SPG's Q2 FFO Top Estimates on Leasing Strength, Guidance Raised

SPG's Lease Income Powers Revenue Growth

Lease income increased 20.3% year over year to $1.66 billion. Fixed lease income reached $1.35 billion compared with $1.13 billion a year earlier, while variable lease income increased to $310.6 million from $246.7 million.

Management fees and other revenues rose 7.7% to $40.8 million. Other income advanced 11.1% to $90.1 million, aided by higher mixed-use and franchise operations income and other ancillary sources.

SPG’s Property Metrics Stay Firm

Base minimum rent per square foot for U.S. Malls and Premium Outlets climbed 6.3% year over year to $62.42. Reported retailer sales per square foot increased to $838 for the trailing 12 months ended June 30, 2026 from $736 a year earlier.

The Mills portfolio remained highly occupied at 98.8%, down from 99.3% a year ago. Its base minimum rent per square foot increased to $42.28 from $37.65, indicating higher rental rates across the portfolio.

SPG Posts Strong Property-Level NOI Growth

Domestic property net operating income (NOI) increased 8.5% year over year to $1.51 billion. Portfolio NOI, which includes domestic and international properties, rose 8.3% to $1.60 billion.

Beneficial interest of the combined NOI increased 6.4% to $1.75 billion. International property NOI totaled $96 million compared with $91.3 million in the prior-year quarter, while NOI from other platform investments declined to $31.8 million from $41.7 million.

SPG Sees Higher Costs & Interest Expense

Total operating expenses increased 28.1% year over year to $966.5 million. Depreciation and amortization rose to $459.9 million from $339.1 million, while property operating expenses increased to $171.4 million from $139.8 million.

Interest expense climbed 20.8% to $281.2 million.

SPG Maintains Ample Balance Sheet Liquidity

Simon ended the June 2026 quarter with approximately $9.3 billion of liquidity, comprising $1.7 billion of cash on hand, including its share of joint venture cash, and $7.6 billion of available capacity under its revolving credit facilities.

During the second quarter, SPG completed eight secured loan transactions totaling approximately $1.4 billion at a weighted average interest rate of 5.36%. It also issued €500 million of five-year senior notes carrying a 3.65% coupon and closed a $460 million five-year term loan priced at SOFR plus 0.70%.

SPG Raises 2026 Real Estate FFO Outlook

Simon increased its full-year 2026 Real Estate FFO per share guidance to $13.20-$13.30 from $13.10-$13.25. The midpoint of the updated range is 8 cents above the midpoint of the previous outlook. The Zacks Consensus Estimate of $13.21 is within the guided range.

The company also declared a third-quarter common stock dividend of $2.25 per share, up 4.7% year over year. The dividend will be payable on Sept. 30, 2026, to shareholders of record on Sept. 9, 2026.

SPG’s Zacks Rank

Currently, SPG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Retail REITs

Federal Realty Investment Trust FRT reported second-quarter 2026 core FFO per share of $1.88, up 6.8% year over year and above the Zacks Consensus Estimate of $1.85.

Total revenues increased 7.8% year over year to $335.7 million and surpassed the consensus mark of $333.5 million by 0.66%. FRT’s results reflected higher rental income, record comparable leasing volume and growth in adjusted comparable property operating income. FRT carries a Zacks Rank #3.

Regency Centers Corporation REG reported second-quarter 2026 NAREIT FFO per share of $1.21, beating the Zacks Consensus Estimate of $1.20 by 0.8%. The metric increased 4.3% from the year-ago quarter.

Total revenues of $413.5 million rose 8.6% year over year and topped the consensus mark of $405 million by 2.1%. The company’s results reflected solid leasing demand, with same-property NOI advancing 3.8%. REG carries a Zacks Rank #3.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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