Simon Property raises 2026 outlook on strong leasing demand
SPG beats Q2 FFO targets, lifts full-year guidance as occupancy holds steady and rental rates rise.
Simon Property Group reported second-quarter 2026 Real Estate FFO of $3.29 per share, exceeding the consensus estimate of $3.18 by 3.5% and rising 7.9% year over year. Total revenues reached $1.79 billion, a 19.5% increase from the prior year period, driven by broad-based leasing strength and higher retailer sales. The company subsequently raised its full-year 2026 FFO guidance to a range of $13.20-$13.30 per share, an increase of 8 cents at the midpoint from its previous outlook, according to data provided by GN markets/earnings.
Lease income was the primary driver of revenue growth, climbing 20.3% to $1.66 billion. Fixed lease income increased to $1.35 billion from $1.13 billion a year earlier, while variable lease income rose to $310.6 million from $246.7 million. This growth in rental revenue supported the company's decision to upgrade its financial projections for the remainder of the year, reflecting sustained demand across its portfolio.
Occupancy and rental rates remain firm
Operational metrics show stability across the core assets. U.S. Malls and Premium Outlets maintained a 96% occupancy rate, unchanged from the previous year. Base minimum rent per square foot for these properties increased 6.3% to $62.42. Meanwhile, the Mills portfolio reported a 98.8% occupancy rate, with base minimum rent per square foot rising to $42.28 from $37.65, indicating successful lease renewals at higher rates.
Retailer performance also contributed to the positive results, with sales per square foot jumping 13.9% year over year. Reported retailer sales per square foot for the trailing 12 months ended June 30, 2026, reached $838, up from $736 in the prior year period. These figures suggest that tenant sales volume is supporting the higher rental income structure.
Expense growth outpaces revenue gains
Despite strong revenue performance, total operating expenses increased 28.1% year over year to $966.5 million. Depreciation and amortization costs rose to $459.9 million from $339.1 million, while property operating expenses climbed to $171.4 million from $139.8 million. Interest expense also saw a significant increase of 20.8%, reaching $281.2 million for the quarter. These rising costs reflect the higher capital base and debt service requirements associated with recent acquisitions and new financing activities.
Liquidity position remains substantial
The company ended the June 2026 quarter with approximately $9.3 billion in total liquidity. This includes $1.7 billion in cash on hand and $7.6 billion in available capacity under revolving credit facilities. During the quarter, Simon Property completed eight secured loan transactions totaling roughly $1.4 billion at a weighted average interest rate of 5.36%. It also issued €500 million in five-year senior notes with a 3.65% coupon and closed a $460 million term loan priced at SOFR plus 0.70%.
