��s intensifying, prompting Simon’s leasing team to work full pelt. During the quarter, the company signed more than 1,300 tenant leases, bringing the annual total to over 4,600 leases covering 17 million square feet of floorspace. For perspective, that’s the equivalent of more than 20 superregional shopping malls. A key indicator of tenant demand for space is whether that demand is diffusing from A-class to B-class and C-class malls. If demand is focused squarely on the ‘A’ malls, there isn’t much to get excited about, since they will always be sought-after even when times are tough. However, CEO David Simon told investors it was fair to say that it is now easier for his company to lease space in B-class assets than it was a year ago, suggesting that retailers were increasingly willing to take space in lower-tier malls, provided the local market was a good fit. Moreover, mall renovations that incorporate a luxury component can turn a weak mall into an ‘A’. Simon’s Southdale Center in Edina, Minnesota, is a poster child: originally opened in 1956 and recently undergoing a massive upgrade with luxury tenants, dining and leisure to spring it into the ‘A’ category. Louis Vuitton, Gucci, Tiffany, and dozens of other major brands all entered the centre. Interestingly, acquiring the remaining stake in the 21-mall Taubman portfolio during the fourth quarter bumped reported portfolio occupancy slightly down, to 96.4 per cent, partly due to Taubman’s historical preference for leaving a good space vacant and hanging on for the right tenant rather than filling it for the sake of filling it, the normal practice for most mall operators. Now that Simon is in charge of the Taubman portfolio leasing, there will be some upside in occupancy. Retailer solvency: it isn’t all to do with tariffs As good as the mood is on the operational side, it turns sombre when tariffs come up, especially in the context of retailer solvency. With a Supreme Court ruling on the legality of certain tariffs still pending, there is a possibility of relief for retailers. Still, putting that aside, David Simon told investors on the February 2 conference call that the heat is on retailers, particularly smaller ones: “Retailers that we speak to are managing it the best they can. But, you know, it is a headwind, and long story short, it probably puts more pressure on retailers than should be, and it’s gonna end up hurting the small guys.” His concern about the smaller retailers stems from their limited sourcing flexibility: they can’t easily diversify their sourcing locations outside China to avoid tariffs on imports from China. Still, the CEO admitted that the blame for retailers’ troubles couldn’t be pinned squarely on tariffs: “The retailers that don’t make it, even though I could sit here and blame tariffs, you know, they’re not highly productive retailers.” Fourth quarter results: ending the year on a high Total revenue for the fourth quarter came to US$1.791 billion, up 25.1 per cent from the same quarter a year ago. That brought full-year revenue to US$6.364 billion, a year-on-year increase of 6.7 per cent. The leasing component that accounts for more than 90 per cent of Simon’s total revenue stream rose by 14.5 per cent for the quarter and 8.3 per cent for the full year. Net after-tax income for Simon’s stockholders in the fourth quarter rose by 356.9 per cent to US$3.048 billion, bringing the total for 2025 to US$4.624 billion, an increase of 95 per cent. The outsized gain in the fourth quarter was primarily due to a non-cash increase in the fair value of the portfolio associated with the company’s acquisition of the remaining equity in Taubman Realty Group. Funds from operations (FFO), a widely used non-GAAP real estate REIT metric that excludes depreciation (approximately 45 per cent of Simon’s total operating expenses), came to US$1.242 billion (-10.1 per cent) in the fourth quarter and US$4.663 billion (-4.4 per cent) for the year. Sales productivity is showing signs of improvement Operationally, US portfolio occupancy was 96.4 per cent at year-end, roughly flat with last year, and minimum base rent per square foot increased by 4.7 per cent. Shopper traffic was strong during the quarter, and sales productivity climbed 8.1 per cent to US$799 per square foot for the trailing 12 months, up from US$739 in 2024. However, the lion’s share of that uptick (probably about 75 per cent of it) is attributable to the contribution of the now 100 per cent-owned Taubman portfolio that wasn’t in the base US$739 last year. Portfolio numbers There were no new mall openings in the fourth quarter, at the end of which Simon’s retail portfolio stood at 194 malls, lifestyle centres, factory outlet centres, and megamalls in the US, and 42 factory outlet centres and malls overseas. Nineteen of the 42 projects outside of the US are in Asia. AI to help with lease negotiations? The leading mall operators in the US have repeatedly demonstrated their ability to adapt to change, renovating their properties, abandoning old tenant-mix formulas, and incorporating new ones. Further retailer bankruptcies can be expected as legacy retailers die out, and these will continue to test the mall model. However, as long as properties are well-located, they will attract tenant interest. Even lease negotiations might become easier, not harder. On the topic of rent-setting, David Simon remarked to investors, “Hopefully AI will solve it for us, so we don’t have to negotiate. It’ll just say, ‘Here is the rent that the tenant and the landlord should agree on,’ and then we can, you know, I don’t know what we do, but, you know, we can use that.”  Futher reading: Holding ground at home, betting on Asia: Inside Simon Property’s global strategy