egotiating tactics were unchanged…so far. He was aware of one European retailer that put a deal on hold because of concerns about the additional costs of importing merchandise from Europe, but other than that leasing demand was still strong.  Effect on inventory levels and sales is trickier to predict Dealmaking aside, the effect on actual sales is highly uncertain but the thinking among Simon’s executives is that even at the 30 per cent level for goods from China, it would be hard to see it not having some impact. Some retailers are looking at postponing imports from China and also diversifying sources, and in some instances this might have an adverse impact on inventory levels. (Since tariffs are paid at the source and not upon receipt of the goods by the retailer, there are a few boats not making scheduled trips.) As for the extra cost of the tariffs itself, retailers were passing some on to the consumer, absorbing some, and trying to get the manufacturers to shoulder some. On the other hand, retailers sourcing from Europe would not be much affected in terms of pricing or sales. While he admitted to having a cloudy chrystal ball on the tariff issue, the CEO, David Simon, was a lot more unequivocal on the subject of the abolition of the de-minimus ‘loophole’, applauding the administration for its action. “That is a great outcome…I think that is going to be a material benefit to our retailers to defend themselves against Chinese retailers shipping directly to consumers”. Another topic on which he exuded optimism was the re-leasing of 100 or so Forever 21 boxes left empty after the retailer’s recent bankruptcy. In many cases the boxes will be subdivided and re-leased to multiple tenants, and David Simon said he expected that over a two-year time horizon the company would double the rent from what it had previously been getting for the same space. Leasing income up, but the bottom line down Revenue for the quarter, mostly leasing income, amounted to $1.47 billion, representing a 5.0 per cent increase from a year ago. Of the leasing income, nearly 18 per cent is ‘variable’, meaning rental income that varies according to actual sales movements. Net income for the first quarter was $447.9 million, down close to 50 per cent from a year ago. However, this was driven by non-operational factors that don’t reflect the underlying strength of Simon’s business. Real estate funds from operations (FFO) were virtually flat for the quarter at $1.11 million, and up 2.1 per cent year-on-year. FFO is a REIT non-GAAP metric that adds back real estate depreciation and other items to net income on the assumption that this provides a more accurate picture of how the company is performing.  Rents still going north while sales productivity remains on a plateau US portfolio occupancy was an enviable 95.9 per cent, edging up from a year ago, and minimum base rent increased 2.4 per cent year-over-year. Sales productivity is still marooned: at Simon’s domestic malls and premium outlets, specialty retailer sales per square foot were $733 for the trailing 12 months, down from $739 for calendar 2024, which itself was a decline from $745 per square foot in 2023. The plateauing of sales growth (albeit from a previously high level) makes the tariff situation of even greater concern. In North America, traffic and sales at the Canada/US and Mexico/US border factory outlet centres has slowed down as a result of “negative rhetoric”. Moreover, the outlook for tourism is more cautious, with Simon telling investors that he believed visitors from Canada, Mexico and Europe would be more muted both in numbers and spending. Indonesia gets a premium outlet centre During the first quarter, Simon opened a new factory outlet centre in Tangerang, a western outer suburb of Jakarta, Indonesia, and also acquired two outlet centres in Italy. At the end of the quarter it had a portfolio of 180 malls, lifestyle centres and premium outlets in the US (including the former high-end Taubman portfolio), plus 14 Mills megamalls. Outside the US it had a further 42 factory outlet centres, of which 19 are spread across five Asian countries: Korea, Japan, Thailand, Malaysia, and now Indonesia. The company’s influence on Asian retail is profound, eclipsing the pre-existing, somewhat ratty, factory outlet experience on the continent. While the pace of new development overall isn’t exactly breakneck anymore, meaningful progress is being made outside of the US. The new outlet centre in Tangerang, Indonesia, opened fully leased late in the quarter and boasts 150 brands, including luxury/designer names like Bally, Versace, Coach and Kate Spade, along with the mid-end staples of factory outlet retailing: global sportswear brands Adidas, Nike, Converse, Hoka and Sketchers. The centre’s features are consistent with its natural environment, with greenery, water features and a lot of shade, an essential element of the open-air premium outlet design. Tangerang City has a population of about two million, but it sits within a metropolitan area of more than 30 million and is easily accessible from the international airport to the north, giving the centre a formidable potential customer base. CEO Simon, despite all the uncertainties around US consumer trends, tariffs, tourism and border traffic, is bullish on international markets and said the playing field in Europe and Asia remained unchanged. Finally, a bit of certainty in a year where almost nothing is easy to predict. Developments and capital investment also remain on track but David Simon says the company is “instinctively more cautious” at the present time. “The development pipeline is there, but we’re not going crazy with it.”