgan.

[Michael Mueller, analyst]

For the question, TRG's year-over-year base rent growth looks like it was over 8% in the second quarter. Can you talk about what's driving that growth?

[David Simon, executive]

It's just a mix of the deals that they're doing at the assets they're doing, Michael. So they're doing some better leasing and they're better assets, and that's really coming through the average rooms for that period of time. not every space is created equal, not every app [indiscernible] created equal. So they're seeing great [ wins ] in the best assets that have the best pricing. And it's not a small portfolio. So you're getting a bigger percentage -- it's a smaller portfolio, a much lower portfolio than ours. So you just see a bigger percentage Jump from it

[Operator]

Our next question is from Ki Bin Kim with Truist Securities.

[Ki Bin Kim, analyst]

So just curious, if there was a consumer downturn, could you discuss how your portfolio might perform today versus a few years ago? I realize the [ tenancy ] might have changed significantly over the years towards less apparel, more services, restaurants or other uses. And trying to look at this from a sales sensitivity standpoint versus maybe a credit sensitivity standpoint? Because I can understand those two things might be different.

[David Simon, executive]

Yes. Sure. I'll take a shot at it. So I mean, historical recessionary times. And again, we're not in that camp just yet. I mean you call me in two months than we might be, but I would say our NOI cash flow tends to flatten out. It's very -- obviously, there's so many variables that go into it. But and I hate still talking about COVID but we really didn't see other recessions, really didn't see cash flow from the properties go down, they flattened. I would think not knowing exactly if and what kind of recession it is and how hard and how deep and all that other stuff, it would be hard to give you a number other than to say history would indicate our cash flow was relatively flat. We weathered pretty nicely because what happens is [indiscernible] items trying to go on the back burner and the stuff that we saw in our properties hence to maintain itself. So that would be the best guess at this point, but it is almost impossible without kind of knowing exactly what kind of market that we're in. But again, we're not in that camp yet and we might be later on in the year or whenever. But I would think our cash flows would be relatively flat, assuming it's just -- it's hard to say what a typical recession is anymore but I would say that's probably the best guess at this point.

[Operator]

Our next question is from Caitlin Burrows with Goldman Sachs.

[Caitlin Burrows, analyst]

This is a very efficient call. I guess maybe on retailer bankruptcies, Express and [ Route 21 ] were retailer bankruptcies of 2024, and I'm guessing you have had exposure from a rent perspective, two additional smaller ones also that maybe aren't as obvious. So could you comment on how the outcomes of the 2024 bankruptcies on Simon's financials have ended up versus your expectations and then give a broader update on the current watch list and going forward.

[David Simon, executive]

Well, I'll just say in Brian's remarks, we definitely have a decent impact from the retail restructurings. I mean also, we have a little lower lease income a little lower of land sales than we had budgeted. But if you put those 3 categories together, it's about $0.15 that we had planned on being there that aren't there this year. So obviously, we factored in the Express restructurings and [indiscernible] and so on. So those numbers are reflective of our new guidance it doesn't reflect there's a material new one coming up, but we don't -- we haven't -- we don't know of anyone that's on the road. So Brian, you can add whatever you want to add?

[Richard Hill, analyst]

Yes. Watchlist continues to be relatively flat, that those things that have happened, we had a thought that they would and it planned to head. We don't really see much on the horizon at this point. No new additions to the Watchlist at this point in [indiscernible].

[Caitlin Burrows, analyst]

And then maybe one more, if I could. Just the contribution to the portfolio from the retailers. I think your latest was for flattish contribution in '24. So just wondering if there was any update to that and maybe like your visibility, your confidence in the back half of the year?

[David Simon, executive]

Well, look, I think we continue to work through it. It's -- if you look at that whole PennEast, [indiscernible], RGG, Jamestown, we basically have around $200 million plus or minus EBITDA in that kind of [ OPI ] bucket now that ABG is out. And it will be plus or minus a couple of cents here or there. So -- because again, we have accounting, we've got lots of depreciation, you don't add that back. And the brands within [ Spark ], the lower income consumer continue to fight through a tough market for that consumer. So there's not a lot of new news other than the team had Sparks working very hard. The new stuff that they're buying is working but it continues to be a very competitive marketplace.

I think this wraps it up. Let me just say to everybody, thank you. I got a lot of well wishes during this tough time for me, and I'm working at it. And appreciate all your support and we'll talk in the near future. Thank you.

[Operator]

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.