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Simon Property Group Inc  (NYSE:SPG)
Q3 2018 Earnings Conference Call
Oct. 25, 2018, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen and welcome to the Third Quarter 2018 Simon Property Group Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the call over to Mr. Tom Ward, Senior Vice President of Investor Relations. Sir, you may begin.

Tom Ward -- Senior Vice President of Investor Relations.

Thank you, Joe. Good morning everyone and thank you for joining us today. Presenting on today's call is David Simon, Chairman and Chief Executive Officer. Also on the call are Rick Sokolov, President and Chief Operating Officer; Brian McDade, Chief Financial Officer; and Adam Reuille, Chief Accounting Officer. Before we begin, a quick reminder that statements made during this call may be deemed forward-looking statements within the meaning of the Safe Harbor of the Private Securities Litigation Reform Act of 1995 and actual results may differ materially due to a variety of risks, uncertainties and other factors. We refer you to today's press release and our SEC filings for a detailed discussion of the risk factors relating to those forward-looking statements. Please note that this call includes information that may be accurate only as of today's date.

Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included within the press release and the supplemental information in today's Form 8-K filing. Both the press release and the supplemental information are available on our IR website at investors.simon.com. For our prepared remarks, I'm pleased to introduce David Simon.

David Simon -- Chairman and Chief Executive Officer

Good morning, we're pleased to report another record quarter with continued strong operating and financial results. Our investment in our product remains unabated with a long-term view of creating compelling integrated environments with critical mass that serve as the hub of retail dining, entertainment, and socializing within their communities. We completed several significant new developments and redevelopments in the quarter, are under construction on others, and announced more transformational mixed-use activity that will further enhance the value of our real estate and grow our cash flow.

Turning to results, highlighted FFO by $1.090 billion or $3.05 per share, an increase of 5.5% per share compared to the prior year. We continue to grow our cash flow and report solid key operating metrics. Total portfolio NOI increased 4.1% or approximately $188 million to date. Comp NOI increased 2.3% for the year-to-date period. Leasing activity remains solid. Average base rent was $53.88, up 2.8% compared to last year. The Mall and Premium Outlet recorded leasing spreads of $7.59 per square foot, an increase of 13.9%. We're pleased that retailer sales momentum continued in the third quarter. Our Mall and Premium Outlets was $650 compared to $622 in the prior year period per foot, an increase of 4.5% and sales were strong across the portfolio in the third quarter. Retail sales productivity has increased each month over the last 12 consecutive months. Occupancy at the end of the quarter was 95.5%, I'm sorry, 95.5%, an increase of 80 basis points for (ph) the second quarter and an increase of 20 basis points compared to prior year.

On an NOI weighted basis, our operating metrics were as follows: retail sales would be $817 per foot compared to $650, occupancy would be 96.3% compared to 95.5%, and average base minimum rent would be $71.21 compared to $53.88. The end of September, we opened Denver Premium Outlet. Center is fully leased, it's off to a great start. Center is another terrific asset within a great portfolio and a great location and a strong and growing market. Construction continues on two international outlets expected to open in 2019: Queretaro, Mexico and Malaga, Spain and we announced a 50:50 joint venture with Macerich to create Los Angeles Premium Outlets. This will be an exciting project on fantastic real estate and obviously one of the country's most attractive markets.

Now at the end of the third quarter, redevelopment and expansion projects were ongoing across all of our platforms in the US, internationally and internationally we started construction on significant expansions of Paju Premium Outlets in Seoul and Tosu Premium Outlets in Japan. Last week, we held the ground breaking of our landmark mixed-use transformation at Phipps Plaza that will include Atlanta's first Nobu Hotel and Restaurant, a Class A office building, a Life Time Athletic resort, food hall and outdoor community gathering space all in the area of one department store that we reclaim. We also announced our transformational vision for Northgate in Seattle. We're thrilled to collaborate with NHL Seattle, make their training center and corporate headquarters, an integral element of the reimagined Northgate community. This project is a prime example of our unique ability to repurpose our well-located real estate to create compelling ways for consumers to live, work, play, stay sharp and now skate at our destination.

Now Sears, over the last several years as you know including what we just recently did at Phipps, we have reclaimed a number of our unproductive stores in our portfolio -- department stores in our portfolio. The reclamation of unproductive space specifically some department stores is an unprecedented opportunity for us to dramatically enhance the productivity of the space, our centers overall, and we will continue to proactively recapture additional stores to further enhance our centers. The SPG portfolio currently has 33 Sears stores that Sears has closed or announced they will be closed. Of those 33 stores, we have through proactive action, control 22 of those 33, five of which are in our joint venture with Seritage. Of those 17 that we control, Sears will no longer exist in 2019, they will be demolished, replaced and redeveloped. Now, turning back to the 33 that Sears owns and controls, five that will be closing and Seritage controls six for the total of 33, not including the ones in our joint venture and they are -- Seritage is in the process of redeveloping those and are in construction -- under construction with six of those former Sears stores. The remaining we have 29 that are currently operating, eight are owned by us and leased to Sears, four are owned by Seritage and leased to Sears, and 17 are owned by Sears.

Turning the capital markets, during the first nine months, we closed on 13 mortgages totaling approximately $3 billion, of which our share is approximately $1.3 billion with a weighted average interest rate of 3.83%, term of 8.4. We have the highest investment grade credit rating in the industry. Our net to EBITDA was 5.4 times, our interest coverage is 5, which is well in excess of our peers, well in excess on both fronts. Our current liquidity is $7 billion. We continue to have excess cash flow, which we can reinvest in our business. Today, we announced our dividend at $2 per share for the fourth quarter, a year-over-year increase of 8.1% and we're approaching the $100 per share dividend since we've been public, which we will celebrate in December. So $100 have been paid to the shareholders roughly in dividends through our public company existence. Our total dividend payment will be $7.90 in 2018, which is an increase of 10.5% compared to last year.

Now turning to guidance, we once again raised our full year guidance to $12.09 to $12.13. Just to keep in mind, this is an updated range compared to our -- updated range includes compared to our original guidance of $11.90 to $12.02 and this range -- this new range is a growth of approximately 7.9% to 8.2% compared to our reported FFO of last year. So, we're ready for questions, but before I turn it over, we had a very strong quarter and we continue to grow our cash flow.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question comes from Steve Sakwa with Evercore ISI. Your line is now open.

Stephen Thomas Sakwa -- Evercore ISI Group -- Analyst

Thanks. Good morning, David.

David Simon -- Chairman and Chief Executive Officer

Good morning.

Stephen Thomas Sakwa -- Evercore ISI Group -- Analyst

I just wonder if you or Rick could just talk maybe a little bit about the leasing environment and as you sit here today, looking forward, maybe just reflect on the last year and how you felt maybe a year ago and just sort of give us a flavor for the leasing environment.

David Simon -- Chairman and Chief Executive Officer

Well, we tend to take a longer-term view, so we can talk about quarter-to-quarter or even year-to-year, but as you know, we take a longer-term view and I would say, certainly our long-term view has not changed. The activity has increased from '17 to '18. I think there's clearly -- for the retailers that are investing in their product, there's increased sales, as you know, we showed you that and I'd say it's certainly generally better than last year, but again, you got to take a longer-term view, we have more activity going on, there's more new concepts on the restaurant entertainment overall retail you've got the folks that start out on the Internet that want to (ph) own physical stores. So I'd say generally, the environment is better, but as you know, we never really -- we're overly concerned about maybe a less robust leasing environment in '17 because we tend to take longer term views of this. Happy for Rick to add anything he would like to this.

Richard S. Sokolov -- President and Chief Operating Officer

The only thing that I would add is that there is I sense an acceleration. In the last year at this time, I think people were talking, but there was less aggressive approach to opening new stores. I think, as David said, the people that are well positioned are now more encouraged to open stores. Obviously, sales are better, the profitability is better and we are very well positioned. We don't talk about it a lot, but every day, every one of our properties is getting better because of the capital we're spending.

Stephen Thomas Sakwa -- Evercore ISI Group -- Analyst

Okay, David, just secondly, I just noticed on the leasing spreads information you provide on page 22 of the supplemental. There was a pretty big jump in the square footage of openings and a pretty sharp decline in the average rent per foot and I realize these are trailing 12-month figures, but it almost appears like maybe a different set of assets is being compared now. Do you have any comments on that?

David Simon -- Chairman and Chief Executive Officer

Sure, we're again I -- what's the most important thing that I focus on, just so we're clear.

Stephen Thomas Sakwa -- Evercore ISI Group -- Analyst

(multiple speakers).

David Simon -- Chairman and Chief Executive Officer

You got it. So, and these -- the operating metrics, it's funny. Just to take a step back, so when sales were -- it's always like, OK, what's the operating metrics de jure (ph). And the reality is our business is changing in that we're going to be recapturing these boxes that pay very low rent and we're carving them up and we are now showing to you that love metrics, OK, the importance of the embedded growth in our business by recapturing these leases that pay very low rent. So we put all of our openings and all of our closings in that number so that you can see the embedded market rent growth that we have in our business.

Stephen Thomas Sakwa -- Evercore ISI Group -- Analyst

Okay, thanks. And then lastly, just in the other income, I know there were different components and last year you had some securities gains and this year you didn't, but is there any -- there was a big jump in the other income and I just know there's a lot of different things that run through that, but are there any comments, things you could share?

David Simon -- Chairman and Chief Executive Officer

So, last year, as you know, we sold the Seritage stock at $48, $49 (ph), which I think if I look today, it was a pretty good trade to sell it at that rate. In other income, we did get our business interruption, not all of it, but some of it from Puerto Rico and that's what's in other income, it doesn't flow through the operating numbers. That was -- we always had planned to get that and it's always been in our numbers, but you can't book that until you actually get the cash from that according to GAAP and then we got some of that BI in the third quarter.

Stephen Thomas Sakwa -- Evercore ISI Group -- Analyst

Okay. Is there a number you could share with us that's kind of embedded in that other income or --

David Simon -- Chairman and Chief Executive Officer

Well, it's the big jump in that -- the vast majority of it, yes.

Stephen Thomas Sakwa -- Evercore ISI Group -- Analyst

Okay, it's a vast majority of the $20 million increase (ph).

David Simon -- Chairman and Chief Executive Officer

That's correct and it really is -- so you know, we always planned on getting the BI, you just can't show it in your normal minimum rent or right CAM recoveries or any of that information. It's got to be in other income.

Stephen Thomas Sakwa -- Evercore ISI Group -- Analyst

Okay, that's it from me. Thank you.

David Simon -- Chairman and Chief Executive Officer

Yes, no worries, thank you.

Operator

Thank you. Our next question comes from Christy McElroy with Citi. Your line is now open.

Michael Bilerman -- Citi Investment Research -- Analyst

Hey, it's Michael Bilerman here with Christy. David, can you just elaborate a little bit on Sears, your name to the creditors committee yesterday. So maybe talk a little about the role that you plan to play there and you went through a lot of different numbers in terms of the Sears boxes. If you just look sequentially, you went from 59 effectively down to 46, which includes the 17 which are closing. So there's 13 stores during the quarter that fell out, I wasn't sure whether those were recaptured during the quarter and formed part of some redevelopment plan, but just looking sequentially sub to sub (ph) 59 to 46 inclusive of the 17 that are closing. Just try to get some color there.

David Simon -- Chairman and Chief Executive Officer

Yes, I think the thing to focus on, we're putting Sears in our rearview mirror. Okay, so what we're trying to explain and there are a lot of moving boxes and obviously, the whole situation is a tragic frankly, put aside how it affects us, we think this is a unique opportunity, we're going to redevelop this, we're going to generate positive momentum with the properties due to this, we're going to reinvest in the communities, we're going to be able to drive traffic now from this box, put all of that aside, we're going to be able to make money on this, put that all aside, if I may and just, it's a tragic set of events that a company that's been around for so long is in this state of affairs. So that to us is -- that's what I think about -- it wasn't that long ago, 10, 12 years ago that 300,000 people worked at Sears. Okay, so I mean I think we should put that in perspective, but let's focus on what we -- the task at hand and what I'm trying to do and there a lot of moving parts, but basically and what I explained I'm sure I garbled some because you know I have a hard time spitting out words, but, the reality is we have 33 stores that have are closed or in the process of closed at the end of this year. We control 22 of those and five of those are in our joint venture with Seritage. Of this 17 that we have unmitigated control, Sears will no longer exist in '19. They will either be torn down, redeveloped, released, but they'll be in our rearview mirror. So we are effectively down to 29 operating stores, we own 8, Seritage owns 4 and then the 17 are owned by Sears and we'll have to wait and see what happens on the, in terms of whether they'll continue to operate those or not.

Obviously, you know, we're planning for the ultimate unfortunate demise of Sears and we're ready for it and we have the balance sheet and the capital with intellectual and human resources to deal with these set of events. So that's what I would focus on. The other thing to keep in mind is that there is also Seritage that owns some in that and they've done a reasonable job of releasing some of their space. So those are the numbers that I would focus on and it's still moving around because they -- some are closed, some aren't, but those are the numbers. At the end of the day, next year we'll report 29 Sears stores. That's it.

Michael Bilerman -- Citi Investment Research -- Analyst

Right. It sounds like there was at least 11 that are controlled by others, other than you and Seritage that closed during the quarter, which was in that 33 to 22, right?

David Simon -- Chairman and Chief Executive Officer

That's correct. Sears owns the balance of those. That's correct, that is correct.

Michael Bilerman -- Citi Investment Research -- Analyst

But the creditors committee and sort of your role there and (multiple speakers).

David Simon -- Chairman and Chief Executive Officer

There is no comment that I can have on that. We, for better or worse, we tend to be on creditors committees with large unfortunate bankruptcies of retailers. So we have a certain expertise in that. We'll see how it all plays out, but beyond that I can't, I really can't comment.

Michael Bilerman -- Citi Investment Research -- Analyst

Can you talk a little bit about international in terms of what's happening there. Obviously, Klepierre, its shares have come down meaningfully alongside a lot of other real estate stocks in Europe. There's obviously been consolidation activity going on there in part. Klepierre tried to make the bid for Hammerson, but Hammerson went after Intu and now Intu has its own consortium bid from their main shareholder alongside capital sources. How are you thinking about Europe overall, both of your investment in Klepierre here but then also consolidation opportunities in that region whether that would be Simon-led or Klepierre-led?

David Simon -- Chairman and Chief Executive Officer

Well, that I would classify that as an add-on sentence, but let's put that aside. I'm very comfortable with our investment in Klepierre. They have I mean I have to look at the long-term prospects of that company measured against kind of the short-term volatility and from a long-term perspective, I don't really see any real change. There's very little new development, they have a lot of redevelopment activity, they are good operators getting better, so our investment is solid and stocks go up, stocks go down, we take a long-term view. We have exposure in Europe, not only through Klepierre, but obviously through McArthurGlen and through our interest in value retail, I would tell you that the market generally ignores and under estimate the value that we have outside of the US whether that's Mexico, Europe, Asia, there is no appreciation of the value that we've created in that. That's fine. We continue to do what we do. I don't really you know we, I think we, we mentioned briefly what Klepierre did on Hammerson, that's in their rear view mirror. I think that's better coming from them. I think the CEO has made that clear to investors. Not much I can add to that and you know, there's nothing I can add to what's going on with Intu. I mean we don't, we, as they say, we don't have a dog in that hunt, so here in Indiana that is, but so I continue to think Europe is fine. It's certainly -- the better is -- I think the trends there are similar to ours in that the better assets will get better and the ones that are smaller unless there are uniquely positioned will be put under pressure, but even the better ones will grow, will offset whatever diminution might have happened on the little ones. So I'm generally feel pretty good. I mean there are parts in Europe that you might want to avoid i.e., Turkey and other places like that given the currency and the lira and what happens on that front, but generally I think it's OK. Look, I'm sure the Klepierre team has a focus on Italy, what's going on there, you have Brexit. So you could certainly take a contrarian view at the right time. We did that in 2012 when we invested in Klepierre. Could we be coming into another contrarian point of view? Perhaps, but we're really not overly active other than making sure our investments grow in value.

Michael Bilerman -- Citi Investment Research -- Analyst

Good thank you.

David Simon -- Chairman and Chief Executive Officer

Sure.

Operator

Thank you. Our next question comes from Jeremy Metz with BMO Capital Markets. Your line is now open.

Jeremy Metz -- BMO Capital Markets -- Analyst

Thanks, good morning.

David Simon -- Chairman and Chief Executive Officer

Good morning.

Jeremy Metz -- BMO Capital Markets -- Analyst

Just going back to the Sears boxes, in terms of the 17 that you're expected to close by year end, the 22 including the Seritage JV. I know it's a little early here still, but can you sort of frame it out from a timing and capital allocation perspective in terms of how much of this you really think will fall into redevelopment potentially kick off some larger redevelopments and what sort of rough capital investment this could possibly represent?

David Simon -- Chairman and Chief Executive Officer

Well, it -- remember, part of -- the vast majority of the 17 of the 22 we actually transacted to get back, when was that? November. Okay, so remember that just to put that in perspective. So those plans are already moving and not just to name a few, Northshore, Cape Cod, Brea, Stoneridge, Broadway, Midland, you know just to name a few. So all of those are coming online and that's why I made the comment that the 17 that we control. Sears is going to be gone. There won't be, you know, there will not be a Sears, it will be either gone under construction or we'll take the box and there will be a new retailer hopefully open by then, but obviously, it does take time. So the 22 of the 33 are basically all under redevelopment. The capital of that is over $1 billion. That's always been in our plan and there's no surprise there.

And so that's, that we are moving at a high level to redevelop those boxes as quickly and as smartly as we can. Then there is 11 that Sears and Seritage own that we're not involved in. I think Seritage of those six and again, there's a lot of numbers here, that's why I'm repeating myself and I appreciate the question. Of those six, Seritage has already redeveloped over half of those. So those are moving, they're doing those independently in conjunction with us, but independently and that's fine and then there's five that's Sears owns and then we'll see what happens with that real estate and I think it's a blanket statement that we would love to own at the right price any of the real estate that we don't control and so we patience, seeing how this plays out is important. So I hope that answers it, but it will be well over $1 billion. You'll start to see in the 8-K this stuff as we approve it. I don't know, I'm asking, Tom, I don't know, we just approved Cape Cod, Northshore. There are some in there. So you're going to see it, you know, we have a busy capital appropriations committee. We approved three or four Monday, you'll see those in the fourth quarter numbers. So it's all moving. It's all moving quickly. We're -- and I would tell you generally other than obviously to see a retailer like Sears end up where it is I mean, this will be fine for us, we'll add value to the real estate. We wish it would have been done in a different manner, but we have to confront what we have to confront and I think we'll make this -- it will be an opportunity for us just like everything else we've dealt with over the last 25 years as a public company.

Jeremy Metz -- BMO Capital Markets -- Analyst

I appreciate that color and as we see that start to come on to the development pipeline, I mean is it fair to assume the same kind of yield you've been achieving that 7% to 8% on redevelopments or what (multiple speakers).

David Simon -- Chairman and Chief Executive Officer

Yes, no, look every deal is different but that would be our goal for sure.

Jeremy Metz -- BMO Capital Markets -- Analyst

Great and second one from me, just going back to the leasing commentary about the environment being a little better here today. Are you starting to see this translating to your leases as well in terms of timing to get deals done, terms, leasing capital or is it more just on the activity front at this point and then in terms of rents, we've talked about this before, but you're not necessarily going to benefit of sales in an area move online, but you do feel the returns at the store level. So to that end, are you starting to push occupancy cost to account for that leakage or are you looking at other metrics to understand tenant profitability and therefore what a tenant can pay and are tenants accepting that this whole model maybe needs to change or is it just more of an educational process on both sides though at this point?

Richard S. Sokolov -- President and Chief Operating Officer

This is Rick, obviously you covered a lot of ground. Let me take it apart. One our terms, our TA are certainly within the norms that we've established over the years. Our tempo of leasing is accelerating in that we now have more tenants coming in saying, all right, let me look at five, 10, 15 openings for 19 (ph) that is an acceleration from what we had this time last year. That's encouraging our occupancy costs, today are the lowest they have been in the last 2.5 years. So that's encouraging and that's taking into account the fact that there is an understatement of sales productivity. All of our leasing agents are totally aware of knocked at potential, but that fact and as we are pricing our real estate, we are prosecuting that to the extent we can to drive rents and you've seen our average base rent go up and our spreads are going up.

David Simon -- Chairman and Chief Executive Officer

I would just add though, I mean it is -- retailers are smart and savvy, they are doing what they need to do on their cost structure and so it's not easy, but like I said, we have a unique position in this industry, we have really quality properties, a lot of scale, we have the ability to think, we have the ability to be patient, we have the ability to say no. We take gambles, we win, we lose, we draw. So we do OK, but it continues to be -- there is still very thoughtful negotiations -- everybody is focused on increasing their profitability. They are no different with us and we just, we try as hard as we can to create a decent win-win scenario and then when we do that, the math spits out, but it's better than it was last year, the long run. We have no worries about where we're going to be and I think as we continue to redevelop, we're going to make these properties fantastic, but in the meantime, we're going to be in the spot where it's going to be a thoughtful diligent, but appropriately focused negotiation between us and our best clients.

Jeremy Metz -- BMO Capital Markets -- Analyst

Thanks for the time.

David Simon -- Chairman and Chief Executive Officer

Sure.

Operator

Thank you. Our next question comes from Craig Schmidt with Bank of America. Your line is now open.

Craig Schmidt -- Bank of America -- Analyst

Thank you.

David Simon -- Chairman and Chief Executive Officer

Hi Craig.

Craig Schmidt -- Bank of America -- Analyst

Hey, I noticed on your redevelopment activity, the yields for the Premium Outlet redevs went from 10 to 11 and The Mills went from 11 to 13. I just wondered what was pushing those returns and is it perhaps that the leasing is going better at these redevelopment efforts?

David Simon -- Chairman and Chief Executive Officer

I wouldn't -- those are hard to like extrapolate trends, I think it's just a function of mix. Nothing that really jumps out, but I'm sure we'll look at it and Tom could answer, but I just think it's probably just mix off the top of my head. Nothing major, no change -- we do have the ability I think to continue to add value through our redevelopments, new development efforts and it goes up and it will go down, but it will -- that gives you the directional idea of kind of where things are.

Craig Schmidt -- Bank of America -- Analyst

Okay, so and I mean it's clear that although the construction costs are going up, that is really isn't impacting your returns on these?

David Simon -- Chairman and Chief Executive Officer

Well, that's a good question and let me just say this, everything -- we are -- it's a good point and let me address this, this way, I mean we have no risk at this point and things always change, but at this point, we have absolutely no risk in what we're building today. You always have contingency in there, but nothing what I would say beyond our contingency and obviously our contingency is in our 8-K. We are seeing a general increase in construction cost, it's really a market by market scenario, but the rise -- potential rise of those costs are not in any way at the point where we're saying we can't make the numbers work. I don't anticipate that happening, but obviously we're paying attention to it.

Craig Schmidt -- Bank of America -- Analyst

Okay, thanks and then we keep hearing about new technology in both retail and just the retail center. I wonder if there's anything new that might surprise consumers this holiday season whether it's unmanned checkouts or mobile apps making things more personalized or virtual or augmented reality?

David Simon -- Chairman and Chief Executive Officer

Well, I think we and all sorts of retailers and technology companies are focused on a couple of things. Payment obviously, driving traffic, which could be through a lot of individual personalized (technical difficulty) the checkout process and improving that is really important and then the ease of parking as well. So lots of experiments, lots of things happening by us and others, by retailers and by technology companies. I think there is clearly a bounce back on the physical world compared to the pure online Internet just because I do think payment and ease and convenience can be enhanced by technology in the store environment. So we're looking forward to those introductions into the physical world. I think that will make physical shopping a lot more easier and convenient and then obviously there's so much benefits to physical shopping compared to looking on your phone and trying to trying to buy stuff. So and what's fascinating to us, fascinating and we see it because remember we have our rights and we can see the high level of returns, the high level of returns that we see from online sales to (ph) the physical stores is never talked about OK, but if you wanted to go write at a research report, Craig, that would be the big focus because everybody wants to say here's the gross Internet sale, but they don't want to tell you the net, they want to hit the physical world, but the returns are staggering, OK especially in the product that I'm discussing, but no one wants to talk about that.

Craig Schmidt -- Bank of America -- Analyst

I understand your frustration, but thank you for your answers.

David Simon -- Chairman and Chief Executive Officer

Sure. Well, I'm not frustrated -- by the way, just so it's clear, I'm not -- I'm just saying it's very interesting that no one talks about. It's just a fact.

Craig Schmidt -- Bank of America -- Analyst

Understood, thanks.

David Simon -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Alexander Goldfarb with Sandler O'Neill. Your line is now open.

Alexander D. Goldfarb -- Sandler O'Neill -- Analyst

Hey, good morning. Good morning out there, David. So two questions from us. First, you mentioned the international and you think that it's under-appreciated, but just curious, I mean obviously in the US you guys have a very efficient platform, but globally, you know you're definitely spread out. So just sort of curious how you would compare your overseas platforms efficiency to the US and then as you expand into like Thailand or the Middle East, how those markets are initially versus once you've get a concentration of assets, do you really see a material improvement in operations or the Premium Outlets work very well as a stand-alone or in clusters?

David Simon -- Chairman and Chief Executive Officer

Well, there is, I'd say both. I mean the reality is our joint ventures with the Premium Outlet business, is -- has its own group of personnel, so they can add -- as they add product to their platform, I mean they get scale. It's safe to say no one -- none of our investments overseas has anywhere near the scale and the overhead metrics that we have. I mean our overhead metrics are under-appreciated. I mean, Tom can give you the numbers, but many of our peers are at 10% of you know NOI and we're at 3%, what give me the numbers.

Tom Ward -- Senior Vice President of Investor Relations.

We're 3%.

David Simon -- Chairman and Chief Executive Officer

We're at 3% and they are 8%, 9%, 10%. So all of our places don't have quite that scale. I could certainly if I wanted to or could, I could certainly probably find a weighted scale, but they're doing fine and so, you know it is what it is. So they all benefit from adding good product to their platforms. I would say none of them have this scale that we do and we don't impose our scale to them at all and I don't think that we will, but you can't rule it out. And if we did, I'm sure we could do it -- we could have better, better, better results, but at the moment, everything's good, so we let it go.

Alexander D. Goldfarb -- Sandler O'Neill -- Analyst

Okay and then the second question is, you guys on the last call you talked about converting retail to other uses and obviously, you had the deal out in Northgate where it looks to be sort of cutting them all in half. As you guys increasingly go through, is there like basically not exact percentage, but a view of how much existing retail you could do without to replace with things like apartments or hotels or office versus how much you would increase the overall square footage of your properties to add incremental uses. So trying to get a sense of how much of your existing retail would you scale back to increase uses versus how much of the new mixed-uses would be incremental to the existing retail to target there?

David Simon -- Chairman and Chief Executive Officer

Well, it's hard to give you a number, but let me look at it this way. Okay, so I think the greatest opportunity that we have -- I think we're in good shape with small shop. There's always going to be a mall here or there that has too much small shops, but I think we're in decent shape there and so what -- we have the opportunity to do and we are doing as we probably the mall of the future doesn't need five, six, three, it depends on the mall, but it doesn't need the department stores and then the ability to reclaim that allows us to densify the properties and I think we have that opportunity in a rather large scale. So, again, this is where we suffer maybe from the scope of what we do and all the activity that we have, but take Phipps as an example. So this is -- was that put in the 8-K or not?

Tom Ward -- Senior Vice President of Investor Relations.

Yes.

David Simon -- Chairman and Chief Executive Officer

Okay, so it's in the 8-K now, all right. So take Phipps, we had one department store belt that was a 140,000 --

Richard S. Sokolov -- President and Chief Operating Officer

160,000.

David Simon -- Chairman and Chief Executive Officer

160,000, thank you, Rick. We are adding essentially 300 plus -- well, we have the hotel -- the office is 324, right (multiple speakers) and the hotel is, how big is that? Whatever, OK. So we're -- let's say we're adding 500,000 square feet and something that was doing 160,000 that was taking up 160,000 square feet and I encourage you to look at the renderings. Do we have the renderings on our website?

Tom Ward -- Senior Vice President of Investor Relations.

We can get them out.

David Simon -- Chairman and Chief Executive Officer

Okay, we should, let's get them. Do you have the video with me and Mr. De Niro and Shep Noble (ph) on our website and Rick, because it's out there. Okay, so we won't, but we'll do that and Northgate, you say the mall cut in half. I got to tell you Northgate is so much bigger than that and again where we have up to 800 plus apartments.

Richard S. Sokolov -- President and Chief Operating Officer

1200 apartments (multiple speakers). Frankly, we're going to have 1200 apartments, 600,000 feet of retail, we're going to have probably 600,000 feet of office and the NHL Seattle Training Facility.

David Simon -- Chairman and Chief Executive Officer

So I mean the scope of some of these things are really large, but if you're looking for, here's the number I can't give it to you other than, as these -- we do feel like there's a lot of fun stuff to do. It's aggravating in the sense that it's you're -- you have to hurt all the catch (ph) in terms of accomplishments, but once we build something. I mean like once we now the dips will be open hopefully -- I'm pushing for two years, but maybe 2.5 years. I think we're going to be really proud of that and our shareholders will be happy and Rick and I will have great sushi. So what else could you want?

Alexander D. Goldfarb -- Sandler O'Neill -- Analyst

Sounds pretty good. Okay, that perspective is helpful. Thank you, David.

David Simon -- Chairman and Chief Executive Officer

Sure.

Operator

Thank you. Our next question comes from Caitlin Burrows with Goldman Sachs. Your line is now open.

Caitlin Burrows -- Goldman Sachs -- Analyst

Hi, good morning. So your dividend is going to be up 10.5% this year, which is great. I guess I was just wondering, considering your growing cash flow, how are you thinking about prioritizing on development and redevelopment where you are obviously very active versus increasing the dividend and potential acquisition opportunities right now?

David Simon -- Chairman and Chief Executive Officer

Well, I'd say to you that I would expect obviously, Board decision blah, blah, blah, but we would expect to continue to increase our dividend next year. Clearly, we will be -- our redevelopment is really active and that could be increased -- again the reality is, Caitlin, that it takes time. So take Brea which we control that Sears store, it's going to be unbelievable, but we have another six months of permitting. So we're able to -- I'd love to like just stuff it all into the box and do it all at once, but the reality is we can't because we have external constraints. I wouldn't say necessarily capital constraints at all, but, and so I'm looking at Brian and he's saying, we don't have any, but you know maybe I tend to be a little conservative on that front, but anyway, we just have constraints on doing the redevelopment only because we've got the permitting and so on and so forth. So that continues to be a big priority. Obviously, new development is not -- in the US is not wildly active though I will tell you that the deal with Macerich I think is going to be a really good project, but that's a three-year essentially, OK. So that takes time and that we are really -- we think that's going to be really a good deal. We got another one in the works in another area of the country and probably two more outlets that we're going to build, but again those are over -- one could be a little quicker, but two years or so. So that continues to be a focus. Internationally, it's basically we take our cash flow there and reinvest it. So it's not what I call Simon capital. We're actually not writing. We may not get repatriation back to us, but we're basically doing what many thoughtful companies do is they take profits and they reinvest it and have more profits and keep doing it until they can't do it anymore. So, we don't see that and so then the next thing is look, we're going to, we still have, if the market doesn't like our business or doesn't like what we're doing, we still have a focus on buying stock back and then, we're not all that active in the acquisition area. We could do a deal here or there, we certainly are interested in reclaiming at the right price certain department stores and that's kind of how we're thinking about the world right now. I hope that's helpful.

Caitlin Burrows -- Goldman Sachs -- Analyst

It is and just in terms of the time it takes. Is there any-- i think there is some concern out there with the amount of department store reclaims that you have and everyone else does that finding those new uses is taking longer. Is that part of it or is it not?

David Simon -- Chairman and Chief Executive Officer

Not with us. No way, that's not our issue. Our issue is execution, permitting, has nothing to do with demand, supply and demand and has nothing to do with capital. That's not us. Sorry.

Caitlin Burrows -- Goldman Sachs -- Analyst

Great to hear and then maybe just last quickly, looks like you guys have $600 million of 2.2% debt maturing in early '19. Just wondering the plans to address that and if it were a 10-year unsecured deal, what you think the rate could be?

David Simon -- Chairman and Chief Executive Officer

Well, we'll either use our cash or certainly we have $7 billion available. So that's just basically standard operating procedure, no big deal there. We could go to the unsecured market, obviously there's a lot of rate volatility today. We wouldn't probably do it today, but we'll have to wait and see kind of where the world shakes out, Brian, I don't know if you want to add anything?

Brian McDade -- Simon Property Group, Inc.

Yes, look, I think our cost of money today on a 10-year basis would be about 4.125% (ph) but we have, as David said, we've got over $7 billion of liquidity, so we have plenty of options to address the upcoming maturity. It is our only maturity we have in 2019.

David Simon -- Chairman and Chief Executive Officer

Yes and I would say to you what's fascinating, we have very, very little debt coming due in '19 or '20 both on the unsecured and secured basis. So we're in a very good spot to do that and I would also again, it's overlooked, but if you look at our peers, internationally, north of the border, domestic, Far East, nobody has our balance sheet, nobody is five times debt-to-EBITDA, nobody people are 2x of us, not seven, but 10 plus, please appreciate that.

Caitlin Burrows -- Goldman Sachs -- Analyst

(technical difficulty) commentary.

David Simon -- Chairman and Chief Executive Officer

Okay. So you broke up there, but anyway, so we're in good shape there and we'll see what happens on that front.

Caitlin Burrows -- Goldman Sachs -- Analyst

Great, thank you.

David Simon -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Jeff Donnelly with Wells Fargo. Your line is now open.

Jeffrey Donnelly -- Wells Fargo Securities -- Analyst

Thank you. David, I can't wait for you to co-star in De Niro's next film. I guess a question for both of you, Rick and David and I'm just curious in situations where you guys have redeveloped anchor boxes, do you have any statistics you can share on the change in foot traffic sales or asking rents of the property since the new anchor opened?

David Simon -- Chairman and Chief Executive Officer

Yes, I'm sure we could put something together. Here's what's interesting that we're seeing again, I wouldn't like -- this is anecdotal. So don't know like go you know and I don't know if this means anything and so it's too early, but we've had department store closings in the portfolio, -- there is no hiding that right and we have seen and again, nothing drives our business, this does not drive our business one way or another because you know the size of the portfolio, but what we've seen which is actually encouraging is that the in-line sales are actually getting the benefit of the department store closures and we're also seeing some of the other department stores pick that business up.

So at the end of the day like I said, maybe our industry got just too carried away with having all these big department store boxes. As we transition to the smaller more appropriately sized group and they'll be centers that lose in that, look, we may have one or two that we're nervous about. The reality is the rest of that center and we will get a better and bigger benefit. I think we'll get healthier and we're starting to see that, but again I'd say that's anecdotal and nothing to quantify, but we are seeing that in some of these cases, which I think is encouraging and that's what we want. We don't need all of those, we don't really get much of an economic benefit from those boxes. We've taken over driving the traffic to the center from those boxes as that would have been the historical reason to have them.

So this could be healthy other than, Rick and I pull our hair out, we want every box leased, we want everything redeveloped, the team is moving really hard and everybody is like we're playing very hard here to make this stuff happen quick. I mean that's the downside is that we -- not that we ever have, but we are not coasting, OK. We're not coasting. So you know not that you should feel sorry for us, but I'm not asking you to, but that's the reality. We're humping and pumping and I think this will be -- I really think other than yes, there'll be a couple of losses on the scoreboard for us, but at the end of the day, this will be a good thing for us and likely our entire industry.

Richard S. Sokolov -- President and Chief Operating Officer

One unambiguous result of replacing these anchors is there is no doubt that our total sales and total footfall at our properties is increasing. Just think about David's example at Phipps. When we're done, we're probably going to have triple the retail sales plus have all the hotel traffic, plus the office traffic. So in every instance what we're adding is going to be more productive and more dynamic than what we're replacing.

Jeffrey Donnelly -- Wells Fargo Securities -- Analyst

Thanks and I guess on Sears. I'm curious were they current on their rent before they filed because typically retailers build up a pre-petition receivable before they file, but it's sounding like some of their (ph) landlords that they were largely current, which frankly makes it seem like the bankruptcy started out as a bluff that they got called out on?

David Simon -- Chairman and Chief Executive Officer

Yes, we don't, we're not going to have a bad debt reserve. I think that's correct.

Jeffrey Donnelly -- Wells Fargo Securities -- Analyst

Just one last one on Sears, you mentioned about $1 billion of investment for the 22 boxes you are redeveloping. Should people think of that as like a rule of thumb as $40 million to $50 million a box or does that include investment beyond the Sears. I think people are looking for a number there and I'm curious how your return on investment you see in that $1 billion compares to what it has been on prior anchor redevelopments?

David Simon -- Chairman and Chief Executive Officer

I think what I would -- the best way to do this is really say to you Jeff that we're going to have the $1 billion plus of spend. We've been at this -- Tom, $1 billion for how many years? Six, OK. Six years, $1 billion spend a lot of -- So I think, Jeff, if you look at what we've been doing, we've been spending $1 billion and if you look at '15, '16, some of that may have been tilted toward new development more than redevelopment. It's now going to tilt more toward redevelopment, but it -- and I think it will go up, but that $1 billion of spend is not just those 22 boxes. That's a lot of stuff in there, OK. So like Phipps is a $300 million plus spend, it will be over two years, 2.5 years probably, but two years and that's not Sears. That was an old Belk store. Northgate, I mean the Northgate numbers could be much bigger than that, but again that will be over three years and again, that's not a Sears box. So when I say that $1 billion plus spend, it's like, it's what we -- it's the vision of what we see on redeveloping our business and it will tilt more toward that.

On the other hand, when you add Carson with Macerich and you add a couple more, I mean I think our spend on average has averaged about $1 billion, it could go up as we add these things, not going to go to $2 billion a year, but it could go to a $1.3 billion, $1.4 billion. We're doing our plan for '19. Tom told me not to invite anybody to our planning process, correct. So I'm officially not inviting anybody, but right now, we're looking at a little over $1.3 billion. I think it's just more than just Sears, OK.

Jeffrey Donnelly -- Wells Fargo Securities -- Analyst

Got it. Thanks guys.

David Simon -- Chairman and Chief Executive Officer

Sure.

Operator

Thank you. Our next question comes from Michael Mueller with JP Morgan. Your line is now open.

Michael Mueller -- JP Morgan -- Analyst

Hi, It looks like sales growth at The Mills has been similar to the rest of the portfolio. So I'm curious what's enabling you to drive the spreads that are significantly higher there?

David Simon -- Chairman and Chief Executive Officer

The Mills is -- they are very well positioned in virtually every market where they operate. They are a unique mix of full price, value, outlet, entertainment, food, they're all 1.5 million square feet to 2 million square feet and they just are able to attract a very broad segment of shoppers and they are performing well. There's no real magic, but we have a very broad use of potential users there and we've been able to keep those things very well leased and they are very productive.

Michael Mueller -- JP Morgan -- Analyst

Is the occupancy cost notably different than the other part of the portfolio.

David Simon -- Chairman and Chief Executive Officer

No.

Michael Mueller -- JP Morgan -- Analyst

Okay. That was it. Thanks.

David Simon -- Chairman and Chief Executive Officer

Sure.

Operator

Thank you. Our next question comes from Rich Hill with Morgan Stanley. Your line is now open.

Richard Hill -- Morgan Stanley -- Analyst

Hey, good morning, David. I wanted to go back to a comment you made I think at the outset, talking about how maybe your international portfolio has been -- I'm going to put words in your mouth, undervalued or underappreciated. When I look at your development pipeline, it looks like there is a tremendous amount of focus on international. So how are you thinking about that? I think it's just a little bit above 10% right now. As a percentage of NOI, as you think forward over the next five years, do you have a bright-line test as to where you want to get it or is it just you're going to do good deals when you can find them?

David Simon -- Chairman and Chief Executive Officer

I think Rich, it's -- we don't have a oh boy, we're -- we need to be at 12, 13, 14, 15, 20 (ph) that's not how we look at it. So the reality is and most of that as you know is through development that we've made some strategic investments, i.e., Klepierre and McArthurGlen that come to mind and I would and remember, we own a decent chunk of value retail, we don't really book any of their earnings and we've had this discussion, we only book when we get cash which is cash distributions, which is basically cost accounting for those of you who remember cost accounting, which I do, but long story short, we don't really have -- I don't have any desire to do more, I don't have any desire to do less, I only have desire to make money.

So we do think we add value, we do think maybe some of our international partners don't think so, but I think we do. So I think it's more deal driven, but it's an important part of our business and we will continue to invest in our platforms whether it's Japan, Korea. We announced a development in Thailand, which I think will be fantastic. That opens up that whole country. The tourism there is remarkable. I just happen to do a retail tour in Europe and the interest in that is the Far East, our Premium Outlet business in the Far East is very -- it has a high level of interest from our retailers. So I just think it's going to be -- how do we continue to drive and make money from our investments there. No desire one way or another.

Richard Hill -- Morgan Stanley -- Analyst

Got it. So just one quick follow-up question then. And maybe this is just that in light of some global consolidation that we've seen. Do you think landlords have to have global footprints to make money?

David Simon -- Chairman and Chief Executive Officer

I think it can help, but I don't think it's the -- and I've evolved on this. I don't think you need it. I think it can help. I wouldn't do a deal because that was a really important component of that transaction, i.e., exporting retailers from one level to another. However, it's not inconsequential. So take an example, I've met and I won't name a name, but I was just in Spain with a large retailer and the fact that we have a terrific relationship with them in the US and Klepierre has a terrific relationship in Europe, doesn't hurt, but it would -- if I had overpaid for the Klepierre stake, that relationship wouldn't make it up, OK so, but I think it is helpful, but it's not a reason to do a deal.

Richard Hill -- Morgan Stanley -- Analyst

Got it, thank you for that color. I appreciate it.

David Simon -- Chairman and Chief Executive Officer

Sure.

Operator

Thank you. Our next question comes from Tayo Okusanya with Jefferies. Your line is now open.

Omotayo Okusanya -- Jefferies -- Analyst

Yes, so my question is more numbers focused. I'm just trying to understand the nature of the guidance change and then just kind of given the $0.05 beat in 3Q, how come it is only the low-end of guidance that was raised rather than the high-end as well?

David Simon -- Chairman and Chief Executive Officer

Well, look, I don't know, there's lots of numbers, we're a big company. One deal, one of that is not going to change this, that and the other, but obviously, the currency in Europe is a little softer than it was. We tend to be conservative. There is nothing really to study or read into that, it's just a number, OK.

Omotayo Okusanya -- Jefferies -- Analyst

Okay, fair enough. David, all right.

David Simon -- Chairman and Chief Executive Officer

I mean (multiple speakers) Just a number, OK.

Omotayo Okusanya -- Jefferies -- Analyst

Okay, all right. fair enough. And then any update in regards to just lease accounting charges we should be expecting for 2019, I know, earlier in the year you've kind of given us some guidance to that.

David Simon -- Chairman and Chief Executive Officer

Yes, that's the same general number, no change in that. We're not going to -- we'll make that clear when we give our guidance in February, we'll absolutely make it clear the number that we've told the market more or less is the same number. There's not going to be much change there and we'll debate whether we should -- we might go a year just saying, here's what it would have been before and after just so people do it, but we might not, but you'll see the number and it's not -- and that's really the only thing that's going to and with these other new pronouncements, that's the only thing that's really going to be different and again it's not a huge number. Yes, basically 1% and it is pretty much over the, so it's 25 basis points per quarter and you can do the math to get to the number.

Omotayo Okusanya -- Jefferies -- Analyst

Great and then last one from me, I mean always look couple of years out, any other information you can just share about the JV with Macerich?

David Simon -- Chairman and Chief Executive Officer

No, it's a development JV. I think a lot of people from discussions with Macerich are probably familiar with the site and we take the site over in about a year and then we build. So we're happy to be part of it and we think it'll be a very good LA Premium Outlet center. So we don't get the site back until Carson does what they need to do and the timing on that is roughly a year from now.

Omotayo Okusanya -- Jefferies -- Analyst

Okay, great, thank you.

David Simon -- Chairman and Chief Executive Officer

Yes, thank you.

Operator

Thank you. Our next question comes from Haendel St. Juste with Mizuho. Your line is now open.

Haendel St. Juste -- Mizuho Securities -- Analyst

Hey, good morning out there. Dave, I guess a question for you on the lease termination environment. Are you guys still, are you receiving early termination buyout offers from retailers and what's your appetite or sentiment regarding these early buyout offers?

David Simon -- Chairman and Chief Executive Officer

We have some, it was lower this quarter -- much lower this quarter than a year ago quarter, right, it's in our -- actually you can see it in our 8-K. I don't remember the number off the top it was like --

Richard S. Sokolov -- President and Chief Operating Officer

It was $9.8 million for the quarter versus $13.2 million.

David Simon -- Chairman and Chief Executive Officer

So it's down. I'm not a big fan of them, frankly, but we'll do them. I would say we'll do them occasionally. I certainly, as you know, it's not in our comp NOI because we -- there is a lot of volatility associated with it. I would say generally the buyout requests are down pretty reasonably, Rick, do you agree?

Richard S. Sokolov -- President and Chief Operating Officer

I agree. There has been less activity this period than we had last year.

David Simon -- Chairman and Chief Executive Officer

So it's down, occasionally we did it. I'm not a big fan of it, but look, we'll do it for strategic reasons, one is maybe we're helping the retailer. Two is we want the space back, but it's not what we -- I would prefer not to like do a lot of it and but we will do it strategically and it's basically a function of whether the offer is fair and whether it helps the retailer and what our prospects for renewing the space quickly. So all that goes into the blender and then we make a decision one way or another, but we don't run around trying to look for it. It basically comes to us.

Haendel St. Juste -- Mizuho Securities -- Analyst

Got it, that's helpful, thanks. I missed it earlier you. I think you mentioned that you did receive business interruption income in the third quarter and you put in the other income, but I didn't catch a figure. Did you provide one?

David Simon -- Chairman and Chief Executive Officer

No, we didn't but it's the vast majority of the other income number.

Haendel St. Juste -- Mizuho Securities -- Analyst

Got it, OK. And capital allocation I guess a follow-up to an earlier question. You guys did not buy back any stock after being active it looks like second quarter, the stock is pretty much at the same level. Anything precluding you there from buying back stock or just maybe storing up dry powder for incremental read -- just curious on your thoughts on capital allocation regarding stock buyback?

David Simon -- Chairman and Chief Executive Officer

Yes, I just think we're conservative. I would tell you that I want to hug Brian and Andy every day, maybe I should get a little credit too. I just love our balance sheet where it is. I just love it, love it, love it. I just think it's so cool to have a balance sheet like that. So we're going to be really conservative, thoughtful and then as you mentioned, I mean obviously we've got a very active redevelopment pipeline, but I just love, love our balance sheet and I just think that's something that, it's got to be a unique set of circumstances to really do anything material to it.

Haendel St. Juste -- Mizuho Securities -- Analyst

Okay, last one, I guess same-store expense growth in the third quarter, can you provide what that was?

David Simon -- Chairman and Chief Executive Officer

I don't know, I mean, I have no idea but Tom will -- we don't really do that, it's just our NOI, our comp NOI -- we kind of -- it is what it is.

Haendel St. Juste -- Mizuho Securities -- Analyst

All right, I'll follow-up with Tom, thank you.

David Simon -- Chairman and Chief Executive Officer

Yes, no worries.

Operator

Thank you. Our next question comes from Ki Bin Kim with SunTrust. Your line is now open.

Ki Bin Kim -- SunTrust -- Analyst

Thanks, just to clarify something you guys mentioned earlier, the definition for leasing spreads and the volume, I think the pool changed. Now you are including anchor boxes. If that's correct, do you have any of those stats under the previous language available just for the sake of comparability.

David Simon -- Chairman and Chief Executive Officer

Well, it's not just anchors it's everything, it's whatever boxes come in and come out (ph) whatever theaters we renew, whatever amendments we take and we just, we sat back and said, look, this is our business and it's important to focus on that because I think the market wants to know, great, you're getting these boxes back, but are you -- is there value in that real estate, why are you paying for it if there is not value on the releasing of that and that's what we're trying to express. So we had -- I will say this, if you look at the earlier definition, we had positive spreads that we think the market would be fine with, but I think the more important thing is to focus on what the future of our opportunity set is and that's what we're trying to do.

Ki Bin Kim -- SunTrust -- Analyst

All right and if I think about Simon and the size and the scale you guys have, up well above your peers, it's still interesting that on simon.com you can't buy anything. Have you guys thought about that? Are there any initiatives under way. I could imagine having something like that could probably help a lot of your data collection initiatives?

David Simon -- Chairman and Chief Executive Officer

Have you been studying what we're up to? A very good question and an appropriate question and the best answer I have a really thoughtful answer and that is to stay tuned.

Ki Bin Kim -- SunTrust -- Analyst

Sounds good, all right, thank you.

David Simon -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Derek Johnston with Deutsche Bank. Your line is now open.

Derek Johnston -- Deutsche Bank -- Analyst

Good morning.

David Simon -- Chairman and Chief Executive Officer

Good morning.

Derek Johnston -- Deutsche Bank -- Analyst

How is the mixed-use redevelopment at Phipps Plaza reshaping your vision of the portfolio's potentiality and in your thinking, how many additional large scale repositionings exist within the malls portfolio and what's your appetite for accelerating these investments?

Richard S. Sokolov -- President and Chief Operating Officer

It's interesting we've been at this now for over an hour and the words KOP and King of Prussia haven't come up yet. Just our portfolio has a number of those activities. We emphasized before when we get back one of these department store boxes, it's more than just a 150,000 feet to 200,000 feet, it's anywhere from 10 acres to 18 acres adjacent to some of the best real estate in the United States. We are very focused on what we can do with those 18 acres and you are going to see an accelerating amount of activity in a number of our properties where we add (ph) back 22 boxes. David said we'd like to get back others. We've taken back Teddy's, we've taken back Belk's. So you're going to keep seeing that. We have the capital, we have the expertise, we have the opportunity and it's going to be accelerating throughout the portfolio. Frankly, we've been doing this for a decade. The difference is we now have access to these 10 acres to 18 acres adjacent to our properties that can accelerate all of these activities and they are more top of mind for the investment community. So it's a great opportunity. We're well positioned to doing it and it is in fact happening as we sit here talking to you.

Derek Johnston -- Deutsche Bank -- Analyst

Excellent, thank you. And just a last one, if you could share any updates on digitally native or e-tailers initiatives. I know you have some experience there now and been doing it for a while. Any early customer or maybe brand retailer feedback that you think is worth sharing?

David Simon -- Chairman and Chief Executive Officer

I would simply say that the store experience, the best way I can -- and along a little bit, so let me be really concise, the best way I can say that is the store experience and the store requirement is back and that is -- shouldn't be under-appreciated. They all want stores period, end of story.

Richard S. Sokolov -- President and Chief Operating Officer

And they are opening stores. We have a very active program right now where we've got probably 25 retailers that started on the Internet that have opened stores with us and our opening more because as David said, they work and they make money.

Derek Johnston -- Deutsche Bank -- Analyst

Excellent. Thank you.

David Simon -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Linda Tsai with Barclays. Your line is now open.

Linda Tsai -- Barclays -- Analyst

Hi, in terms of the business interruption insurance from -- in other income from Puerto Rico this quarter, do you expect anything material in 4Q as well?

David Simon -- Chairman and Chief Executive Officer

Yes, we expect to have some more because it comes in over a period of time, but again all of that was planned in our guidance at the beginning of the year. Remember, we had Puerto Rico down. So we've been reporting our numbers with basically on average around $35 million of EBITDA adios, OK between those two assets. So now we're starting to play catch up and it happened a year ago. So that's been out of our numbers fourth quarter of last year all the way up now and we're starting to come back a little bit as we collect the cash.

Linda Tsai -- Barclays -- Analyst

Would that continue into '19 as well?

David Simon -- Chairman and Chief Executive Officer

Well, at that point the property will be back on line, so then we'll have it -- then we'll report it just our normal NOI that we would get from that property.

Linda Tsai -- Barclays -- Analyst

And then, I understand that Sears going away is a long-term positive for you and the rest of the industry. As this is playing out though, short to medium term, do you see store closures or liquidation sales as having a dampening effect on retailers for the holiday season and then to the extent that the liquidations continue post holiday?

David Simon -- Chairman and Chief Executive Officer

Well, look, let me restate what I said about Sears. I am disappointed. We didn't want Sears to basically file Chapter 11 or go out of business, but given that it is -- at least the Chapter 11 process is happening and given the fact that they -- that we could buy some of the real estate back, we're going to make the best of it and at the end of the day that could be positive for us and in terms of diversifying the mix of our properties and so on and all the stuff that we already talked about. There is always a little bit of disruption when you have a liquidation. Just so you know when you liquidate a store, you got to follow a lot of rules. We will certainly enforce our legal rights there and hopefully it will not be disruptive to the other patrons of our shopping environments and or have any impact on our retailers, but there is a process there that they've got to run by and we intend to make sure they operate accordingly.

Linda Tsai -- Barclays -- Analyst

Thanks and then finally, you said you just completed a tour of Europe and I'm sure you visit regularly, but are there any novel retail models or concepts you felt inspired by or seen making a play to the US?

David Simon -- Chairman and Chief Executive Officer

Well, listen, a lot of -- there are a lot of great retailers in Europe. Spain, obviously Sweden, Italy, France and so I think what you don't see a lot of is kind of the Internet folks. I mean we're seeing most of that here, but beyond that in terms of Internet, entertainment, restaurants and obviously fashion and apparel, they're fantastic and they are very good people and we do a lot of good stuff with them throughout the world, Asia, Europe and the US. So it's important for us and I think one of the benefits we've gotten over the years is that we are now -- they recognize who we are and what we do, which may not have been the case a decade ago.

Linda Tsai -- Barclays -- Analyst

Thanks.

David Simon -- Chairman and Chief Executive Officer

Sure.

Operator

Thank you. I'm not showing any further --

David Simon -- Chairman and Chief Executive Officer

Go ahead, ma'am.

Operator

I'm not showing any further questions at this time. I would now like to turn the call back over to David Simon for any further remarks.

David Simon -- Chairman and Chief Executive Officer

All right, thank you. We appreciate your questions and we'll talk to you soon.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone have a great day.

Duration: 86 minutes

Call participants:

Tom Ward -- Senior Vice President of Investor Relations.

David Simon -- Chairman and Chief Executive Officer

Stephen Thomas Sakwa -- Evercore ISI Group -- Analyst

Richard S. Sokolov -- President and Chief Operating Officer

Michael Bilerman -- Citi Investment Research -- Analyst

Jeremy Metz -- BMO Capital Markets -- Analyst

Craig Schmidt -- Bank of America -- Analyst

Alexander D. Goldfarb -- Sandler O'Neill -- Analyst

Caitlin Burrows -- Goldman Sachs -- Analyst

Brian McDade -- Simon Property Group, Inc.

Jeffrey Donnelly -- Wells Fargo Securities -- Analyst

Michael Mueller -- JP Morgan -- Analyst

Richard Hill -- Morgan Stanley -- Analyst

Omotayo Okusanya -- Jefferies -- Analyst

Haendel St. Juste -- Mizuho Securities -- Analyst

Ki Bin Kim -- SunTrust -- Analyst

Derek Johnston -- Deutsche Bank -- Analyst

Linda Tsai -- Barclays -- Analyst

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