Mall Giant Simon Property Group Sweats Tariff Impacts as Revenue Climbs – Commercial Observer
Indianapolis-based mall giant Simon Property Group saw a mixed bag in its first-quarter numbers amid mounting caution over the impact of tariffs on retail.
The retail real estate investment trust saw funds from operations drop to $413.7 million in the first quarter of 2025 compared to $667.2 million in the previous quarter, while funds from its real estate operations totaled $1.113 billion compared to $1.261 billion in the last three months of 2024. The company reported more than $1.47 billion in revenue, up from $1.44 billion-plus in the fourth quarter of 2024.
In the first three months of this year, the REIT inked about 1,300 leases spanning 5 million square feet, with 25 percent of those deals signed with new tenants, according to Simon Chief Financial Officer Brian McDade.
For all that, though, tariffs dominated Monday’s earnings call. Despite Monday’s deal between the U.S. and China temporarily reducing the import taxes on the latter from 145 percent to 30 percent, Simon CEO David Simon was hesitant to rule out any future distress from the levies.
“Even with today’s reduction in the tit for tat, you’re still talking about a 30 percent tariff. … Many retailers are holding off bringing in goods from China, which could affect their inventory levels,” Simon said during the call. “I think it’s going to give retailers pause whether or not they can afford to have goods shipped from China. I think they’re going to probably operate business as usual. I think they’ll try to pass a little bit on to the consumer. They’ll try to get the manufacturer to take some of it, and they may take some of it as well.”
During its February earnings call for the fourth quarter of 2024, Simon had expressed little concern about the Trump administration’s tariff plans, still in their infancy and having no influence on quarterly results.
But, during the first-quarter call Monday, Simon and other executives in the company spent considerably more time analyzing the potential impacts of tariffs now that Liberation Day is more than a month in the past.
One unnamed retailer backed out of four outlet deals with Simon due to the caution from tariffs, which Simon said was more of an anecdotal situation. He said the tenant was replaced by another.
“If things don’t ultimately stabilize, I think you’ll have potential pressure points on the local mom-and-pop retailers that are important to the country, and, of course, we do lease space to them,” Simon said. “I do worry about them a little more than I do [larger retailers] that have 100 stores.”
Mark Hallum can be reached at mhallum@commercialobserver.com.
