Q4 2024 Earnings Call Transcript

Greetings and welcome to the Simon Property Group Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tom Ward. Thank you. You may begin.

Thank you, Matt, and thank you all for joining us this evening. Presenting on today's call are David Simon, Chairman, Chief Executive Officer and President; Brian McDade, Chief Financial Officer; and Adam Reuille, Chief Accounting Officer. A quick reminder that statements made during this call may be deemed forward-looking statements within the meaning of the Safe Harbor of the Private Securities Litigation Reform Act of 1995 and actual results may differ materially due to a variety of risks, uncertainties, and other factors. We refer you to today's press release and our SEC filings for a detailed discussion of the risk factors relating to those forward-looking statements.

Please note that this call includes information that may be accurate only as of today's date. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included within the press release and the supplemental information in today's Form 8-K filing. Both the press release and the supplemental information are available on our IR website at investors.simon.com. Our conference call this evening will be limited to one hour.

For those of you 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 am pleased to introduce David Simon.

Good evening. I'm pleased with our financial and operational results in the fourth quarter, concluding an exceptional year for our company. We reported record total funds from operation of $4.9 billion or $12.99 per share. We generated $4.6 billion in real estate FFO or $12.24 per share, which was growth of 3.9% year-over-year.

We returned a record of more than $3 billion to shareholders in cash dividends and now we have paid approximately $45 billion to shareholders in dividends over our history as a public company. We saw record leasing and retail sales volume and occupancy gains for the year. We completed last week the acquisition of the mall, two well-known luxury outlet centers in Italy from Kering. We look forward to adding these high-quality luxury assets into our global portfolio while continuing to build upon their success.

We opened a new fully leased premium outlet in Tulsa, Oklahoma and we completed 16 significant redevelopment projects during the year. Development, redevelopment opportunities are growing within our portfolio. We delevered our A-rated balance sheet providing additional capacity and flexibility to fund future growth. I'm now going to turn it over to Brian, who will cover our fourth quarter results in more detail and provide our outlook for 2025.

Thank you, David. Real estate FFO was $3.35 per share in the fourth quarter compared to $3.23 in the prior year, 3.7% growth. Domestic and international operations had a very good quarter and contributed $0.18 of growth. During the quarter, we sold assets that resulted in a tax benefit, which partially offset a prior tax expense from our ABG sale and essentially offset a write-off of pre-development costs associated with a joint venture development project in California.

Leasing momentum continued across the portfolio. We signed more than 1,500 leases for 6.1 million square feet in the quarter. For the year, we signed a record 5,500 leases for more than 21 million square feet. Approximately 25% of our leasing activity for the year were new deals.

Malls and Outlet occupancy at the end of the fourth quarter was 96.5%, an increase of 70 basis points compared to the prior year. Our year-end occupancy is the highest level over the last eight years. The Mills occupancy was 98.8%, an increase of 1% and is at a record level. Average base minimum rent for the Malls and Outlets increased 2.5% year-over-year and the Mills increased 4.3%.

Retailer sales per square foot was $739 for the year. Strong revenue growth across our businesses, combined with expense discipline resulted in a 100 basis point increase year-over-year in our industry leading operating margin. Our occupancy cost at the end of the year was 13%. Domestic NOI increased 4.4% year-over-year for the quarter and 4.7% for the year.

Portfolio NOI, which includes our international properties at a constant currency grew 4.5% for the quarter and 4.6% for the year. Fourth quarter funds from operation were $1.39 billion or $3.68 per share compared to $1.38 billion or $3.69 per share last year. Fourth quarter results include $0.20 per share of non-cash after-tax gain from the combination of JCPenney and SPARC Group. The mark-to-market fair-value of Klepierre's exchangeable bonds increased year-over-year, which offset a lower contribution from OPI operations.

As a reminder, the prior year results include $0.33 per share in gain from the sale of part of our interest in ABG last year. Turning to new development and redevelopment. This year, we will open our first premium outlets in Jakarta, Indonesia in March and expect to begin construction on four to five mixed use projects throughout the year. We expect to fund these redevelopments and mixed use projects with our internally generated cash flow of over $1.5 billion after our dividend payments.

Other platform investments, JCPenney and SPARC Group combined to form a portfolio of iconic retailer banners called Catalyst brands. Catalyst brings together SPARC's brands, Aeropostale, Brooks Brothers, Eddie Bauer, Lucky and Nautica with JCPenney in its exclusive private brands. Catalyst sold Reebok in early January and is currently evaluating strategic options for Forever 21. We view the Catalyst transaction as a positive development that will create significant synergies with a solid balance sheet that will enable the company to drive EBITDA growth. Catalyst shareholders include Simon, Brookfield, Authentic Brands Groups and Shein.

Turning to the balance sheet. During 2024, we completed $11 billion in financing activities, including issuing $1 billion in senior notes with a 10 year term and a 4.75% interest rate. We recasted our $3.5 billion revolving credit facility with maturity extended to January of 2030 and no change in pricing or terms and completed over $6 billion of secured loan refinancing and extensions. Lastly, we delevered our balance sheet by approximately $1.5 billion in the year and ended the year at 5.2 times net debt to EBITDA.

Our A-rated balance sheet provides a distinct advantage with more than $10 billion of liquidity at year-end. Additionally, today, relative to our dividend, we announced a dividend of $2.10 per share for the first quarter, a year-over-year increase of 7.7%. The dividend is payable on March 31st. Now moving on to our 2025 guidance.

Our real estate FFO guidance range is $12.40 to $12.65 per share. Our guidance reflects the following assumptions, domestic property NOI growth of at least 3%, increased net interest expense compared to 2024 of between $0.25 to $0.30 per share, reflecting current market interest rates and projected cash balances compared to 2024. Lastly, our diluted share count of approximately 377 million shares and units outstanding, due to the recent Catalyst brands transaction, we will not include Catalyst guidance at this time. We expect there will be significant savings and synergies from the combination that will be coupled with potential restructuring costs.

We expect Catalyst will generate positive EBITDA in fiscal 2025 and roughly breakeven FFO as they work through the combination. With that, thank you. And David and I are now available for your questions.

Great. Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question is from Jeff Spector from Bank of America. Please go ahead.

Great. Thank you. I know you'll get through some of the numbers through some of the other questions. I wanted to focus on some of the initiatives you have to bring people to the mall.

I know you have the Tomorrow Stars, the Meet Me @themall when your traffic was up at malls, premium outlets. Can you talk a little bit more about some of the programs initiatives that you're doing to again bring the shopper to the mall and how did those programs go for the holiday season? Thank you.

Well, listen, I think we're leaders in this area. Our national advertising campaign is all about talking about how it's fun to go to the mall and hang out just like in the 80s and 90s we had a very good reception to it. We rebranded Simon Premium Outlets to ShopSimon. We're in the midst of creating our loyalty program.

So and then obviously we've got events, thousands of events that drive traffic through the year, whether it's breast cancer awareness programs, Valentine's Day, basically every major event that occurs at within the US we try to drive an event around that Easter down the road. So I couldn't be prouder of our marketing efforts. They're very digital, they're very fun, they use new media in a lot of ways. And I just expect more and more.

And more importantly, we're seeing return on investment. And we've got the data to prove that. And not that our peer group is wide and deep, but to the extent that it is, there's nobody doing more when it comes to data, digital comments, commerce with a ShopSimon, marketing, events you put it all together where leaps and bounds compared to what else is out there.

Thank you.

Next question is from Steve Sakwa from Evercore ISI. Please go ahead.

Yes, thanks. Good evening. David, you guys obviously had a great year with 21 million square feet of leasing, occupancy up. Given where you're sitting on the occupancy side, I'm just curious how the discussions your leasing team are having with the retailers is kind of shifting and maybe talk about the pricing power and how that's kind of returned to the mall for the A's and I guess to tie that into NOI growth, you've talked about greater than 3%, but you certainly beaten 4% for the last like three years in a row.

So what are we missing on the 3% front and maybe just comment on pricing power. Thank you.

Well, let me just talk about 3%. So look, as we did last year, we budget flat sales. Why? I don't really know, but that's what we do.

And when you do that, we come up with a conservative number. To the extent that we have sales growth like we did this year, again, maybe not overall, but the retailers that matter, we generate overage rent, which obviously pops our NOI growth. So I hope we're being conservative. Obviously, there is pretty good animal spirits in the US and its economy.

We expect it to participate in that. And again I don't like the word pricing power. I just think we're able to, we have deep relationships with our retailers and we're able to generate a lot of new business. We see new retailers approach us all the time and new uses all the time, which essentially allows us to and one of the big things to grow -- we're never stuck with the tenant mix that we have.

So what and I think Brian knows the numbers specifically, but I think 25% of our leases this year were new. So what's driving a lot of what we do is we're able to take retailers that aren't doing the sales and replace them with ones that will. And that because they'll do better volume, that drives rent growth. And then I don't call that pricing power.

I just think that's improving our mix and doing what we need to do to drive our business forward. And as I said, I think, last call is we still think we have an opportunity because frankly we've been organizationally very focused on for no better or the A's. We do think there is real effort focus growth for us in the B's where we're investing our dollars. So that's a big program for us in '25 and '26. And just to cap off your question, we still feel, and again, it's hard to predict because there's always downtime, tenant bankruptcies, et cetera.

But we still feel like we have upside in our occupancy. We're still not at our high that was 97.1%, if I remember right in 2014, Tom's shaking his head, yes. So we still some message to my leasing team, if they're listening. I don't mind if they're not, if they're making a lease, but assuming they're listening.

Let's get up to a record high in 2014 and then we'll take a deep breath, but we won't tell that.

Next question is from Michael Goldsmith from UBS. Please go ahead.

Good evening. Thanks a lot for taking my question. Maybe just following off the last one, right, the NOI expectation dropped from 4% last year and for the last several years is down to 3%. So bridging the gap between those expectations, right, it sounds like some of that is retail sales, but it sounds like occupancy, there is still upside, but is there the same magnitude of upside?

And then also are you taking into account any sort of tenant bankruptcies or credit reserve in that as well, which is driving that by 100 basis points? Thanks.

Hey, Michael, it's Brian. So I think first, we've historically put out at least 3% at the beginning of every year, including last year and then have subsequently beat that, which we've repeated here. I think you just heard David talk about the overage component, we budgeted , assume sales were flat, so there is a negative componentry mathematically to overage in the subsequent year. You heard us just talk about mix.

And so as we swap out tenants for new tenants, there is downtime specifically associated with our full price business as we build out those stores. Last thing I would mention, you just mentioned bad debt. Our numbers in '25 take into consideration our historical approach to bad debt. We did slightly better than that in 2024, but we've taken an appropriate expectation into '25 relative to our standard approach.

So those are the three major drivers that would get you kind of back to a, from this year's number down to a 3% number for, again, as a baseline starting in '25.

Very helpful. Thank you very much.

Next question is from Craig Mailman from Citi. Please go ahead.

Thanks. It's Nick Joseph here with Craig. David, just want to touch on the potential impact for tariffs. Obviously, the news keeps changing. But just broadly what are you hearing from your retailers? How is it impacting their business and kind of the uncertainty there and the potential impact of the de-minimis exemption going away?

Yeah, first, I don't -- it's interesting just our first hand -- I don't know where every retailer sources their goods. But if you take Catalyst as an example, they only source 20% of their goods with all the brands of about 20 -- in China, okay. So and we talk to Catalysts their view of it is with respect to China that they'll pass some of it on to the consumer, but also hope that the supplier tightens up the cost of goods sold. So many, many retailers have moved a lot of production out of China over the last several years.

And the good news is where we had kind of the most exposure was shoes, which Reebok would have been more exposed. But as you know, we disposed of the Reebok operating business in January. So no one is really, honestly, it hasn't affected by our day-to-day decision making and it's relatively reduced amount for the retailers. What's really going to be helpful to the American retailers and the non-Chinese retailers is to get rid of the de-minimis rule, which basically exempts tariffs if you send a package over $800 to a customer, that's not a level playing field.

That causes retailers to pay more that ship in bulk and it's given real benefits to someone like the [indiscernible] where they've shipped purposely under the $800. But Congress is taking it up. I know the President is taking it up and that will absolutely be if enacted will give a real shot in the arm to retailers that don't purposely, don't purposely try to send their goods to get under the $800 limitation, not only to say it's also more green, it saves packaging costs, et cetera. It's good for our country and I hope Congress and/or the President enact it. That to me is more material than any tariffs that are being talked about.

That's very helpful. Thank you.

Our next question is from Floris van Dijkum from Compass Point. Please go ahead.

Hey, thanks for taking my question. Good to hear your voice, David. A couple of questions, but I guess I'm going to focus on your latest acquisition in Italy. I note that Kering just snuck into your top 10 list this past quarter prior to the acquisition.

I'm curious if you can talk about that acquisition, the returns that you expect to achieve and how you might be able to manage those assets going forward? And also what would Kering's percentage have been? Had they been included? I guess I know that your top 10 is domestic only, but how much of an impact would that have on the, if you were to include Kering's exposure in Europe as well?

Well, on that particular point, you'll see that in our next supplement. So it will go up, but you'll see that in our next supplement. Look, I would say, we're under confidentiality agreement on the details other than the price. I will tell you we've been very, as you know, very selective on the acquisitions and we're only buying top stuff at the right price.

This follows 100% of that strategy. So it's top stuff at the right price. Kering will remain a long-term tenant in that. They have a very -- they've had historically a very competent group that ran it for them, obviously because they're not that's not their main business as you know.

We've taken over that team, we'll help them with strategic guidance and we think there's upside in the business. We think it's NAV accretive for us. We also think it's earnings accretive for us. So it again is a something we wanted to do years and years ago, but they weren't ready to do it.

We're extremely excited about doing it, the location, Italy's, in a renaissance so it's got one of the positive growth in the EU. And this is these are the kind of deals we want to do buy it at the right price, it's accretive to NAV, accretive to earnings, but it's also high quality with the right retailers. And we couldn't have done a -- we couldn't have picked a better asset in terms of this.

Thanks, David.

Thank you, Floris.

Next question is from Greg McGinniss from Scotiabank. Please go ahead.

Hey, good evening. David, following up on your comment regarding the focus on B Mall investments in 2025, '26, are you able to talk about the types of investments that you make in those malls, whether it differs from how you would approach investing in an A Mall? And then any detail on the magnitude of those investments and expected return? Thanks.

I'll just be very generic Brian can lay it out for you later. But to me it's a whole combination of things. These are important assets in the communities. We've been focused on the bigger assets historically.

So it's a combination of adding boxes, updating the look, feel of the place, restaurants, tenants, everyone changes a little bit differently. But I'll just take Smith Haven as an example. We're going to -- I got to be careful because I don't know if I can announce it even though the lease is signed. So I think an announcement is coming.

The business in basically Eastern Long Island where we're going to update, renovate the property, add a great retailer in a huge box. We just added Primark. Hospital just opened up their one of their health facilities and that will probably be about a 12% return and over the next couple of years and it will be a renovated, rejuvenated asset that because of all the progress we've made in the bigger ones, we're able to kind of reenergize our focus on an asset like that. But there the list of those is long.

So Brian can go through it, but that's just one kind of jumps to top of mind and to my team I'm supposed to see a press release on that, but I haven't seen it so please move that along.

Thank you.

I'm sorry. Next question is from Alexander Goldfarb from Piper Sandler. Please go ahead.

Hey, good evening, David. Good to hear you. And I'm sure the people out of Smithtown will appreciate the dollar spend. A question on your guidance for '25. Obviously, very good versus expectations despite the headwinds on the interest expense that Brian laid out.

So my question is, is this back to sort of the old Simon days pre-pandemic where you guys just had strong internal growth that was accelerating or is this more about removing OPI drag from the future? I'm just trying to understand if this is just all the side, but not yet leases taking effect or if truly the underlying portfolio is accelerating and we're going back to where you guys used to be pre-pandemic when the core portfolio would just -- was really just humming along?

Well, the $12.40 to $12.65 excludes Catalyst. The other investments in OPI are small. So they're -- and again they're neither FFO is probably the wrong way to look at those investments, but they run through FFO anyway because they're one's an asset management company and one's an e-commerce marketplace and an e-commerce retailer. And so FFO is the least important metric on those, but they run through our numbers.

So Catalyst is outside of that number. And I don't like the word old, Alex. But, yes, no, we're growing the portfolio. We said at least 3%, I think, we've said at least 3% last two years, maybe three, I don't remember three years, Brian saying.

So hopefully, we can beat that and that's basically all the stuff that leads to that, which is leasing, focused operational margins, events, Simon Brand Ventures replacing boxes, restaurants, all of the basics and we still see that. I think we've had a pretty good run, forget the big juice that we got back from, getting back to business after we were unreasonably shut down by various state governments, but we've been clipping along 4% plus even though we guided to 3% and let's see how this year transpires, but we've got a lot going for us. And the biggest of which is great team, leasings focused.

We feel that there's upside in the portfolio across the board, but primarily in our historical bread and butter properties. We're going to do smart deals. We're prudent with a hell of a balance sheet and I think and we're lease, lease, lease. I think it's not overly complicated.

And then Catalyst well it's obviously a big six months as they go through it and we'll have a better sense of kind of it will be positive EBITDA for sure, we'll have better idea of FFO as the year progresses. But just to be clear, it's not in our number as of what we've guided to in the $12.40 to $12.65.

Okay. Good to see the magic.

Thank you.

Our next question is from Juan Sanabria from BMO Capital Markets. Please go ahead.

Hi. Great to hear your voice, David, as well. Just a question on the leasing. It looks like about 5% is still month-to month.

I think that's still kind of above where you were pre-COVID in 2019. So just curious on how you think that will evolve over time and is just like a second or part B of a question. How has the SNO pipeline changed if at all over time? And could you just give us where it is as of year-end please?

Hey, Juan, it's Brian. SNO at the year-end was about 250 basis points as we brought occupancy on in the fourth quarter and you saw that in the numbers. Month-to-month will as we move leases through our leasing process, ultimately, not everything gets signed at the same time. So we put that into that category.

Nothing there. We're in the process of renewals in year-end leasing. And so ultimately we would expect that number to come down throughout the year.

I just would say we're slightly for the life of me, I don't understand why it takes so long. But put that aside, we do get our leases signed up and we are slightly ahead of where we were last year on our renewals. Inside, I should say, but we've got commitment on a lot of sure.

Next question is from Vince Tibone from Green Street. Please go ahead.

Hi. Good evening. I have a few questions related to the mixed use projects you mentioned earlier. So what is the expected pro-rata spend on the four to five mixed use projects to break ground in '25?

And also like what's the common structure? Are you doing this primarily on your own balance sheet or using joint venture partners the non-retail components? And then also is it mostly residential or like where are some of the other non-retail property types in there? Sorry for couple of questions.

Yes. I'm sorry, I interrupted you. So it will be around $400 million to $500 million. And again we are -- when I look at the ones that we're expecting to start this year, they're all JVs and they will run from residential to a couple of hotels to office.

And just to give you a sense what's in that category. We expect to start a hotel in Roosevelt Field. A big residential project in Brea, office at Clearfork and we're expanding a hotel at The Domain in Austin, Texas. Those are all pretty much planned for.

I would expect this to add to that this year. As you know we've got Northgate under construction. We are going to somewhat accelerate if we can anything we're planning in California. I am very nervous about construction costs there given the horrific events in Southern Cal.

So we're looking at a couple of projects there that we might push before, before what's going on there, but I would expect us to add more to the pipeline, but those are kind of the ones that were pretty much, so got shovel on the ground and went over, but those are all pretty much baked in the cake. And in this case, they all happen to be JVs, but that could change.

No, that's really helpful. If I can maybe squee in one more clarification. When you say joint ventures like is Simon typically like a 10% or 20% partner in the non-retail portion or are you an 80% owner of the non-retail? Just trying to get a sense of appetite for non-retail?

Yes. That's usually 50-50.

Yes. Great. Thank you.

Okay. No problem. Thank you.

Next question is from Mike Mueller from JPMorgan. Please go ahead.

Yes, hi. I know you can't talk about the carrying pricing, but what's your sense as to how pricing on a comparable quality US assets would compare today. Do you think it would be similar stronger or weaker?

I missed the question. So can you say one more? I didn't understand. Can you reframe?

Yes. So, yes, I was saying on the Italy purchase, we know you can't talk about the cap rate and the economics. But just curious as a hypothetical, if you have something comparable quality in the US, how would you imagine the pricing would compare to what you were in for in Italy? Do you think it would be stronger, higher cap rate, lower cap rate, something similar?

Just curious of the thoughts there.

It's a good question and I'm trying to think if I can answer it. I'll try to be artful. I would say let me do a macro, a macro make a macro statement about is what usually macro or the even though properties are powerful and comparable. They'll tend to have higher cap rates than they would to the US and obviously that calculus is important as to how we think about things.

Got it. Okay.

How was that?

That was good. I think you pointed in the direction. There you go. I appreciate it. Thank you.

Next question is from Caitlin Burrows from Goldman Sachs. Please go ahead.

Hi, everyone. Maybe just another question on kind of acquisitions or capital allocation generally, but it sounds like you were targeting the Kering acquisition for a while and I imagine there are many other deals that you've assessed over the past couple of years. So I was wondering if you could talk about the rest of the acquisition properties that might be out there that could be attractive to you and how you're balancing perhaps buying those versus your stock versus more redevelopment versus increasing the dividend, realizing that you're kind of doing a little bit of all of that.

Yes, listen, I would say, Caitlin that we're not, there's no big deal that is on the drawing board. So we're still interested in few high-quality transactions, we're working on them. There's no guarantee. But I think since there's no big deal, we're going to do it all and that's kind of my philosophy right now.

So we may if there were a big deal to do, you can define big deal, but several billion dollars, billions of dollars, let's say, not then we might have to readjust our thinking, but I think we're going to, the mindset right now is we can do it all. Remember, we delevered, and so we're still working on a couple of high-quality transactions, but they're not like they're not going to tip the scales from a leverage or financial consequence or capacity point of view. And as you know, development, redevelopment is a three-year product, just you build a house, you buy a house, it's one thing you need to build it, you got three years to stroke the check every year.

So for so or every month and unless you have a really nice contractor. So honestly, I think, we're going to do it all, redevelop. We don't mind buying our stock back. And obviously subject to market conditions, we have the capacity to do so.

And then I think redevelopment, development, we announced Nashville. We're really excited about that land. It's in the growth corridor, it's on the interstate. Great, great ingress, egress, visibility, terrific long-term 100 acre site.

So we got stuff going on in Asia on development. Nothing really on new development in Europe. So just maybe a couple of things here and there, but we're also looking expanding some of our better assets like a Woodbury or a Toronto Premium Outlet or Desert Hills et cetera. So that stuff is high priority.

So right now obviously things change. But right now we're planning to keep operating the same way we're operating. A little bit of everything.

Sounds like a lot of opportunity. Great. Thanks.

Thank you.

Next question is from Haendel St. Juste from Mizuho. Please go ahead.

Hey, there, good evening. Thanks for taking my question and good to hear you, David. My question, I guess, I wanted to go back a bit more to your plan on investing a bit more on your B assets here. I guess I'm curious how you're able to generate the 12% returns versus, I think the 8% to 9% we've seen in more of your A projects here the last couple of years?

Is it the lower rent basis? Are you seeing, I guess, stronger any sense of stronger demand for space in any of those B Malls? And is 12% more of an anomaly or more than norm for these B Mall investments you're making? Thanks.

Yes, I think the simple thing is right now we have little to no income. But when we always give you a number on return, we're always backing out existing income. But in this case, if you have an empty box or empty space, there's no existing income and that really drives kind of the incremental return. That's the biggest element of it.

And they're not all, the 12%, I kind of referred to what we see as Smith Haven, but they're not all that way. But in a lot of cases, it's just empty space or an empty box. And it's income, basically, there's no offset against it because there is no existing retailer or and then it's just the capital we have to put in to do it.

Got it. I appreciate that. And just thinking about that 12%, is that kind of reflective of the incremental risk return or risk premium perhaps for some of these assets? Just curious how that perhaps would?

I think that's a good point, but I would re-characterize it. So let's say there's a, and again, our B Malls are probably some equals better than A Malls. But let's just take a B Mall and where we think the value very simplistically is an eight cap rate, okay? We wouldn't want to invest in that asset at a six return because that would be diluted NAV.

So part of what you're going to see and are seeing is we really look to improve that kind of portfolio was if we can't make NAV accretive investments, we won't do it. So we're better off in that case, just managing the cash flow to the best of our abilities. So I understand your point, I kind of re-characterized it not because of risk, it's not really risk adjusted, it's more what's the value of the asset and will this add to the value of that asset. Follow what I'm saying?

Absolutely. And that's partly what I was getting at. So I appreciate that. Thank you.

Thanks.

Next question is from Linda Tsai from Jefferies. Please go ahead.

Yes, hi. Regarding the comment that you buy only really good stuff after Kering, do you see more opportunities abroad or domestically?

I would say mostly domestic, just because it's got to be really unique, which is what we saw the mall, which is rare. And again, as I mentioned earlier, I think I talked to them, hard to remember, but it was definitely a couple of years pre-COVID. So I just think there is very few jewels like that in Europe that make sense with what we do in Europe, if you understand what I'm saying. So we're not going to buy a mall in Europe, just to have one mall in Europe.

So the outlet business, we view it a little differently. So I would say by, because of that, it's going to be really unique and more the domestic, let's say more domestic.

Thanks. And then how are you feeling about the consumer right now and high versus low end US versus Europe?

Well, I think they're very cautious in Europe. And the US consumer is still I'm still nervous about the lower end consumer. The better to the upper income, I feel pretty confident about that. A lot of whipsaws going on left and right, so it's very hard to predict, but generally still concerned about the lower end pretty bullish on the upper to high end consumer.

Thank you.

The next question is from Ronald Kamdem from Morgan Stanley. Please go-ahead.

Great. Hey, if we could just go back to sort of the strong performance last year. Wondering if we could dig in a little bit between sort of the outlets and the mall business, any sort of call out what drove the performance? Is it traffic?

Is it higher ticket prices so on and so forth? And the second part of the question is really, are you seeing any impact from the strong dollar on tourist centers? Thanks.

So, Ron, it's Brian. There wasn't a big bifurcation kind of between asset classes. I think all three platforms performed exceedingly well. You did see the outlet in the mills, which generally skew a little bit more value oriented to outperform a little bit into the fourth quarter.

It wasn't really kind of an anomaly just kind of expected performance. I mean, we've not seen any real time impact yet to the tourist oriented centers, but we're February 4th. So still early in the year, but we would expect to see or if we continue to see dollar strength, can see some impact over the course of the year, certainly in our translations of our foreign earnings.

Thanks so much.

And I would just say when we talk about reenergizing on the assets. Don't just think malls, think outlets, think a few of our mills. So it's a wide portfolio focus, not just when people talk B, they always think malls, but for us it's across our entire domestic portfolio.

Helpful. Thank you.

Thank you.

This concludes the question-and-answer session. I'd like to turn the floor back to David Simon for any closing comments.

Okay. Thank you, everybody and look forward to talking in the future. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.