TRANSFORMING RETAIL THROUGH INNOVATION - BRIAN J. MCDADE EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER & TREASURER - Seeking Alpha
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TRANSFORMING RETAIL THROUGH INNOVATION BRIAN J. MCDADE EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER & TREASURER
SAFE HARBOR
FOR FORWARD LOOKING STATEMENTS
Statements in this presentation that are not historical may be deemed “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Although the Company believes that the expectations reflected in any forward-looking statements are based on
reasonable assumptions, it can give no assurance that these expectations will be attained and it is possible that actual results may differ materially
from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Such factors include, but are not limited to:
changes in economic and market conditions that adversely affect the general retail environment; the potential loss of anchor stores or major tenants;
the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; decreases in market rental rates; the intensely competitive
market environment in the retail industry; the inability to lease newly developed properties and renew leases and relet space at existing properties on
favorable terms; risks related to international activities, including, without limitation, the impact of the United Kingdom’s vote to leave the European
Union; changes to applicable laws or regulations or the interpretation thereof; risks associated with the acquisition, development, redevelopment,
expansion, leasing and management of properties; general risks related to real estate investments, including the illiquidity of real estate investments;
the impact of our substantial indebtedness on our future operations; any disruption in the financial markets that adversely affects our ability to
access capital for growth and satisfy our ongoing debt service requirements; any change in our credit rating; changes in market rates of interest
and foreign exchange rates for foreign currencies; changes in the value of our investments in foreign entities; our ability to hedge interest rate and
currency risk; our continued ability to maintain our status as a REIT; changes in tax laws or regulations that result in adverse tax consequences; risks
relating to our joint venture properties; environmental liabilities; changes in insurance costs, the availability of comprehensive insurance coverage;
security breaches that could compromise our information technology or infrastructure; natural disasters; the potential for terrorist activities; and the
loss of key management personnel. The Company discusses these and other risks and uncertainties under the heading “Risk Factors” in its annual and
quarterly periodic reports filed with the SEC. The Company may update that discussion in subsequent other periodic reports, but, except as required
by law, the Company undertakes no duty or obligation to update or revise these forward‑looking statements, whether as a result of new information,
future developments, or otherwise.
This presentation includes the non-GAAP measures of funds from operations, or FFO, and net operating income, or NOI. Industry practice is to
evaluate real estate properties in part based upon FFO. The Company believes that FFO and NOI are helpful to investors because they are widely
recognized measures of the performance of real estate investment trusts and provide a relevant basis for comparison among REITs. The Company
also uses these measures internally to measure the operating performance of its portfolio. For information on FFO and NOI, see the Supplemental
Information Package available on our investor relations website at investors.simon.com, under Financials.
The information in this presentation has been included in good faith but is for general informational purposes only. All reasonable care has been taken
to ensure that the information contained herein is not untrue or misleading. It should not be relied on for any specific purpose and no representation
or warranty is given regarding its accuracy or completeness. Neither the Company, its shareholders, its officers or employees nor any other person
shall be liable for any loss, damage or expense arising out of any access to or use of this presentation. Information may be accurate only as of
December 31, 2019 or such other dates as may be noted in the presentation.
2
AT THE EPICENTER OF COMMERCE AND COMMUNITY
CREATING THE
MIXED-USE DESTINATIONS CURATING CREATING AN DRIVING IMPACTING
OF THE FUTURE CREATIVE RETAIL INTERACTIVE FUTURE TRAFFIC AND SALES SUSTAINABLY
The New Live, Work, Play, World’s Leading Industry leading programs Innovative a dvertising and Creating a positive
Stay, Shop Experience Collection of Brands that provide a seamless programming that resonates economic, social, and
shopping experience with consumers and provides environmental impact
results for our retailers
$8B 3,000+ 3,000 $5B
Investment over Past 8 Years Market Leaders Retailer Designers on 4.6B in Annual Tax Contributions
Shoppremiumoutlets.com Advertising Impressions
$5B 95% 1,200+ 182M $7.2M
Investment over Next 5 Years Occupancy over Last 8 Years Interactive Directories Website Visits Raised for Charity
3
SIMON
INVESTMENT MERITS
A/A2 Credit Rating >$32B Distributed Dividends
Since 1993
>$80B Global Retailer Sales
96% of Properties in Top
10 Largest Economies
>$900PSF 8X
91 U.S. Malls, Named Fortune Magazine’s Most
Premium Admired Real Estate Company
Outlets &
The Mills
Average
Sales PSF
4
UNPARALLELED
GLOBAL QUALITY
— H
ighly productive centers of national and
international renown are proven locations for
successful retailers wanting to grow their business
— U
.S. reach serves each of the Top 10 markets in the
U.S. as well as the largest tourist markets, including
Las Vegas, Orlando, and Honolulu
— International presence with premier properties
generating more than $20 billion in retailer sales
91 U.S. MALLS, PREMIUM OUTLETS & THE MILLS
>$900 PSF
>70%
NOI
5
CURATING
CREATIVE RETAIL
Simon is a brand powerhouse. Our portfolio features
3,000+ market leaders such as Apple, Sephora, and
lululemon, as well as the world’s leading collection
of luxury and international brands like Louis Vuitton,
Dior, Chanel, and Balenciaga. We are also introducing
new Digital First concepts to our millions of customers,
including Warby Parker, Peloton, Casper, and UNTUCKit,
with over 40 more brands in the pipeline.
HIGHLIGHTS
95%+
Occupancy for the Past 8 Years
1,200+
New-to-Market Brands and Unique
Retailer Leases Signed in Last 12 Months
6
SIMON’S
STRATEGIC VISION
STAY
7
CREATING THE
MIXED-USE DESTINATIONS KING OF PRUSSIA –
KING OF PRUSSIA (PHILADELPHIA), PA
OF THE FUTURE
$8B Portfolio Investment
Over Past 8 Years
10
Mixed-Use Projects Completed
Representing 3,000 Units
STONERIDGE SHOPPING CENTER –
25+
PLEASANTON, CA
Redevelopments
Completed in 2019
$5B Portfolio Investment
Over Next 5 Years
4,500+ Residential
Units
THE SHOPS AT CLEARFORK–
FT. WORTH, TX
1M+ Square Feet Commercial
Office Space
1,500+
Hotel
Rooms
8
LIVE. WORK.
PLAY. STAY. SHOP. PHIPPS PLAZA
In our vision to be the epicenter of commerce and
community, Simon is investing in our properties to
become the ultimate live, work, play, stay, and shop
destination in each of our markets. Some of our most
exciting projects feature state-of-the-art residential
opportunities and ultra-modern office and commercial
spaces. Key projects include:
PHIPPS PLAZA NORTHGATE
Undergoing a groundbreaking transformation featuring
a signature Nobu Hotel and Nobu Atlanta restaurant,
a 90,000-square-foot Life Time athletic center, and a
13-story Class A office building.
NORTHGATE
A paradigm for Simon’s 360˚ live, work, play, stay, shop
community model featuring an NHL Seattle corporate
complex, three skating rinks, plus 800,000 square feet
of new Class A office space, 1,200 luxury multifamily
residences, hotels, and dramatic green spaces. BREA MALL
BREA MALL
®
Reimagined as a mixed-use destination, development is
underway to include a Life Time Athletic resort, luxury
residences, great restaurants, and fresh retail brands.
9
BUILDING WORLD-CLASSS
DESTINATION OUTLETS
DENVER PREMIUM OUTLETS
NEW DEVELOPMENTS RECENTLY OPENED:
Premium Outlet Collection Edmonton IA
Edmonton, Canada (5/2018)
Denver Premium Outlets
Denver, Colorado (10/2018)
Queretaro Premium Outlets
Queretaro, Mexico (5/2019)
MALAGA DESIGNER OUTLET
Malaga Designer Outlet
Malaga, Spain (2/2020)
FUTURE DEVELOPMENTS:
Siam Premium Outlets Bangkok
Bangkok, Thailand (4/2020)
West Midlands Designer Outlet
Cannock, England (10/2020)
LOS ANGELES
Tulsa Premium Outlets PREMIUM OUTLETS
Jenks, Oklahoma (5/2021)
Paris-Giverny Designer Outlet
Normandy, France (9/2021)
Los Angeles Premium Outlets
Carson, California (2021)
10
SIAM PREMIUM OUTLETS
BANGKOKSTRATEGIC INVESTMENTS
IN LOCATION-BASED
ENTERTAINMENT
LIFE TIME FITNESS
—Leading healthy lifestyle brand that operates a chain of more
than 145 athletic resort destinations
—One location open with seven planned locations to open soon
SOHO HOUSE
Founded in 1995 as a private members’ club for people working
—
in the creative industries and has grown into a community of like-
minded individuals with more than 20 clubs all over the world, as
well as restaurants, cinemas, and workspaces
PARM
Full-service, casual Italian-American restaurant chain that currently
—
operates four NYC locations—controlled and managed by Major
Food Group, one of the most successful restaurant groups in the
U.S.
ALLIED ESPORTS
A leading esports entertainment company with a global network of
—
dedicated esports properties and content production facilities
—Mission is to connect players, streamers, and fans via integrated
arenas and mobile esports trucks around the world that serve as both
competition battlegrounds and everyday content generation hubs
—Launched The Simon Cup—a national esports tournament
featuring a Fortnite competition
PINSTRIPES
—An experiential dining and entertainment concept featuring Italian-
American cuisine as well as bowling and bocce ball
—One current location with three future locations opening soon
11SHOP PREMIUM OUTLETS AND
RUE GILT GROUPE
—In October 2019, finalized our venture to combine our Shop
Premium Outlets (SPO) marketplace with the highly successful
Rue Gilt Groupe (RGG), creating a new multi-platform dedicated
to digital value shopping.
—RGG is an online flash sales platform delivering premium brands
at great value. Through its two principal businesses, Rue La La
and Gilt, RGG has over 6,000 brands.
—Partnership expands our omnichannel capabilities in collaboration
with a leading digital entrepreneur and the RGG platform.
—Online value shopping represents a tremendous $200 billion
business opportunity, and this partnership will enhance the SPO
platform and accelerate growth.
—Our strong capabilities in the physical outlet space, combined
with RGG’s exceptional e-commerce success, creates a unique
opportunity to drive growth both online and off-line.
—Ability to leverage RGG’s technology stack and team to
accelerate the development and enhancement of SPO (e.g.,
data-science, personalization, curation, and customer experience).
—Our partnership is about growth; the combined online sales from
the three platforms are poised to surpass $1 billion traffic and
sales due to our existing consumer connectivity.
12CONSERVATIVE CAPITAL STRUCTURE PROVIDES
FINANCIAL FLEXIBILITY AND ENHANCES INVESTMENT RETURNS
Simon invests to strengthen its portfolio and return capital to shareholders,
while consistently maintaining a conservative balance sheet
Ability to access capital from multiple sources (secured, unsecured, commercial paper)
A/A2 $1.3B 5.3X
INTEREST 35.8 % $7.1B
>LIQUIDITY
INVESTMENT CASH FLOW NET DEBT/
GRADE RATING EXCESS COVERAGE MKT CAP
RATIO
DEBT TO NOI & INTEREST COVERAGE
7.0X 5.3X 5.5X
5.0X 5.0X 5.1X
5.0X
6.5X 4.5X
6.0X 6.2X 4.5X
6.1X
3.8X 4.0X
5.7X 5.6X 5.6X
3.4X 5.5X
5.4X 5.2X
5.0X 5.1X 3.5X
3.0X 3.1X
2.8X 3.0X
4.0X 2.5X
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
NET DEBT TO NOI INTEREST COVERAGE
13ATTRACTIVE VALUATION AND
RETURNING CAPITAL TO SHAREHOLDERS
Simon is trading at a significant discount relative to its historical multiple range and the S&P 500
and providing a dividend yield significantly greater than the S&P 500 and the 10-Year Treasury
EARNINGS MULTIPLE DIVIDEND YIELD
30X 6%
5.6%
25X 5%
20X 4%
18.4X
15X
12.0X 3%
10X
2% 1.9%
1.8%
5X
1%
0X
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 0%
● SPG ● S&P 500 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
● SPG ● S&P 500 ● 10-Year Treasury
FUNDS RETURNED TO SHAREHOLDERS
($ in billions, except per share amounts) RETURN ON EQUITY
$4.0 $9.00
Dividends $8.30
$7.90 80% 83.2%
$3.5 $8.00
Share Repurchases $7.15
74.3%
Dividends per Share $6.50
$0.4
$0.4 $7.00 70%
$3.0 $6.05 $0.4
$2.9
$0.3
$2.8 $6.00 60%
$5.15 $2.6
$2.5 $0.5
53.0%
$4.65 $2.4 $5.00 50%
$4.10 $2.2 41.0%
$2.0
$3.50 $1.9 $4.00 40% 43.0%
$1.7
$1.5 $2.60
$1.5 $3.00 30% 24.9% 27.7%
$1.2
$1.0 $2.00 20% 13.4%
$0.9 22.5% 22.7%
$0.5 $1.00
10%
$—
$- 0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 14WHY SIMON?
Whether it’s the scale of our properties, from high-end to value
and domestic to international, our top-rated balance sheet in
the industry, or our best-in-class team committed to a long-
term ownership outlook, we’re focused on performance.
Simon’s portfolio is unrivaled and we’re the only developer
who has the financial flexibility to continually transform our
properties to enhance their market position and give customers
what they want, when they want it, and how they want it.
5%
Increase in Sales,
$693
Sales PSF, +185% from
2019 vs 2018 25 Years Ago
91
U.S. Malls, Premium
>$80B
Global Retailer Sales,
Outlets & The Mills Top in Industry
Average >$900 Sales PSF
2B
Shopper Visits
A/A2
Credit Rating
Annually
15INVESTMENT
HIGHLIGHTS
— Premier real estate company uniquely
positioned in North America, Europe, and Asia
— Track record of industry-leading performance,
balance sheet, dividend growth, and
shareholder returns
— High quality portfolio across wide retail
spectrum – from value to luxury
— NOI growth and high occupancy levels driven
by diversified asset type, geography, and
tenant base
— Best-in-class management team
— Reinventing the shopping experience to
connect with today’s consumer in modern
and innovative ways
— Opportunities to invest capital for
accretive returns
— Growing and well-covered dividend
1617
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