Simon Property Group Reports Record Occupancy in Q3, Raises Full-Year Outlook
Simon Property Group, the largest mall landlord in the U.S., beat analysts’ expectations once again last quarter.
The Indianapolis-based company raised its full-year outlook during Thursday evening’s third-quarter earnings call, reporting increased revenue and real estate funds from operations (FFO) driven by strong leasing momentum. Higher interest rates, however, weighed on the company’s financial results.
Simon reported $1.8 billion in revenue for the third quarter, up 13.3 percent from the same period last year and 1.3 percent over the prior quarter. The real estate investment trust (REIT)’s property portfolio continued to put up stellar numbers through the year, with shopper traffic growth accelerating for the third consecutive quarter and sales productivity at record levels.
Occupancy at the company’s U.S. malls and premium retail outlets reached 96.5 percent at the end of September, up slightly from 96.4 percent a year earlier. This ties for Simon’s highest combined occupancy level since 2016, according to Brian McDade, Simon’s chief financial officer.
The company reported nearly 1,200 new leases signed over the third quarter spanning more than 4.3 million square feet. Those initial base rents rose 17 percent year-over-year, while tenant allowances declined 10 percent.
“In other words, we’re achieving higher rents while investing less capital per deal,” CEO Eli Simon said, adding that the company’s pipeline of prospective deals is “well ahead” of where it was in the third quarter of 2025.
The earnings call came less than a week after Simon announced its agreement to acquire University Village, a nearly 600,000-square-foot, open-air shopping mall in Seattle near the University of Washington. The deal is expected to close in the fourth quarter.
“We think this will grow well above our average portfolio growth for many years to come, given the quality of the asset and the market,” Simon said.
The announcement followed a September ribbon-cutting ceremony in Seattle at Simon’s first-ever multifamily development, the District at Northgate.
This fall, the REIT also completed the $32.5 million purchase of roughly 100 acres of land in Nashville, Nashville Business Journal reported. The future luxury mixed-use development, dubbed Sagefield, will break ground next week, Simon said.
Simons’ consolidated net income for the third quarter was $565 million — a slight decline over the previous quarter, and a sharp 20 percent dip year-over-year. The results were weighted down by paper losses on investments that fell in value, as well as a higher quarterly interest expense, which climbed from $243 million to $288 million over the year. Those losses also pulled FFO down to $3.09 per diluted share from $3.25 a year earlier, though real estate FFO rose 4.7 percent to $3.37 per diluted share, or $1.28 billion.
On the current rate environment’s impact on new developments, Simon said his company’s healthy books and tenant demand allows them to “still do it when others can’t,” and increases the value of the company’s real estate.
“As rates are high, we’re incredibly disciplined on what we do,” Simon said. “If they go down, we’re incredibly disciplined on what we do. We look at every dollar. We look at every tenant. We look at every basis point. But where we are today, we have not really changed our viewpoint on this development pipeline.”
Simon’s domestic property net operating income (NOI) rose 6.6 percent and portfolio NOI grew 6.7 percent. The CEO added that the company’s restaurants, in particular, had their best quarter in three years, despite flat growth in the sector.
In response to the three-month results, company leadership raised Simon’s full-year outlook for its annual real estate FFO by 10 cents, to between $13.30 to $13.40 per share. Simon ended the quarter with approximately $9 billion of liquidity, including $1.3 billion of cash and $7.7 billion of available credit.
Emily Davis can be reached at edavis@commercialobserver.com.
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