Simon Property Group Inc. Q1 FY2021 Earnings Call

Good day and thank you for standing by. Welcome to the First Quarter 2021 Simon Property Group Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Tom Ward, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Lori. Thank you, all, for joining us this evening. Presenting on today's call is David Simon, chairman, chief executive officer, and president. Also on the call are Brian McDade, chief financial officer; and Adam Reuille, chief accounting officer. Before we begin, a quick reminder that statements made during this call may be deemed forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995 and actual results may differ materially due to a variety of risks, uncertainties and other factors. We refer you to today's press release and our SEC filings for a detailed discussion of the risk factors relating to those forward-looking statements. Please note that this call includes information that may be accurate only as of today's date. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included within the press release and the supplemental information in today's Form 8-K filing. Both the press release and the supplemental information are available on our IR website at investors.simon.com. For those who would like to participate in the question-and-answer session, we ask that you please respect that request to limit yourself to one question and one follow-up question, so we might allow everyone the opportunity to ask question and the opportunity to participate. For our prepared remarks, I'm pleased to introduce David Simon.

Good evening. I'm pleased to report that our business has significantly improved after having addressed the impacts from COVID-19, including the restrictive governmental orders that forced us to shut down, as well as reduce our operating capacity. Thankfully, those restrictions are now being lifted. I'm pleased to report our continued improvement in our profitability and cash flow generated for the first quarter. First quarter funds from operations was $934 million or $2.48 per share. FFO increased approximately $150 million or $0.31 per share compared to the fourth quarter of 2020. Our international operations continued to be affected by governmental closure orders and capacity restrictions. In fact, the quarter was negatively impacted by approximately $0.08 per share compared to our expectations given the closures that have occurred internationally. We also recorded additional COVID impacts in the first quarter of approximately $0.07 per share from domestic rent abatements and uncollectible rents. We generated $875 million in cash from operations in the quarter, which was an increase of 18% compared to the prior-year period. We collected over 95% of our net billed rents for the first quarter and our in-line tenant collections are back to pre-COVID levels in the approximate 98% range. Our operating metrics in the period were as follows: mall and outlet occupancy at the end of the first quarter was 90.8%, down 50 basis points compared to the fourth quarter of 2020. This 50 basis point decline for the quarter is approximately 75 basis points less than the average historical seasonal decline from the fourth quarter to the first quarter. Average base rent was $56.07, up 60 basis points year over year. Leasing spreads declined for the trailing 12 months, primarily due to the mix of deals that have closed, and the spread calculation that resulted in an increase to the average closing rate by approximately $8 per square foot for the trailing 12 months. Pricing continues to improve with the average opening rate per square foot for the trailing 12 months of approximately $60 per foot. As you can see in the lease expiration schedule included in our supplemental, our expiring rents for the next few years are less than $60 per square foot. Keep in mind that the opening rate included in our spread calculation does not include any estimates for variable lease income based on sales. In certain circumstances, in addressing tenant COVID negotiations last year, we, in certain cases, agreed to lower our initial base rent in exchange for lower natural sales breakpoints, allowing us to participate in the improved sales performance as the economy recovers. We think that will end up being a very smart move on our behalf. Those deals are included in the average opening rate at the lower base minimum rent and do not include our estimation of what the percentage rent could be, and we believe those contributions in time will add to our cash flow. Leasing momentum has continued across our portfolio. We signed 1,100 leases for approximately 4.4 million square feet, and we have a significant number of leases in our pipeline; our leasing volume in both number of leases and square feet was greater than the volume in each of the first quarter of 2020 and 2019. The improving domestic economic environment and shopper sentiment have increased shopper foot traffic and sales across our portfolio. As I mentioned, increases in traffic for our open-air and suburban centers have been very encouraging and retail sales continue to improve across the portfolio with higher sales volumes in March compared to 2019 levels. We opened West Midlands Designer Outlet, our second outlet in the United Kingdom, in early April. This was behind schedule, as it was supposed to open in the fall of 2020 but was delayed due to COVID restrictions. We're pleased that this has now been lifted and we're now able to open and serve shoppers. During the first quarter, we started construction of our fifth premium outlet in South Korea. We're excited about that opportunity. With respect to our brand and retailer investments, you've seen that we've been able to add significant value. Our global brands within SPARC outperformed their plans in March and April on both sales and gross margin, led by Forever 21 and Aéropostale. For the two months combined, SPARC outperformed the sales plan by more than $135 million and our gross margin plan by more than $75 million. We're also very pleased with the JCPenney early results. They continue to be above our plan. Our company's liquidity position at Penney is strong at $1.2 billion, and its balance sheet is in very good shape with leverage of less than 1.2 times net debt to projected EBITDA. We continue to add new brands to the JCPenney portfolio, and we expect growth to be our focus going forward. Just a quick update on Taubman: we're very pleased with our partnership and the results in the first quarter. Our teams have collectively shared and implemented many best practices and are adding value to the assets. We expect to step up redevelopment plans with mixed-use opportunities throughout their TRG portfolio. Capital markets: we're very active. We completed a $1.5 billion senior note offering at 1.96%, weighted average term of 8.4 years. We also completed a EUR 750 million note at a one and one-eighth percent coupon with a term of 12 years. We used those proceeds to completely repay the $2 billion unsecured term facility associated with the Taubman deal, as well as pay off our $550 million senior notes. We've also refinanced six mortgages for $1.3 billion; our share of which is $589 million at an average interest rate of 3.36%. That market is continuing to improve. At the end of the quarter, with all this activity, we have $8.4 billion of liquidity, consisting of $6.9 billion available on our credit facility; $1.5 billion of cash, including our share of JV cash. A reminder that is net of $500 million of U.S. commercial paper outstanding at quarter end. We paid $1.30 per share in cash in terms of our dividend on April 23. Finally, given our first-quarter results, we are increasing our full-year 2021 FFO guidance from $9.50 to $9.75 per share to $9.70 to $9.80 per share. This is an increase of $0.20 per share at the bottom end of the range and $0.05 at the top end of the range, or a $0.13 increase at midpoint, and that represents a 6.5% to 7.6% growth rate compared to our 2020 results. So in conclusion, we are pleased with the results, encouraged with what we're seeing in terms of sales, traffic and retail demand, and we continue to increase our performance and profitability. Ready for questions.

Our first question is from Rich Hill of Morgan Stanley. Your line is open.

Hey, David, good afternoon. I had a quick question on the guide. Look, we've argued that the guide looks pretty conservative because I think if you assume no NOI growth versus 2020, you can sort of get to the high end of the prior range. And so the revision looks fairly conservative to us. I recognize there was some lease termination benefits in this quarter. So maybe you can just walk us through how you think about the cadence of that guide in 2Q, 3Q and 4Q?

Well, Rich, you can't blame us for being conservative, can you? After what we dealt with for 14 months, we did not—just a couple of things. The lease settlement income was kind of in our plan, one. On the other hand, when we gave our initial guidance, we did not expect the negative results that we saw in Europe, primarily of $0.08. So that hurt us by $0.08. That's still going to underperform given the restrictions for the rest of the year because that lockdown amazingly took a lot longer and lasted a lot longer. So unfortunately, in Europe they're still dealing with COVID. That will have an impact. I would say we—when we gave our initial guidance, we still did have some abatement and some bad debt that affected us of $0.07. We think we may have some further activity there; we don't know. It's pretty much behind us at this point, but we're conservative. We've got Europe. I think the comp NOI in the U.S. we expect to do better than what we initially thought. I hope you're right. I hope we're conservative and I hope we do better than what we're guiding to, but it's been a traumatic time for this company and our folks, and you can't blame us.

Understood. I have one follow-up question. And hopefully, I'm not putting words in your mouth, but I think on the last earnings call, you had talked about total core portfolio, ex-Taubman, being in the 3% to 4% range for 2021. I note that total portfolio was plus 4% in this quarter, including Taubman, if I read it correctly. So how should we think about the total portfolio growth going forward, recognizing you haven't guided? Is that 3% to 4% still accurate, meaning that there should be a pretty significant ramp over the next several quarters?

Let's separate the two. When we talked about our comp, we thought we were going to be in the four-ish range, just comp, excluding Taubman. So to be clear, that's what my intent was when we had our year-end call. We expect to be a little bit above that. We still don't know. Because of COVID and some of the negotiations with retailers, we're betting a little bit more on the comps because of the sales aspect. We would hope to be around 5% on that as we look at it. Taubman we are including based on our plan; they're off to a pretty good start, and that's where you get the portfolio numbers. So the comp NOI should be in the 4% to 5% range, hopefully on the high end of that range. Next year, 2022, we'll just have the TRG portfolio on our comps. Did that help you at all?

It does. I can follow up with Brian and Tom offline on some wonky accounting questions, but that's helpful color. I'll get back in the queue.

I pride myself in being a wonk. So if you're ever bored, you can call me anytime.

Our next question is from Steve Sakwa of Evercore ISI. Your line is open.

Thanks. Good afternoon, David. I was wondering if you could comment a little bit more on leasing momentum. You talked about the 4.4 million square feet done in Q1. Maybe give us a little bit more color on what the pipeline looks like, what types of tenants you are seeing. Is there a focus on food, apparel, entertainment? What are you seeing on leasing today?

Keep my fingers crossed, but we're actually seeing really good demand across the board. Very interestingly, restaurant demand is at a very high level. We're seeing a lot of restaurateurs for some of the fixed space that was vacated who want to come in, retrofit it and get open quicker. We're seeing strong retailers growing their footprints significantly. American Eagle and Urban Outfitters are great examples of companies that have multiple deals in the works. We're probably 80% done on our renewals thus far, and we generally feel pretty good and much better than we felt in a long time. We're seeing a resurgence in brands. For example, Crocs has come back strongly. We're seeing footwear, apparel, and many new brands that want great retail real estate. We're also seeing demand from entrepreneurs, local and regional. So pretty good results are coming that I think you'll start to see in the upcoming quarters.

OK, thanks. That dovetails into my follow-up. When you think about occupancy trend, and I appreciate your comments that the drop sequentially was less than normal seasonally, do you feel occupancy is now at the bottom and will improve throughout this year into next year? And same with leasing spreads — does this mark the bottom on leasing spreads?

On leasing spreads, it's mix driven. During COVID, we did renewals with lower base rents and more aggressive breakpoints; as the mix stabilizes, you should see that effect abate. We expect occupancy to improve versus where we were at the end of last year by year-end. We won't get back to 2019 levels in 2021 — that is more in the 2022–2023 timeframe — but demand is real. We still have some difficult negotiations with certain tenants, and in some cases we've chosen not to take very one-sided deals. If they're not paying what we think is fair, we'd rather sit on the space. That tactical response may keep occupancy upticks from being as robust as some expect, but it's a judgment we think investors will appreciate given our experience.

Great. That's it for me. Thanks.

Our next question is from Caitlin Burrows from Goldman Sachs. Your line is open.

Hi there. Maybe following up on occupancy: lease termination fees were significant in the quarter and you mentioned that was part of your plan. What made you comfortable allowing tenants to move out early and Simon take that termination income rather than keeping them in occupancy?

That's a great question. It's really an art versus science. In some cases the space is very good and we can take the near present value of the lease and the cash now, then lease the space up — effectively getting the benefit of both. We generally didn't take real discounts to NPV; we were thoughtful and ran the math to ensure we were getting a fair deal. Our spaces and malls aren't going anywhere; demand is picking up and in some cases taking the lease termination income and re-leasing the space is the smart move.

OK. On the acquisition front: Simon raised equity late in 2020, some earmarked for property acquisitions. What are you seeing in terms of opportunities and willing sellers, and are you more interested in U.S. or international properties?

We built a great portfolio and don't need acquisitions to run profitably and grow after surviving COVID, but if strategic properties make sense, we're willing buyers. Seller expectations ebb and flow. We're very active with Taubman and see lots of upside in those portfolios as they recover. We're also focused on content investments and off-balance-sheet value creation that can enhance our real estate positioning.

Our next question is from Alexander Goldfarb of Piper Sandler. Your line is open.

Hey, good afternoon, David. Saw the Eddie Bauer news and it looks like you did that in the traditional ABG investment wrapper, not in the SPAC. Can you walk through how things go into the ABG wrapper versus the SPAC? Also, my Page 16 review shows benefits from retail investments starting to come through; curious how much of brand NOI is coming from Simon centers versus non-Simon centers?

We don't break down brand NOI by Simon versus non-Simon centers specifically, but these retailers have broad portfolios and derive profitability from many channels outside our portfolio. On Eddie Bauer: we will partner with ABG to buy the IP. Eddie Bauer is an iconic brand; in 2019 it did about $786 million in sales, and we're acquiring the IP at a fraction of that. SPARC will buy the operating company as a partner with ABG essentially for working capital and will operate the stores. We expect Eddie Bauer to add $30 million to $40 million of EBITDA to SPARC. SPARC is projected to do about $130 million of EBITDA this year. Depreciation impacts FFO so that doesn't flow fully to FFO, but SPARC is performing well, and Eddie Bauer will be a strong addition as we build an outdoor apparel portfolio with brands like Nautica.

Is the SPAC really for things outside retail, like technology or efficiency investments, not retail?

This Eddie Bauer transaction is not in the SPAC. The SPAC is available to do things outside traditional retail, as we've told the market. Eddie Bauer fits into the ABG-SPARC strategy and is a core retail-brands transaction that follows the same successful game plan we've executed with other brand acquisitions.

ESG: there's more talk about efficiencies of physical versus online. Intuitively, bulk shipment to malls might be more efficient than individual home deliveries. What are you doing to highlight environmental benefits of physical retail versus e-commerce to investors and local communities beyond the white paper you did a few years ago?

Physical shopping is unquestionably better for the environment than e-commerce. We've written studies on it and discussed it. Right now, few people are focused on that, partly due to COVID and other priorities. It's our job to get communities and governments to care. There's a compelling case — packaging, delivery, server energy, returns — all add to e-commerce's carbon footprint. We've argued these points for some time and will continue to make the case to local jurisdictions, assessors and government authorities. I'm open to ideas on getting the message out; the merits are clear to me.

Our next question is from Michael Bilerman of Citi. Your line is open.

Great. Good afternoon, David. Wanted to ask about development and redevelopment spending. How do you think about increasing deployment of capital into new assets or existing assets? On Page 25 the expected spend was $430 million, which seems low versus historic levels. Over the last decade you put like $8 billion to work. How should we think about deployment over the next quarters, including projects in Taubman?

With COVID we shut things down and paused certain midstream projects—government orders and uncertainty forced that. The good news is those projects are ready. We're still a bit conservative as we ensure we're through the COVID crisis, but it's a goal to crank projects back up. We've rethought some projects; in some California projects we had more retail than we likely will now and are evaluating mixed-use components. Suburbia has become very attractive and we own a lot of well-located suburban real estate that we will look to redevelop. The redevelopment pipeline will pick up and Taubman offers additional suburban mixed-use opportunities like the Cherry Creek development, where we will help partners as it develops.

There will be some projects that we'll talk about. Also, remember that there will be projects delivered during the year that will ultimately reduce the pipeline number.

So by year-end could the committed pipeline including Taubman be around a $1 billion level of projects committed?

That's my gut feel — maybe about $1 billion of pipeline commitments by year-end. Don't hold me strictly to that, but that's how I'm thinking about it.

Thanks for the color.

Our next question is from Derek Johnston of Deutsche Bank. Your line is open.

Hi, David. Our store checks point to a pretty high level of online order fulfillment from the mall or the store itself. Is this tenant last-mile approach gaining traction? Since distribution space has gotten costly, are retailers discussing fulfillment from stores and could there be a trend merging online and in-store?

Most sophisticated retailers want a seamless experience: ship-from-store, buy-online-pick-up-in-store, etc. It's not uniform — some prefer distribution facilities — but the vast majority are moving toward ship-from-store and pick-up solutions to reduce delivery costs and improve speed. Retailers look at their businesses in total: closing stores can reduce e-commerce in a market and vice versa. With better consumer data, retailers can manage the omni-channel strategy more effectively.

Thanks. Could you expand on early reads from the JCPenney investment? What are you seeing there in trends, remerchandising wins or early successes?

When we buy a retailer out of bankruptcy, we stabilize and preserve capital first. We've accomplished stabilization at JCPenney: the company has $1.2 billion of liquidity and we are reestablishing vendor relationships, which is critical after bankruptcy. We're bringing new brands into the store and repairing vendor confidence that we're going to be around to pay for goods. The plan to move toward growth is in progress; we are not there yet. Stabilizing the company, right-sizing, strengthening finances, repairing vendor relationships and stabilizing morale were first order goals and we've made encouraging early progress. Turning JCPenney into a modern retailer will take more work.

Understood. Thanks, David.

Our next question is from Craig Schmidt of Bank of America. Your line is open.

Thank you. If you annualize Q1 sales, are you near pre-COVID sales per square foot, or is there still a way to go?

It depends how you compare. Year-over-year versus March 2020 we're far ahead — about 130% above March 2020. Comparing March 2021 to March 2019 for comparable stores, we're roughly down about 7% to 8%. However, with April results added to March, I expect combined March-April 2021 to be ahead of March-April 2019. So as April figures come in, the two-month period will likely show we are ahead.

Great, thanks. On redevelopment: will more be spent on mixed-use or anchor repositionings?

Given the move toward suburbs, my gut feel is that more will be spent on mixed-use. Suburban mixed-use is where we see strong opportunity.

Finally, will SPARC or ABG brands be introduced into JCPenney? Could we see Eddie Bauer or other brands in JCPenney?

Yes. It could be SPARC or ABG brands. ABG owns IP for many brands, and as we design, manufacture and get product in, you may see ABG brands in JCPenney in late 2021 or 2022.

Our next question is from Floris Van Dijkum of Compass Point. Your line is open.

Thanks for taking my question. David, you mentioned comp sales of 4% to 5% for your historical SPG portfolio, presumably Taubman will see something similar. Are you working on initiatives in the TRG portfolio? SPG focuses on specialty leasing, kiosks, etc. Will that be an element in TRG? Where do you see revenue opportunities in TRG in particular?

Short answer: absolutely. We have the resources to implement specialty leasing, local leasing, sponsorship and other programs at TRG, and we've begun implementing many of those initiatives. We brought SPG's sales organization to support that portfolio and are already seeing implementation. The relationship and coordination with Taubman partners has been excellent, and TRG has upside from these initiatives because they previously had limited resources to execute at scale.

One follow-up: you're on both sides of the table as landlord and retailer owner. Does your confidence stem partly from the uptick you're seeing in retailers you've invested in? Could you share growth in sales for those retailers and growth in EBITDA you see for the retailer part of your business?

Yes, the data helps. For example, just two brands in SPARC — Forever 21 and Aéropostale — are already $135 million over their sales plan for March and April combined. SPARC results give us confidence and we're seeing good results in JCPenney as well. We have a lot of data and content now that provide us more flexibility and insight than before.

Our next question is from Michael Mueller of J.P. Morgan. Your line is open.

Hi. Regarding the $0.07 of COVID reserves and abatements, was there any prior-period collections that were positive offsets within it that may not repeat?

Nothing material. We did collect previously deferred rent.

We collected $100 million of previously deferred rents. That was an earnings recognition last year and simply a working capital adjustment; it didn't flow through P&L this quarter in a way that would imply a recurring benefit beyond what's already accounted for.

OK, that was it. Thank you.

Our next question is from Linda Tsai of Jefferies. Your line is open.

Hi. Looking at your NOI overview disclosure on Page 16, it looks like your share of NOI from retailer investments and corporate and other NOI sources were down a bit sequentially. What was driving that?

With respect to NOI from retailers, remember the seasonality of retail: the first quarter is typically the low point, so sequentially versus the fourth quarter you'll see a decline. Relative to historical seasons, this is actually a positive contribution. For corporate and other NOI, there was an increase in lease settlement income offset by reductions in some auxiliary lines of business in the first quarter compared to last year. Simon Business Ventures and similar businesses were down relative to a full quarter last year.

Thanks. In terms of strength in Q1 leasing, who are the backfill options — existing retailers or new-to-market tenants?

It's a broad mix: restaurants, luxury, moderate, and specialty. Examples include American Eagle, Urban Outfitters, Levi's, Aerie, Marc Jacobs, Bottega Veneta, Saint Laurent, Warby Parker, Golden Goose, and others. We're also seeing local and regional entrepreneurs. It's encouraging across categories rather than concentrated in one area.

Our next question is from Haendel St. Juste of Mizuho. Your line is open.

Thank you. On occupancy: you said you could be back to 2019 occupancy levels perhaps by 2022 or 2023. From a cash-paying perspective, when might we see cash flow impact — maybe 2023?

There's clearly a lag. It's fair to say the cash-flow benefits will lag occupancy recovery. We won't get back to 2019 cash flow this year or next year; '23 or '24 could be when we see stronger recovery, depending on the overall economy and travel reopening. We're working toward getting there sooner rather than later.

For the guide: you mentioned an $0.08 drag in Q1 from international. Is there a similar drag expected in Q2, and when will that improve? Also, Brian, what level of bad debt reserves are you carrying at the end of Q1 and the probability of recovery?

For Europe, we expect further impact versus our plan in Q2, perhaps around $0.04 to $0.05. We hope to be closer to plan in Q3 and Q4 as restrictions ease. Japan remains uncertain with COVID and the Olympics and could add a couple of cents of variability internationally.

At quarter end we were appropriately reserved; we did not get a positive impact in the first quarter from recoveries and our expectation for the balance of the year is that reserves will represent true reserves and likely write-offs, not recoveries. We are not disclosing individual reserve levels.

Our next question is from Ki Bin Kim of Truist. Your line is open.

Good evening. On your top tenant list, I noticed decreases in store counts for some top tenants. Any color on whether we should expect further fallout?

Many retailers were conservative during COVID and some closed stores when leases expired during shutdowns. A few retailers will thin their fleets; some announced public store closings. If they do reduce fleets, that's something we've managed before and we'll lease up space. Some of this is already in our expectations.

Can you comment on lease clauses being used today? Are tenants getting more outs or pandemic-specific language that could create variability?

With 20,000-plus leases, there's always variability in a few leases, but there's no broad material trend toward pandemic-specific lease clauses. Most COVID-era renewals involved tradeoffs, and in some cases we reduced base rents to bet on percentage rents from sales. Generally, lease terms remain similar; negotiations involve give and take, but nothing systemic of note to highlight.

Our next question is from Vince Tibone of Green Street. Your line is open.

Hi. How sensitive is your NOI this year to tenant sales? For example, if tenant sales came in at 2019 levels versus 10% higher than 2019, how different would NOI or FFO be? Any rough guideposts?

It's complicated lease by lease — natural versus unnatural breakpoints, timing of when percentage rents kick in, auditing and so forth. We don't provide a simple sensitivity publicly. Internally we model these scenarios, but the variations depend on deal specifics and mix, so we prefer investors consider our broader outlook rather than a simple sales-to-NOI sensitivity.

Are temporary tenants taking more space in the portfolio? Is that expected to increase or decline?

We do program more specialty leasing and temporary tenants because we have more available space from bankruptcies and downsizings. We like working with entrepreneurs — we've seen success stories like Finish Line and LIDS that started small. Temporary tenants make the centers feel occupied, add local uniqueness, and often create a pipeline of future larger tenants. It's an important business for us and one we will continue to foster.

Our next question is from Juan Sanabria of BMO Capital Markets. Your line is open.

Good evening. On development and redevelopment expected yields: I saw yields come down a bit in a couple of buckets. Is that mix or have underwrites changed on rents or timelines widened because of COVID?

It's a mix change. Every quarter projects come in and out of the schedule and the mix of projects can change the blended yield metrics from quarter to quarter.

Second question: you mentioned retailer EBITDA contribution of around $260 million for 2021. What's your sense for that number now pre-Eddie Bauer?

We are already above that $260 million estimate even before Eddie Bauer closes. Eddie Bauer will add to that once it closes. SPARC is doing well, and Eddie Bauer should be a meaningful addition to EBITDA.

Keep in mind we don't add back depreciation and amortization for our retail investments, so the FFO contribution will be much less than the EBITDA contribution.

Our next question is from Greg McGinniss of Scotiabank. Your line is open.

Hey, David. On the last call you talked about a $0.15 to $0.20 contribution to FFO from retail investments. Is a higher number assumed in the current guidance?

Yes, we expect retail investments to outperform our initial budget and contribute more than initially expected. Exact incremental contribution will be clearer as transactions close and operations continue to improve.

Could you tell us what's built into the guidance regarding additional lease cancellation income?

There's nothing material built into guidance for additional lease cancellation income for the balance of the year. We don't have anything on the radar that's material.

There are no further questions on queue. I will turn the call over back to David Simon for any closing remarks.

Thank you. Thanks for your interest and all your questions. I look forward to talking to you soon. Take care.

There's nothing material built into guidance for additional lease cancellation income for the balance of the year. We don't have anything on the radar that's material. There are no further questions in the queue. I will turn the call back to David Simon for any closing remarks. Thank you. Thanks for your interest and all your questions. I look forward to talking to you soon. Take care.