Simon Property Group, Inc. (SPG) Earnings Call Transcript & Summary

Hi, everyone. I'm Caitlin Burrows, and I cover REITs at Goldman, including Simon. And today, we have Brian McDade, CFO of Simon here to speak with us.

I have a number of questions prepared, but if there are any audience questions, please raise your hand later, so I can get a sense, and we'll take it from there. So Brian, Simons had a great year outperforming both the REIT index and the S&P 500. And as about the drivers, 2 major ones, and feel free to let me know if there's something I'm missing. Our fundamental strength, so strong demand and leasing, no new supply, increasing occupancy, rents and same-store NOI, all great things, plus OPI monetization. So maybe starting with those 2 in the leasing side, we think has been robust for a while now, and we can see it translating to occupancy. So can you describe the current leasing environment, the depth of that interest and maybe how that compares to even the recent past?

Sure. Thank you, Caitlin. Thank you for everybody attending today. Certainly happy to touch upon that, but maybe just ahead of that, for those that maybe not know the company as well. Simon Property Group been a public company now for almost 31 years to the day. We operate roughly 90% of our business is domestic here in the U.S., but we also have international business that's about 10% of our business overall. As you think about the company, we went public 31 years ago at a total enterprise value of about $3 billion. Today, through the considerable work in the -- of the organization that now has grown to north of $100 billion. So the company is a large organization. We are the largest landlord -- retail landlord around the world to the growing retail community. And as we think about the business in our kind of structural advantage, I think we have to think back maybe for the past decade of where the company is kind of coming from. There has been certainly a sea change out from a retailer perspective. If you think about the past decade, growth really came from retailers throughout Asia, and that's certainly changed pretty dramatically in recent times. And so retailers have pivoted back to the United States as their growth market. In addition, there's 2 other things that really has changed dramatically in the last decade. You've mentioned no new supply. What you're actually starting to see is kind of negative supply as some of the more out-of-date assets are now starting to move to the system -- move through the system and kind of leaving the system as you've seen interest rates reset higher. The last decade, we've seen 0 interest rates, which propped up capital-intensive businesses. We're starting to see that cleanse now, so capitalism is starting to work. And I think the other thing that's really kind of come to roost in the last decade is the idea that e-commerce was going to disintermediate physical retail. The economics of the e-commerce business, quite honestly, are disadvantaged. And I think that has come home to roost, whether it be the cost of returns, whether it be the cost of delivery, the store is the most profitable channel for retailers, and they've repivoted to that. And actually, you're starting to see retailers disincentivize this idea where you buy 10 things online and bring 9 back to the store. And so you're really starting to see retailers focus on their stores, that's where the profitable channel is. And the facts and circumstances on the ground are as good as they've been for the past decade and they're accelerating. And that's certainly articulating in our results, our occupancy levels, our leasing demand. And as you think about leasing in the U.S., it's really coming across our real estate from a variety of places. As I mentioned, Asia is not the growth engine it once was. And that was really being driven by the luxury brands. They have repivoted to the U.S., and are looking to grow in the U.S. in a meaningful way. In addition, their business model in the U.S. has changed over time as well. They've historically distributed through department stores. And now, like every other business and retailer, they want to have a direct connection with their consumer. And so you're seeing the business model of luxury retailers to become direct-to-consumer and opening up stores throughout our portfolio. And so that is a major source of demand for new space. These retailers think over decades, they don't think month-to-month, and so they are looking to secure their very best locations in the retail real estate in the United States. You see it here in New York on Fifth Avenue, and it's proliferating throughout kind of our portfolio. But in addition to luxury, we're seeing other cohorts of tenants looking to truly expand and improve their real estate position. You think of some of the bigger users of space out there across our business, so the DICK'S Sporting Goods of the world, the Primark of the world, restoration hardware, those type of categories of tenants are looking to grow and access the type of real estate that we own. And so we're seeing outsized demand from those cohorts of tenants. In addition, regular way retailers continue to look to grow, whether it be Abercrombie and Fitch, whether it be Mango, whether it be Lululemon, whether it be Allo Yoga, whether it be Skims, the retail community has reoriented themselves to the physical distribution channels and are looking to expand their store fleet with us specifically, but broadly speaking, they're looking to access high-quality retail real estate in the U.S.

And I guess it seems like for maybe a year or 2, it's been this accelerating leasing environment. It sounds like based on what you said that's not slowing down. But just given where kind of occupancy is and the tougher comps you have, like do you think it can continue to accelerate?

We do. The structural differential in the U.S. over the past decade has advantaged us. And as we think about that leasing demand, which is unabated, the quality of our assets from full-price regional malls all the way out to the value segment of our premium outlets, it gives us a competitive advantage to be able to meet the needs of retailers where they want to be, whether it be full price, whether it be value and the geography -- the geographic footprint we have is unmatched. So it's domestic in all of the major markets, but also internationally. And so we do not see a slowdown. If you look back in history, the high watermark of occupancy of the company was about $97.1 million and that was in the 2014 to 2015 time frame. We're just north of 96% today. So we do expect that there is still upward bias to occupancy overall. In addition, we've talked at length about this, but we've been very successful in converting some of our temporary occupancy into permanent occupancy, and we see a material uplift in rents when we do so. Order of magnitude, a temporary lease with us is in the context of about $20 per square foot, and new leases with us are in the context of $60 to $65 per square foot on a permanent basis. So you're seeing a strong uplift in our cash flow growth by just simply converting some of our temporary tenants to permanent leases. And we do think there is still some runway to go in that process.

And I know you guys have also talked a lot about improving mix, which makes it seem like kind of concentrating on the underperforming retailers and replacing them, I guess, how much are you into that focused on mix rather than just lowering vacancy maybe at this point last year? And does that suggest that, going forward, you might target like a lower retention rate?

So look, I think we've always been focused on making sure we're creating a high-quality retailer mix in our offerings. So it's always been part and parcel to our strategy over time. I just think that you've seen with the lack of new product and some of the existing products going out of the system that we have a deeper roster of tenants looking to access the same number of spaces. And so it gives us the opportunity for us to rotate out some of the underperforming tenants or those that aren't performing up to our expectations and standards and bring in new and exciting retailers to really drive the offering. And so while it's always been part and parcel to our strategy, I think it's really kind of come into more focus in the last year or so as we continue to calibrate the kind of the facts and circumstances on the ground with the desires of retailers continuing to look at accessing the physical environment.

Maybe a little on the watch list. So 2 bankruptcies of this year where Rue21 in Express, Rue21, I would assume it's off the watch list. I guess in terms of Express, I don't know how you think about like if they're on or still kind of on their, or if they're honors off. But then are there incremental tenants that you're newly concerned about or how do you compare the size kind of today versus a year ago?

So the watch list is certainly shrunk, I think, to your point, the folks that we were paying attention to keenly at the beginning of the year or the end of last year have probably come to fruition for the most part. And we're actively looking at replacing those tenants and have been for some time. I would tell you that the watch list today where it stands, it's low as it's been in a long time. Obviously, we're in a very important part of the holiday season where the material amount of profitability of retailers certainly manifests itself. And so we traditionally reevaluate that watch list in January, early February when results are known. But as we stand today, I think we relatively feel good about the position of retailers, and that we don't expect a material expansion of our watch list heading into next year, at least as of now.

You gave a little color on the pricing side. So I guess just sales at your properties have been, let's call it, flattish for a little while now. I guess to what extent is that limiting your ability to increase rents? Or how do new and renewal rents compare to the in-place one?

So look, there's always a formula that goes in, and we want to be scientific about it, but there's just a practical reality that sales are certainly an important part of the componentry here, and the profitability of those sales matter as well, right? As I've mentioned that the store channel is the most profitable channel for retailers. And so with the limited amount of new space being built and the current occupancy levels across retail assets, it is still supporting upward bias in pricing because while sales have been relatively flat, absent to major retailers that have different sales cycle, they are still at elevated levels, and retailers are looking to access those elevated levels in across the real estate, and so they're willing to pay the going rate to access that in our physical environment. If you kind of think about the proxy that traditionally is used as the metric here, which is occupancy cost ratio, at the end of the third quarter, we were about 12.8%, which is still inside of our historical averages. So we do believe that there is upward bias in our pricing opportunities as we look at what's maturing for 2025. There's about 10 million square feet that is maturing in the context of about a $60 average base minimum rent and new leases today that we're signing are in the context of $65 to $66. So we do believe that this is across 10 million square feet, not every space is the same, but we do believe that we should see some amount of pricing power carrying forward into 2025 and beyond.

And so I guess then as we think about maybe the next step, which is same-property NOI growth. If you think of it then like roughly, I think it's 10% of the portfolio rolls at 10% spreads, which is basically what you were just describing. I know there's lease escalators on that. Like does that make you feel like a 3% NOI growth is sustainable? I mean, it seems tougher now that your occupancy is higher, but how sustainable do you think that is?

Yes, I think we're comfortable with it. And I think if you kind of look back over the course of the last, call it, 36 months and looked at our actual performance, it's justified. If you look at 2022, we produced portfolio NOI growth of about 4.8%. Similarly, in '23 and year-to-date, we're on a similar path. And so the momentum continues in the business. Certainly, there are other variables that interplay here. Certainly, you've talked about mix. And as we improve our mix, there are downtime elements of doing so, specifically in our full-price business. The build-outs of those new spaces just take longer than in our Outlet and in our Mills business just from the nature of those build-outs, getting entitlements, the investment by the retailers. So there's a tail here that would impact -- downtime would impact NOI growth kind of year-over-year. But as we think about the long term, it's going to propel it. There's obviously costs that go into this as well into the equation. So we have escalators on our fixed CAM in the context of 3% to 4% a year, which does protect us from escalation, but there are costs that are out of our control, insurance expense, real estate taxes, some of those things that are noncontrollable directly to us will have an impact, but moral of the story, we've been facing those impacts over the past 3 years and have still produced strong NOI growth, and would expect that momentum to continue well into '25 and into '26.

Okay. Back at the beginning, I said that I thought there were like 2 main drivers, almost like fundamental strength and the other was on the OPI side, so other platform investments. So we'll get into that. But first, maybe we'll talk about then the consumer, the retailers and holiday sales. So you mentioned before that you're the largest retail landlord, and I was going to say the country, but maybe the world. So what early comments or feedback can you share on how the holiday shopping season is going?

So out of the gate, very strong. We actually put out a press release after Black Friday, which compare traffic and traffic was up north of 6.5% across the business. I think the consumer was ready to put quite honestly, the election behind them and reengage in the economy. And it was -- it didn't matter your politics. It was just simply there was a resolution and you've seen kind of the the animal spirits of the U.S. consumer reengaged in the economy in a meaningful way. We continue to see strong traffic results thus far from the first -- from Black Friday through just about today. That has a strong corollary to, ultimately, the performance of the retailers in the fourth quarter, which is when the majority of the profitability and the sales occur from a retail perspective. And so I think we're cautiously optimistic, at least on the holiday season. I think there are folks out there calling for 3.5% to 4% growth based upon what we've seen in the first couple of weeks after Black Friday, I think we feel relatively comfortable with those predictions.

And just in thinking about like how much do holiday sales matter to Simon, so you mentioned how important they are to the retailers and their own profitability. But yes, how much does that end up mattering to Simon?

Most of our business is a fixed rent business. We certainly do participate in the upside on a variable basis. As tenants do better from a sales perspective, their overage rent contributions go up. But we've -- 92% of our business is fixed. So we have limited exposure on the variable side. And that other 8% also includes recoveries of uncontrollable expenses, so insurance and real estate taxes. So as you think about our true exposure to -- on a sales basis, it's about 5% of our revenues in a given year. So relatively small relative to the overall pie, but we do have some sensitivity to it in the fourth quarter.

Okay. Back to the other platform investment. So in 2023, which was just a year ago, you mentioned that you thought OPI was worth $3.5 billion. Simon's already monetized almost $2 billion, which I think was faster than anyone expected, which would then suggest $1.5 billion value remaining. So I guess would you say the remaining part of OPI is worth $1.5 billion? Or has there been a change to your estimate?

Look, I don't think there's been a change to our estimate. I think maybe it's important to step back and understand OPI in totality first. There are 4 main businesses sitting inside of the OPI bucket that we talk about, JCPenney and SPARC, which are retail-centric businesses. In addition, Rue La La and Gilt, our digital platform is inside of -- is encapsulated in OPI in addition to James Town, which is an asset manager that we bought into at the end of 2022. And so there's a variety of businesses sitting inside of OPI. From a retailer perspective, JCPenney and SPARC, I think it's important to understand that we've received the initial capital investment that we made in those businesses has been returned. And so on a $100 billion balance sheet, there is no capital investment remaining in those businesses. And in addition, as we think about the earnings of those businesses, we talked about in the third quarter that those JCPenney and SPARC underperformed our plans, and we are taking decisive actions to turn around the trajectory of those businesses and their operating performance. But again, overall OPI for the year we talked about being a drag on earnings is between $0.05 and $0.10. And that's relative to a midpoint FFO guidance for the year of $12.85. So these are relatively small businesses inside a really large organization. We continue to see value in those businesses over time, but the first and foremost goal is to improve its financial performances, which will set it up better for potential monetizations in the future. We have other partners in those businesses. So this isn't simply just a decision that we can make on our own. But over time, we would expect that you will see certainly a continued lessening of exposure to those businesses to our earnings profile, for sure. And over time, an improvement from a financial perspective, which should set itself up better for monetization in the future from an outcome perspective.

So I guess on the third quarter call, I know there was definitely a reference to December or January, unclear exactly what was potentially happening in those time frames. So I guess, it sounds like you would like to monetize those businesses at some point. I guess, could you just give any more color on, like, is it a priority when -- on the earnings call, you guys mentioned December or January, would that be for monetizing SPARC and/or JCPenney?

No. I think what we were trying to get -- convey on the earnings call is simply that the financial performance in the third quarter was not acceptable, and we are taking decisive operational activities to drive the financial performance. So there's no -- that's what we were alluding to. We are taking steps to improve those 2 businesses. As you look at them collectively, there is great opportunity to drive revenue and/or cost synergies between the 2 of them that are available to us. And that's what we were foreshadowing more than anything. Now certainly, monetization and our continued reduced exposure, as you've seen over the past 24 months to those businesses, will likely continue. But that's not necessarily in our direct control. What's in our direct control is improving the financial performance of those businesses.

And maybe back to the merchandise mix focus, how much rent does the total of SPARC brands make up for Simon today? And maybe how has that changed in the past couple of years? Do you expect it to get lower?

Well, as we disclosed in our supplement, ultimately, the top 10 payers are paying greater than 1% of base rent to the company. And SPARC is not on that list. So it's below the 1% kind of threshold here. I would expect that over time that, that probably continues to reduce. Ultimately, as we said, merchandise mix, as we look at our businesses, including our SPARC businesses, if there's opportunity to replace some of those stores with better productivity retailers, we are going to do that. And ultimately, that should continue over time as we rightsize those businesses to kind of their current environment, but also take into consideration the demand behind that for their space. Generally, those retailers that are inside of SPARC are legacy retailers that control great space in assets across the United States because of their history and legacy, and ultimately should allow us to, as a landlord, continue to improve the merchandise and mix in some of their stores.

Maybe switching gears, either from an OPI sale or just your retained cash, which you have a lot of. How would you prioritize Simon's use of excess cash?

So if you think about kind of some of the numbers I talked about earlier, on an FFO basis, we're going to generate somewhere to the tune of about $4.7 billion this year. And if you look at our recent dividend and annualize it, it's about a $3 billion number. So after we pay our dividend, we generate about $1.5 billion of free cash flow available to reinvest in the business. The vast majority of that is going to fund our redevelopment and development pipeline. We are committed today for about $1.3 billion. There are a variety of projects that would be added to and taken away off of that list. But ultimately, from a cash perspective, we probably -- in the construction cycle of the development and redevelopment business, truly cash going out the door relative to that commitment is about $750 million to $800 million a year relative to the $1.5 billion of free cash flow. So after we invest in the projects in -- back into the portfolio, we still have excess cash flow to delever and/or buyback shares, depending upon the facts and circumstances at the time. So from a focus perspective, our free cash flow is really going -- being reinvested back into our business to drive continued outperformance. And what's really interesting about Simon relative to the rest of our industry is that free cash flow. If you look at our competitor set, no one is generating nearly the [indiscernible] of free cash flow. And quite honestly, for growth to come out of our competitor set, they have to source external capital. We have a natural funding source, which is allowing us to drive our current and our future results.

Maybe along those lines, so you mentioned before, I think, something about scale, but your scale and credit rating are 2 qualities that other mall and outlet owners don't have that you do. I guess to what extent do you think that helps Simon or in what way is the scale and credit rating?

Well, I'll take the credit rating piece first. As you think about our opportunity to fund our business, we have -- we're an A-rated credit. We have access to the unsecured markets globally. Here in the U.S., we are a big issuer. Certainly we issue in Europe and other jurisdictions. And as you just think about the the pricing advantage of capital today on the debt side, unsecured debt on a 10-year basis for us in the U.S. is in the context of 5.25%. If you look at the mortgage market in the U.S., it is materially wider than that, which is, today, mortgages will print in the 7% to -- maybe 6.5% to 7.5% range. And so we have a durable advantage running from a cost of debt perspective. We also have access to European and Asian markets where fundamental cost of debt there is lower. We've accessed those markets in the past, and I would expect us to do so in the future. And so as we think about the business that we operate in and our ability to fund it at an accretive basis, ultimately, we have an advantage relative to the rest of the industry that's running 200 basis points on a cost of debt perspective. And it gives us diversity, right? There's a wide opportunity set in the capital markets to fund ourselves on the unsecured. There's other products to consider to, exchangeables, converts, other things, but thus far, we've not had to access those instruments for the most part and fund it ourselves regular way in the unsecured markets. That could change over time as we look at options and the flexibility of our balance sheet gives us that. Today, the balance sheet sits at about 5.2x net debt to EBITDA. If you look at where the rating agencies look at that in an upward bound from a ratings trigger, there's a 1x to 4x of opportunity for us within the balance sheet today to still maintain our rating and stay within our ratings category. So the balance sheet is well positioned for growth and, ultimately, the debt markets are supportive of what we're doing. Now pivoting back to your other question on scale, as we think about our ability to interact with our customers, the retail community, having the ability for -- to sit down and have a conversation with a retailer whoever it is about the U.S., about Europe, about Asia, about full price all the way down to the value segment, that is a unique proposition that we have that others don't. And when you couple our financing and our balance sheet strength with those relationships, we are the preferred partner of retailers to grow their businesses over the globe -- across the globe. And so we do see a slight advantage from an open-to-buy perspective that retailers are very comfortable with where we sit, where our real estate sits, where the balance sheet sits, and so we're doing more business, more concentrated businesses with the retailers across the globe in a bigger way.

I just want to check, does anybody here have a question? I think you can speak and then I'll repeat it. Actually she's coming so.

Last 10 years is the reason that people come to a mall changed at all? And I guess what I'm referring to is, as some of these anchor big department stores have gone bankrupt and with the advent of online retail, you have to create more of an entertainment center, if you will, to attract people, whether it's food courts or entertainment acts that come in and is that happening, and is it happening to you? And if it does happen, does that put a bigger demand on your capital spending or not?

Sure. Great question. And so what I would say is that -- let's talk about the first part of your question, which is department stores and traffic. 30 years ago, the department store was the traffic driver, okay? And that is why that most department stores pay $1 per square foot rent, right? They're uneconomical, but they were the driver. That's reversed 180 degrees, if you would, in the last 30 years. And now the driver is truly the in-line stores that you're offering to the community. Certainly, experience matters, and we've been focusing in a big way on experience, food and beverage is a diversifying technique for our asset base. And so what you have seen is us recapture department stores. And quite honestly, it is still one of the bigger growth vectors of the company is capturing that $1 per square foot anchor box that is uneconomical, but more importantly, the land sitting underneath it. Most department stores sit on 20 to 30 acres of land next to some of the best assets in the world. And so what our opportunity is, is to recapture that and add new uses, whether those uses are entertainment and create vibrance that way, or their alternative uses where it's with residential or hotels. Creating energy in our assets is very important, and we continue to focus on it. And that is where our capital spend has really been focused on our full price business the past decade is really the recapture of that and the regeneration and the reenergization of our assets for the community as the places to be.

Maybe on the acquisition side. So you guys were historically very acquisitive. You bought Taubman in the beginning of the pandemic. I'm not sure if you've bought anything since then, no, but it feels like on the earnings calls, you guys have been talking about maybe evaluating deals. So how big is the universe of properties that you would be interested in? And what do you think would be the catalyst for those to transact?

So look, I think you should know that we look at everything that is out in the market at all times. And so we are certainly very focused on the evolution of that part of our business. If you look back over history, we've done about $50 billion worth of M&A in the 30-year history as a public company. If you look at that in hindsight, we've typically bought those assets at about 150 basis points in excess of our 10-year cost of funding. Operating leverage in our business is important to us. And so we've traditionally bought with about 150 basis points of operating leverage as kind of a proxy. As we look at the landscape of assets that are out there, both domestically, but globally as well, it's really about buying assets that are going to make us better, not simply bigger. And is there an opportunity to drive value in those acquisitions through the size and scale of our business, are we in an advantaged geographic area? And so we certainly are very much attuned to what's going on in the market. I do think there's some small green shoots that have started to happen this year on the retail side. You started to see some smaller retail assets start to transact, $75 million of value to $400 million or $500 million of value. You're starting to see institutional capital. Look at the sector again, I mean the results kind of speak for themselves, right? Capitalism is a unique structure where, when results are starting to be seen, capital starts to form around and trying to look at access those results. And so the raw ingredients on the ground are positive. We do think that this momentum carries into 2025. So I would expect us to be acquisitive again in the future. I can't exactly tell you what date or when it's going to happen, but we are reactionary to the market. If we find an opportunity that we believe makes us better, we're certainly in a position from a capital and balance sheet perspective to move very quickly.

Maybe thinking big picture about earnings growth. So we were talking before about same-store NOI concept and that it could generally be in like the 3% plus range going forward. I guess as you think about the FFO growth to same store, if you were building or buying the external lots would add to that, you're a big company, though, so tough to kind of move the needle. And then there's at different times, but now it's kind of interest rate headwinds. So as you think about like the growth of Simon versus other companies that are out there, like do you think you can reach 5% earnings growth? Or is just the situation right now prevents that from happening?

Well, look, I mean, I'm not going to put guidance out there per se. We'll address that certainly in February. But I think as you look at the momentum the business has on an unlevered cash flow basis, we do feel pretty strongly that, that continues, plus or minus, for the foreseeable future. Certainly, the headwind is debt cost. Interest is, it matters again. If you look at the debt profile of the company, roughly $35 billion of pro rata share of debt, $20 billion of that is unsecured debt that has a weighted average term left of about 9 years at a weighted average coupon of about 3.75%. So we have some time for that roll-up of interest cost to continue to leak through kind of earnings. On the other side is the secured side of our balance sheet, which has probably about a 4-year weighted average and about a 4.25% average rate. So that will happen a little bit faster, but the rate of change is not as high because the base rate we're coming off of. So there will be interest headwinds, but as we think about the unlevered cash flow, we do think that, that continues at a pretty sizable clip as well. So we certainly look to grow earnings appropriately. We do have to make long-term decisions. And so, as I mentioned, we are thinking about things in the context of years and decades, not necessarily quarter-to-quarter, but I do think that there is momentum in our earnings as well.

Anybody else? Okay, I'll go. You were talking before about the department store opportunity you guys have had. I was going to ask about like how much more of that you think there is? I think you mentioned that it's still a large opportunity, so wondering if you could give a 2-minute and 55-second synopsis of the department store opportunity today?

Look, there's -- it is in the early innings still as we think about our full price business and the evolution of it. Certainly, we've -- there's demonstrated evidence of what we have been doing, Fitz Plaza is the probably premier example of it, there was a belt department store that was unproductive. We bought back the belt department store, tore it down and replaced it with a lifetime fitness, a curated dining hall. We've Nobu Hotel and Restaurant and an office building in Atlanta and Fitz sitting outside of Buckhead in Atlanta. And so we've taken what was an uneconomical piece of real estate and really driven it a much different place, both from a financial return perspective, but also as the place of gathering now in the community. And we are probably in the second or third inning of that across our portfolio. Not all of them are going to look like Fitz Plaza. There will be some that will just simply be replacements of a department store with a Primark and maybe a Burlington, or we'll reuse the existing infrastructure where we can. But there will be some that certainly we diversify away from retail. A good example, Brierwood Mall outside -- sitting outside of Ann Arbor, Michigan, University of Michigan, we're reinvesting in that, and we've taken down a department store, and we're going to build residential and additional retail. And so we continue to see that across -- those opportunities across our portfolio. As I mentioned, we have about $1.3 billion of committed capital today of investment in development and redevelopment. We talked a little bit on our earnings call. We think sitting behind that is about another $4 billion of investment available to us, both from a redevelopment of full-price business, but also ground-up development of new outlets in Asia and other jurisdictions. And so we do think that the taking what is antiquated real estate and really creating new energy, both on an individual and a halo basis for the overall asset is really a really interesting growth profile for the company over the course of the next several years.

Okay. I think we'll stop there. Thanks, everybody.

Thank you.