The second quarter of 2026 provided further evidence that Simon Property Group, the largest owner of shopping centres in the US, is carrying its post-pandemic success into the second half of the year. The real estate investment trust announced that revenue, Funds from Operations (FFO) and tenant sales had increased. At the same time, management once again raised its annual forecast.
Eli Simon, CEO of Simon Property Group, stated that shopping centres and retail centres in general are experiencing a cultural moment. He emphasised that people recognise these facilities will endure and young people enjoy spending time there.
Financial Performance and Leasing Success
The Indianapolis-based company generated revenue of $1.79 billion in the second quarter, an increase of 19.5 percent from $1.50 billion in the prior-year period and 1.9 percent from $1.76 billion in the first quarter. Consolidated net income reached $574.1 million, an increase of approximately 1 percent from $568.5 million in the first quarter, but a decrease of 10.8 percent from $643.7 million in the previous year. Net income attributable to common shareholders was $483.1 million, or $1.49 per diluted share, compared to $556.1 million, or $1.70 per share, in the prior year. Simon reported total FFO of $1.18 billion, compared to $1.11 billion in the first quarter and $1.19 billion in the second quarter of 2025. FFO from property operations increased to $1.25 billion, up from $1.21 billion in the first quarter and $1.15 billion in the previous year. This performance prompted Simon to raise its guidance for annual property FFO by 8 cents to $13.20 to $13.30 per share.
Leasing activity was particularly strong. Simon signed over 1,200 leases totalling more than 4.8 million square feet during the quarter, with the number of new deals increasing by over 20 percent year-on-year. New leases accounted for approximately 28 percent of total leasing in the first half of the year, and initial base rents for new deals rose by 17 percent year-on-year, while tenant allowances decreased by 12 percent. Simon also announced that it had already concluded more than 87 percent of its 2026 lease expirations. The occupancy rate at Simon's US shopping centres and Premium Outlets remained unchanged at 96 percent, both compared to the first quarter and the previous year. The base minimum rent increased by 6.3 percent since last year to $62.42 per square foot, while retailer sales over the last 12 months rose by 13.9 percent to $838 per square foot.
Development and Future Outlook
Simon took over approximately 1 million square feet of bankruptcy-related space during the quarter, mainly from Saks Off 5th. However, the company's CEO stated that about half of this space has already been re-leased and expects to increase annual rental income from these returned spaces from around $18 million to $44 million, with the majority of this increase anticipated from 2027 onwards. Simon emphasised that it did not want to be 100 percent occupied to maintain flexibility. The company is also investing significantly more capital in its properties. The REIT ended the quarter with $1.07 billion in development projects, with about half of the investment allocated to mixed-use projects. Additional projects worth over $600 million are expected in the second half of the year, while the broader development pipeline now exceeds $4 billion.
- —Simon plans to build a 374-unit apartment building at the former Sears site in Town Center at Boca Raton in South Florida.
- —A 197-room hotel and nearly 160,000 square feet of new retail space, as well as a car park, are also planned.
- —Net operating income (NOI) from domestic properties increased by 8.5 percent since last year, while total portfolio NOI rose by 8.3 percent.
Looking ahead, the company also plans enough new restaurant openings through its development pipeline to generate an estimated $400 million to $500 million in additional restaurant sales. At the end of June, the company had approximately $9.3 billion in liquidity, including $1.7 billion in cash.
