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Simon Property Group Inc (NYSE:SPG)
Q4 2019 Earnings Call
Feb 4, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Simon Property Group Incorporated Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions] After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to turn the conference to your speaker today, Tom Ward, Senior Vice President-Investor Relations. Please go ahead, sir.

Thomas Ward -- Senior Vice President-Investor Relations

Thank you, Joel. Good morning, and thank you for joining us today. Presenting on today's call is David Simon, Chairman, Chief Executive Officer and President. Also on the call are Rick Sokolov, Vice Chairman; 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, Chief Executive Officer & President

Good morning, everyone. We had a very busy productive quarter too and another successful year for our Company. Our full-year 2019 funds from operation per diluted share was $12.04, which includes a $0.33 charge for the early redemption of our four series of senior notes. Adjusting for the debt charge, our full-year FFO was $12.37 per share, at the upper end of our initial 2019 guidance. Comparable FFO per share for the year increased 4.4%. It is a testament to our relentless focus on operations, cost structure, active portfolio management, commitment to our strategy that we achieved the upper end of our initial range, even with the number of headwinds we faced during the year, including retail bankruptcies, significant downtime due to major redevelopments at many of our properties and a reduced overage from tourism spending, including the negative impact from the continued US strong dollar, as well as the continued trade tensions limiting visitors.

For the fourth quarter, reported FFO was $1.045 billion, or $2.96 per share; comparable FFO was $3.29 per share, an increase of 2.8% year-over-year. We continue to grow our cash flow and report solid key operating metrics, including our comp NOI, which grew with our international properties grew at 1.7%. Our comp NOI for domestic properties increased 1.4% for the year. Retailer bankruptcies impacted our comp NOI by roughly 120 basis points, and lower overage rent due to reduced international tourism, I mentioned earlier, increased -- impacted our comp NOI growth by 30 basis points to 40 basis points.

We are pleased to report that retail sales momentum again accelerated in the fourth quarter. Reported retail sales per square foot for our malls and premium outlets was $693 per foot compared to $661 in the prior year period, an increase of 4.8%. Keep in mind, this is on top of more than 5% increase for the prior year. We continue to believe reported retail sales are understated and are negatively impacted by Internet returns at retailers process at our brick-and-mortar locations.

For the recent holiday period, some media reports quoted in-store sales growth of less than 1.5%. That's contrary to our number, which was more than 3% and again, impacted by the Internet returns that occurred at our stores. These sales results further reinforce the benefits retailers experienced from opening -- operating in high-traffic, highly productive, well-located real estate.

We generated a record of over $1 billion in gift card sales, which was an increase of more than 18% year-over-year. Leasing activity remain solid. Average base rent -- minimum rent was $54.59. The malls and premium outlets recorded leasing spreads of $7.83, which was an increase of 14.4%.

Our malls and premium outlet occupancy at the fourth quarter was 95.1%, which was an increase of 40 basis points compared to the occupancy at the end of the quarter -- third quarter, down 80 basis points compared to the prior year, which was impacted roughly by 200 basis points from the bankruptcies that we processed through the year. We have successfully released approximately 60% of those bankruptcies already.

On an NOI weighted basis, our operating metrics were as follows. Retail sales on an NOI weighted basis is $884 per foot compared to $693. Occupancy would be 96%, and average base minimum rent would be $73.

Now, just to move to new developments, we opened one new development in 2019 in Mexico. Construction continues on five new outlet developments in leading markets, including four international destinations and one in the US; Malaga, Spain, which will open this month; Bangkok, Thailand; West Midlands, England, and in 2021, Normandy, France; and Tulsa, Oklahoma. Very few companies that I know of could open in Thailand and in Tulsa and throw in France for fun.

We completed a number of redevelopments and expansions across our portfolio in 2019, including four redevelopments of former department store spaces. We had a very busy year on the expansion of several high-performing international outlets, adding approximately 400,000 square feet in aggregate to centers in Seoul, Korea; Kent, England; and Vancouver, Canada. We currently have 15 former department store redevelopment projects under construction. Our share of those costs are roughly $850 million. We have 20 more in our pipeline. And at the end of the fourth quarter, redevelopment expansions, densification projects were ongoing at more than 30 properties across all of our platforms in the US and internationally, with our share of that net cost of approximately $1.3 billion. As a reminder, we fund these accretive projects through our internally generated cash flow.

And just to give you a sense of the magnitude of some of the downtime we are dealing with, with respect to our redevelopment, the projects that we have under construction that will open in 2020 will contribute approximately $70 million of incremental NOI in 2021 as they are stabilized. So again, Thailand, France, Tulsa, 30 projects under development, $1.3 billion; $70 million of NOI that will be generated in 2021. Good comp NOI given a few headwinds. And just to put it in, I know it's a lot of numbers and a lot of going on, but it's important for everybody to understand it.

Now let's talk about Aeropostale and ABG because, again, we see a lot of misinformation out there. And I just -- I think it's important just to give you a sense of our smart capital allocation decisions that continue to differentiate our Company. We completed our third full year of owning Aeropostale. So I would like to take some perspective on that investment. I'm going to simplify this. I know it's a lot of information. I'm going to simplify this and focus on our cash investment. Our cash investment in Aero OpCo was approximately $25 million. We have already received $13 million of distributions. So I have $12 million of cash invested in Aero OpCo. At the time -- at the time we bought it, it was producing a negative EBITDA of $100 million and had over 500 stores.

Today, we expect Aero OpCo to produce EBITDA pre-royalties from 575 stores of approximately $80 million of EBITDA. We believe Aero is approximately, if you put a market multiple on it, $350 million today, and our ownership is 50% -- well, to 50% of $350 million. That's the math.

Now with respect to ABG, we invested -- we made a recent investment in it. So we have a total of 600 -- sorry, $67 million in ABG, Authentic Brands Group. At the time of our original investment, which was roughly $33 million, ABG produced EBITDA of approximately $150 million.

Today, our value is worth $190 million [Phonetic] of our $67 million, and ABG is expected to produce EBITDA well north of $350 million and the value is growing every day, which leads me to Forever 21. As you've read recently, we have recently participated with Brookfield and Authentic Brands Group on behalf of the NewCo, SPARC Group F21, LLC and a stalking horse bid for certain assets and liabilities in a going concern transaction under Section 363 of the bankruptcy code.

Our Group's successful turnaround of Aero after acquainted out of bankruptcy in 2016 gives us confidence with our ability to do the same with Forever 21. Forever 21 is a storied and well -- widely recognized brand with over $2 billion in global sales. We believe F21, similar to Aero, presents a very interesting repositioning opportunity. If the transaction is consummated, the NewCo contemplates the continued operations of many of Forever 21 stores and e-commerce business and maintaining many jobs. Our interest in the new venture will be approximately 50%. The aggregate purchase price -- acquisition price is approximately $81 million, plus the assumption of certain ongoing operating liabilities. The process is subject to a go-shop period. The auction is expected to be completed in mid-February, with closing shortly thereafter.

Now, we're not done, sorry. We have balance sheet. So, as you know, we were very active. In 2019, we completed three tranche senior notes of $3.5 billion with an average weighted coupon of 2.61%, 15.9 years. We retired $2.6 billion of senior debt. And our liquidity stands at $7.1 billion. We continued to have the strongest credit profile in the REIT industry.

Our net debt-to-NOI is 5.2 times. Our interest coverage is 5.3 times, and our long-term issuer ratings of A/A2 continues to be the highest in the REIT sector. We paid a record dividend in 2019 of $8.30, a 5.1% increase over 2018. We paid approximately $3 billion in dividends in 2019. And we have paid more than $31 billion in total dividends as a public company. We will be well over $33 billion this year. And today, we announced a dividend of $2.10 per share for the quarter, a year-over-year increase of 2.4% for the first quarter.

Now, let me turn to our outlook for 2020. Let me just briefly summarize 2019. We posted another record year of results. Revenues, cash flow, FFO per share, dividends, all records. We continue to strengthen our Company through innovative disciplined investment activities that will allow us to continue to deliver long-term cash flow growth, FFO and dividend growth. As a reminder, our 2019 results also included $0.19 per share in income related to insurance settlement at our Opry Mills.

Moving on to 2020. Our guidance range is $12.25 to $12.40 per share. This range represents approximately 1.7% to 3% compared to our FFO of $12.04. Our range is based on the following assumptions, major redevelopments occurring in many properties resulting in significant downtime, the impact from a continued strong US dollar versus the euro and yen compared to 2019 levels, comparable NOI growth from our combined malls, outlets, mills and international platforms up 1% -- [00:16:18] approximately 1%, no planned or acquisition -- no planned acquisition or disposition activity, and a diluted share count of 354 million shares.

To conclude, we had another very busy and successful year. Our Company and portfolio is as well positioned as ever, and that will only improve with our ongoing investments. Given our track record of earnings growth, NOI and cash flow generation and increase in dividends, we continue to be curious to see the yield of our stock 500 basis points higher than the 10-year treasury. This is an ongoing overreaction to the negative sentiment. However, regardless, we remain undaunted. Throughout our history, we have zigged when others have zagged, and those moves have served us well. I'm extremely confident of where our business is and about the growth prospects of our Company ahead.

And we're ready for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Craig Schmidt with Bank of America. Your line is now open.

Craig Schmidt -- BofA Merrill Lynch -- Analyst

Thank you. I wondered if you could characterize the outlet results. They seemed obviously to have an impact from the lower traffic, but it also seemed like there were a number of store closings that impact the outlet. If you could just tell us where the outlet relays to the mall business?

David Simon -- Chairman, Chief Executive Officer & President

Well, the outlet business had a very good year. I mean, the only -- I mean, it was affected by certain bankruptcies, but we had significant comp NOI growth. It was higher than the mall business. And the only real shortfall occurred, like I said in the overage rent and that was primarily at our bigger centers due to the strong dollar and tourism. So the outlet business, we are projecting again for our comp NOI to be higher than the mall business. Again, Craig, don't get caught up in this narrative.

We're seeing really good results for the outlet. We'd like a little weaker dollar, more tourism. I believe that's temporary. It's good to see that. Obviously, we've got a bigger picture going on with coronavirus and tourism. I assume that will be temporary. However, it's great to see the China and the US completed their trade discussions. And assuming we get through this coronavirus scenario, we expect our overage to continue to be dominant or at growth in our outlet business. And we have no worries or concerns at all about our outlet business. Tulsa is leasing. Normandy is leasing. Bangkok is leasing. West Midlands -- and even with Brexit, Megxit, whatever you want, it's leasing. Ashford is leasing. You get -- Vancouver is leasing. So I hope that gives you a flavor. So don't believe the narrative. You will understand what we're doing.

Craig Schmidt -- BofA Merrill Lynch -- Analyst

Okay. And then on the 1% comparable NOI guidance is lower than you achieved in 2019. What would you say are the major drivers of that number?

David Simon -- Chairman, Chief Executive Officer & President

Well, look, I would say, primarily because of the downtime, if you -- again, we're a big company. So it's a little harder for everybody to understand all of that's going on. But if you see the significant redevelopment that we have, we have downtime. And the reality of that is we think in 2021, that we could sit here and we don't have throwaway years. You know our philosophy. But we do have significant downtime. That NOI that we've got, that takes a decrease, and these are big malls like a Burlington and Northshore, and all of that stuff.

A lot of that stuff is coming on in late 2020. We expect $70 million, as I mentioned, just from those redevelopments to come on into 2021. Obviously, we're projecting a stronger dollar. So we are muted on our overage rent calculations with our outlet business, and those are the primary. And then, obviously, we've got some retailer restructurings that are occurring. Some of that's related to the newer rent in -- that's likely to occur with the F21 stabilization, some other restructuring. So you put it all in, and that's 1%. I'm not overly worried about that number. I'd like it to be higher, but we've got some things to deal with, and we're dealing with it.

Craig Schmidt -- BofA Merrill Lynch -- Analyst

Okay. And then just -- do you have what the leasing spread was just for the fourth quarter in 2019 and was that result somewhat timing related?

David Simon -- Chairman, Chief Executive Officer & President

We don't. We just do it on a rolling 12.

Craig Schmidt -- BofA Merrill Lynch -- Analyst

Okay.

David Simon -- Chairman, Chief Executive Officer & President

That's a number we post. It is what it is. We don't say too much price over it. Just like sales. I mean, we had this discussion on sales and it was the most important thing. Now I understand it's the least important thing. So again, you kind of know our view, which is that sales are interesting. They're not determinative because again, we can replace retailers that aren't performing. And then, we do think our sales per foot are muted by the returns. Okay?

Craig Schmidt -- BofA Merrill Lynch -- Analyst

Okay. Thank you.

David Simon -- Chairman, Chief Executive Officer & President

Sure.

Operator

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

Michael Bilerman -- Citigroup -- Analyst

Hey. It's Michael Bilerman here with Christy. David, I wanted to go through some of the investments you're making in retailers and other sort of tech platform initiatives. And the numbers you gave out on Aero, I'm surprised you didn't quote Adam Sandler. Again, we're not too shabby, right. A 15 times multiple on Aero is highly impressive. When you step back, how do you think about all these investments, whether it was Aero and potentially Forever 21 and then Life Time, Pinstripes, Allied, PARM, Soho House.

I know some of them may be varied. How do you think about the investment itself versus driving disproportionate leasing within Simon's assets relative to all the other retail landlords, right? So, how much of it is a benefit, not only potentially of turning these retailers around, like you did with Aero versus how much of it's incremental leasing that you're going to get out of your assets or protection of stores relative to everybody else?

David Simon -- Chairman, Chief Executive Officer & President

Well, first of all, let me just talk about the retailer investments. We would not have done Aero or we would -- and we would not be attempting to do Forever 21 for the sole purpose of maintaining our rent. And that's the biggest misnomer out there when I read various publications and analyst notes and media notes. We do it. We make these investments for the sole purpose of we think there is a return on investment. Now, the fact of the matter, we did all this at Aero and then reality is they kept paying us rent. So that's like -- that's obviously beneficial. And I don't want to understate that, but that's not why we do it. At the same time with F21, we do think there is a business there, but it's got to be turned around. And I'm not going to project today to you what those numbers are, but we've got our work ahead of us. But if we are successful in turning it around, we will make money at F21, and we'll get paid our rent. But again, the sole purpose is to make investment in our -- for the benefit of our Company.

Now the rest of them, we are creating a flywheel of unique entrepreneurs that understand the benefits of physical space, understand the benefits of the new consumer today and whether it's Pinstripes or eGaming or the deal that we did with RGG, Rue and Gilt and what's going on with Shop Premium Outlets, and the deal we did with PARM and [Indecipherable] at the SPE. This is a flywheel that no other company in our industry can do. We expected to get the benefit of return on those investments, but additionally, the ability to make us a better operator and also bring those kind of ideas to our portfolio. So, we learn how to be a better operator, we make money on the investment and ultimately, in some cases, they bring their product to our physical portfolio.

So I can't imagine a better scenario for us, but we're in early days on all of the stuff, but we expect to prosper from these kind of investments. Underlying those, we want them to add value to how we operate as well as to our portfolio and we're doing that. I mean, if you've seen as an example, I mean go add chapter, verse on the stuff. But if you see what Life Time brings with their new concept to our portfolio, you'd say I get it. Would I rather have that than a moderate underinvested department store? And the answer is come on, it's a no-brainer.

Michael Bilerman -- Citigroup -- Analyst

Right. Second question I had was, if you think about where your NOI breakdown is today between the malls, outlets, mills and international, which is the pie chart you have on Slide 17 and you sort of married up with the pie chart of where you're spending your capital, which is Slide 28, and then you add in a lot of these other types of investments that you're making. Where does -- let's say, three years out or maybe five years out, where does the composition of your income and asset base shift to from effectively non-retail uses, resi, hotels, office, the totality of all these sort of investments that you're making and then the traditional retail business? What do you think the split would be?

David Simon -- Chairman, Chief Executive Officer & President

I mean, it's really -- it's -- we benefit, you could argue with either way, but we benefit from -- I think we really benefit from being a large company. And it's obvious that we're able to make investments and pay our dividend without having to finance our dividend, etc. So when I look at it, we -- even when we look at just our non-retail real estate, I mean to get to the NOI of over 5% is going to take a lot of work, but we do like that -- we do like the diversity of our geography, our product-type mills, outlets, malls; our mall business is under 50% of our NOI today. We love the international business, that's been highly profitable. And I think we've got a pretty interesting company because it's so diverse and so big, and so well financed. Like I said at the end, I mean, we can zig when others zag or is it zag with zig, I always get confused.

Brian J. McDade -- Executive Vice President, Chief Financial Officer & Treasurer

Either way.

David Simon -- Chairman, Chief Executive Officer & President

Either way. So, we can zig when others are zagging and we can zag when others are zigging. Maybe that's the answer. And then we have our whole additional portfolio of other investments that maybe one day we have a spin-off of that. Maybe one day we're not a REIT. Maybe one day, we're just this diversified interesting company that people will finally think, hey, it's not a bad company, not too shabby.

Christy McElroy -- Citigroup -- Analyst

Hey, David. It's Christy.

David Simon -- Chairman, Chief Executive Officer & President

We did have, not too shabby, in this conference. But we took it up, but if we can use...

Christy McElroy -- Citigroup -- Analyst

Hey, David. It's Christy. If I could just add a follow-up on Craig's question on comp NOI. So realizing that you're now including international and I assume that's on a constant currency basis. I'm wondering if you could provide sort of an apples-to-apples comparison with the 1.4% growth in 2019 just for North America. And then just a clarification, your comp NOI growth excludes those larger redevelopment projects, is that correct?

David Simon -- Chairman, Chief Executive Officer & President

Only a few of those. So not all of them. It depends on the size of a -- we have a definition of that. We have a size of it. And so, that's not all of them. It just depends on some of that. So it doesn't really -- international marginally helped. It's not a big deal. I would suggest to you that the biggest thing affecting our comp, as I said to you earlier, is that we do have a lot of redevelopments that are affecting our cash flow. I don't -- and that's -- when they come on, it will be $70 million in 2021. There is downtime. I don't think people appreciate that because we are -- you're used to dealing with smaller companies frankly. And if they are leasing it out to X, Y, Z, it moves the needle. We're a little bit different, and what we -- there is no denying, we've got some leasing to do. Our occupancy is down a little bit.

By the way, if you believe the narrative, you think our occupancy year-over-year will be down 500 basis points, it's down 80 basis points. We've already leased 60% of it. So I'm not -- you have -- we look at ourselves a little bit different. We give you a year-by-year number. We don't have throwaway years. Our 1%, I think, is going to be fine. And if we get a little uptick in overage rent, it will be better. If we don't, it won't and we'll -- life will go on.

Christy McElroy -- Citigroup -- Analyst

Thank you.

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, just one quick one. Go back on Forever 21, just given that, obviously, there is still a process being run here and there are some different outcomes that could come out of this. Just interested, is your current guide, is it built around all stores staying open and just operating at a reduced occupancy costs, or was that the base that's built in here?

David Simon -- Chairman, Chief Executive Officer & President

We don't -- again, given our size and given our historical results, we don't get into specific retailer rents or restructurings. That's for other folks. That's not for us.

Jeremy Metz -- BMO Capital Markets -- Analyst

That's fair. And then we -- as we think about sort of the ebb and flow of closings and bankruptcies we've seen, 2019 obviously a pretty big year. 2018 was down from '17 though. So as you look at the landscape today, you look specifically at your outlet and mall portfolio. Obviously, what happened last year and what could be in the pipeline sacked into the 1% comp outlook. But more high level, how do you feel about the landscape here today, given there is still, obviously, plenty of over-levered retailers out there?

David Simon -- Chairman, Chief Executive Officer & President

Yeah, I think -- look, I think we're projecting it to be lower than last year for sure. But it's our point of view, and there are no certainties. But I would certainly -- my best judgment call would certainly be to be dramatically less than last year. Last year was a very difficult year when it came to that if you look at. Historically, '17 was a high year. '18 was a low year. '19 was a high year. So we're anticipating a lower -- certainly a lower amount, but that's our best estimate of what we see today.

Jeremy Metz -- BMO Capital Markets -- Analyst

Okay. And last one for me. As we look at where the stock is, as you mentioned, the misperceptions out there, the big dividend yield spread to cash you've been able to generate. How are you thinking about further stock buybacks at this point, just given the redevelopment pipeline and opportunity there that you outlined?

David Simon -- Chairman, Chief Executive Officer & President

Maybe we should go private. It's really what we should do. The reality is, look, it's in our -- we do have the opportunity to do that. We're obviously waiting to see kind of what transpires in the global world right now, but it's something that we'll obviously continue. We do think our Company is undervalued. And I would expect this to continue to play into that. It's not in our numbers, and we'll see how the next period of time evolves.

Jeremy Metz -- BMO Capital Markets -- Analyst

Thanks for the time.

David Simon -- Chairman, Chief Executive Officer & President

Sure.

Operator

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

Alexander Goldfarb -- Piper Sandler -- Analyst

Good morning.

David Simon -- Chairman, Chief Executive Officer & President

Good morning.

Alexander Goldfarb -- Piper Sandler -- Analyst

Good morning. I'll change up the answer because you called me out on the -- out there last time. But I will say to Bilerman's thing, he mentioned that you didn't do not too shabby. I would point out that you brought Megxit, which may be the first in REIT land to mention Megxit.

David Simon -- Chairman, Chief Executive Officer & President

That's why I keep saying, we're a little bit different than the rest of the folks. Okay. Megxit has -- by the way, I'm thinking of uptick sales in Vancouver though. So there'll be a benefit from Megxit.

Alexander Goldfarb -- Piper Sandler -- Analyst

Okay. Well, if you could be a little less different, if you could go back to the 7:00 AM release time, that would be appreciated.

David Simon -- Chairman, Chief Executive Officer & President

No problem. We had a technical difficulty. So it wasn't as bad as the Iowa caucus. But it was a little bit of a technical difficulty.

Alexander Goldfarb -- Piper Sandler -- Analyst

Okay. So two questions, David. I appreciate that you are not going to comment specifically on the individual tenants, but we did notice that Forever 21 dropped out of your Top 10 in the fourth quarter over third quarter. Obviously, NOI in the fourth quarter was a lot weaker than previously. So maybe you can just in aggregate talk about what -- to the extent, you can talk about the impact in the fourth quarter and then what your bad debt credit is for 2020 versus what the actual was in 2019? Just to get a sense for how much the 1% is impacted by maybe a change in bad credit versus historical versus other things?

David Simon -- Chairman, Chief Executive Officer & President

Well, look, we are -- we certainly -- it's not surprising to you. And again, I -- you are very kind and you are very smart, and that's why you want me to answer these F21 questions. But -- and I don't really want to answer, but I will answer this. Our fourth quarter was clearly impacted by the reductions that us and others provided to F21 to help stabilize their business. Okay? And that was -- and that is -- that new scenario is one of the reasons why they dropped out of our Top 10. So it wasn't like we wanted it to drop out of our Top 10, but that's just the math.

Two is -- and I -- again, I have to impress upon everyone out there. We do a -- overage rent is an art, not a complete science and it is back-end weighted for the fourth quarter in the outlet business. We actually were way behind in overage rent and all the way up. And we made some of it back, but we didn't make what we had originally budgeted. So when you put the two together, that's why we were a little short domestically to get to our 2% original budget. I mean, there is no hiding that. There is no denying that. But that is an art, no science. Now, that's why we've been extra conservative, I'd say on the overage in the outlet business. But there is a lot going on.

I mean right now, tourism is way down in the United States. I don't control that. Usually, we're a beneficiary of that, but sometimes we run into a headwind. But that has nothing to do with the long-term viability of this great real estate and these great properties. And that's what we have to, as investors and as you as analysts and us as operators, all have to kind of overlook these temporary things.

So we did. So in summary -- I hope I answered the question. In summary, our fourth -- our Q4 was impacted by what we did with F21. It was impacted, the shortfall in the overage rent with the outlets. We're projecting a similar scenario next year. So hopefully, we will be conservative upon that, but time will tell. And obviously, that does the restructure of F21 because it was a big retailer. It does have it -- it does flow through 2020 as well. I hope that answers.

On the bad debt, it's basically pretty flat from '19, which was a pretty decent size year. So that -- but again, there is no longer bad debt. It's just -- you don't get the income you thought you'd get. Okay? From an accounting point of view, being an old GAAP accountants, I still scratch my head on that. But the reality is it's no longer bad debt. You just don't get all the income you thought you were going to get revenue, contrary.

Alexander Goldfarb -- Piper Sandler -- Analyst

And then the second question goes to the dividend. You obviously highlighted where your yield is relative to the 10 year. You guys always point out your sort of mid-single-digit dividend increases over the years. But maybe that mirrors your taxable dividend increase, in which case it will -- it won't be lower. But just given, it seems like your comments that the market is not appreciating your dividend and the guidance coming a little short of where the Street is, should we brace ourselves that maybe you don't increase the dividend this year or maybe the increase is nominal, maybe 1%, or your view is to continue growing it in the sort of mid-single-digit even if the market doesn't appreciate it in the stock price?

David Simon -- Chairman, Chief Executive Officer & President

Well, look, I think we will continue to grow our dividend. We have earnings growth next year or this year, I should say, 2020. We grew 2.4% Q-over-Q. So that's certainly a signal to you that we are not backing off our dividend growth. I mean, will it be as high as 8% or 10%, like it's been over the last five years or six years? It may -- probably not. But again, I don't think -- I look at it -- I guess if you are in my shoes, when I hear the word bracing, I just want to explain to you, we're not bracing here my friend. We're on the offense. We actually feel good about our Company.

We feel great about our dividend. We feel great about our balance sheet. We feel great about these other investments we're going to make. We're going to hopefully turnaround F21 and make money. So the last thing -- the last word you will never see in our -- hopefully, I shouldn't say never, but we don't -- we're not bracing here. Okay? Yes, we have some leasing to do, given the high amount of bankruptcies. We've already leased 60%. Yes, I'd like to see tourism come in. Strong dollar does limit spend. I mean, you will see that from other retailers, the retailers that are -- that have an important exposure to tourism. We have all that redevelopment in 2020 that's ongoing, that takes properties down.

I mean, at a mall, at Northgate that did $18 million of NOI, it does zero -- zero today, I mean zero. And we accelerated it and we have development rights that could make that property worth $1 billion. Again, we don't have throwaway years, Alex, as you know. And so, yeah, this year will be not as -- not as robust growth as maybe some of the years in the past. That doesn't mean we're bracing, no bracing here, not in our vocabulary.

Alexander Goldfarb -- Piper Sandler -- Analyst

Okay. Okay. Thank you. Thank you, David.

David Simon -- Chairman, Chief Executive Officer & President

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, David. Good morning.

David Simon -- Chairman, Chief Executive Officer & President

Good morning.

Richard Hill -- Morgan Stanley -- Analyst

Just one quick clarification. I think what you said was F21 is still in the pool. It's just a lower tenant and therefore, should we assume F21 as a tenant, is included in the '20 FFO guide?

David Simon -- Chairman, Chief Executive Officer & President

Oh, yeah, yeah. It's just -- we and others adjusted the rent for the fourth quarter. And because of the base rent, it's just -- it's number 11 or 12. What is it?

Brian J. McDade -- Executive Vice President, Chief Financial Officer & Treasurer

Number 12.

David Simon -- Chairman, Chief Executive Officer & President

12. They are 12. Forever 21 is in our Top 12. Okay.

Richard Hill -- Morgan Stanley -- Analyst

Got it. That's helpful. I promise you that's the last question. I'm going to ask about Forever 21.

David Simon -- Chairman, Chief Executive Officer & President

No problem. We have no problem with any questions anybody wants to ask.

Richard Hill -- Morgan Stanley -- Analyst

Sure. And so, actually just staying along this line of your investments in retailers and I appreciate why they've been really attractive investments for you. So two questions. First of all, are these held in the TRS? I think they are. And then number two, do you have a sense for how high you could go with your retail investments before you got up your non-REIT limit in the TRS?

Brian J. McDade -- Executive Vice President, Chief Financial Officer & Treasurer

Yeah, they are in our TRS. And there is a lot going on, technically, about this that the NAREIT is working on. And I'll just defer that because it's a little arcane. But we've got plenty of room -- and given that it's in our TRS, we've got plenty of room that we are not going to -- there is no issue about maintaining REIT status, a bad income or gross asset test and all this -- all of it, all of the various REIT tests that you have to meet. So we've got plenty of room to run.

Richard Hill -- Morgan Stanley -- Analyst

Yeah. And I was really saying that not from, are you hitting the limit, but it seems like this is an attractive investment pool that might warrant some further consideration in the future.

David Simon -- Chairman, Chief Executive Officer & President

Yeah, look, I think we -- look, I guess, Rich, what I'd say to you, we are grounded in real estate, but we have over time found that we can do other things reasonably well and that is our goal to do that. We've had success -- we haven't been perfect. And if we are -- if we do end up buying with Brookfield and Authentic Brands Group, Forever 21, I mean, obviously, that's going to be a lot of work. That is a big restructure ahead of us and that will -- we will want to make sure that that's done right, and there are no guarantees on that.

So don't expect another retailer that will pop up until we get that stabilized. But at the same time, we're always looking at additional investments. I mean, we're very excited about the long-term prospects that we have with our -- basically, our merger with RGG. And we are just starting that whole process, and that's a whole another avenue for this Company in terms of e-commerce and tenant relationships and retailer loyalty, and all the other stuff that comes with that. And we're just -- that we literally just closed in November. So -- and we merged our operations into those, and they are just starting to improve our Shop Premium marketplace. So I mean, there is a lot of growth ahead of that as well. And then you've got all of the mixed-use stuff that we're doing, whether it's Northgate, whether it's Phipps, you go down the list. I mean, there is a lot going on, and that's why we feel good about where we're positioned.

Richard Hill -- Morgan Stanley -- Analyst

Got it. And just two final things for me on Forever 21, I know -- I told you I wouldn't ask about it again, but I can't help myself. Your 50% investment, should we think about that 50% on top of your 25% investment and top of your 50% investment in ABG, would that 50% include the look-through on ABG?

David Simon -- Chairman, Chief Executive Officer & President

No, no. It's just -- it's actually a little under 50% to be technical. It's approximately 50%. No, that's a separate stand-alone entity. It has nothing to do with our investment. And we -- our -- we only own around a little over 6% of ABG. Okay?

Richard Hill -- Morgan Stanley -- Analyst

Okay. Got it. And then, you didn't buy back any shares this quarter, despite what the stock price has done. Is that just a simple capital allocation decision given your discussions you are having on F21?

David Simon -- Chairman, Chief Executive Officer & President

No, I just think we got busy and no real good reason. Obviously -- unfortunately, we made the right choice not to buy it back, right? But I just think we were busy in the fourth quarter and everything else.

Richard Hill -- Morgan Stanley -- Analyst

Got it. Touche. Thanks, guys. I appreciate it.

David Simon -- Chairman, Chief Executive Officer & President

Thanks.

Operator

Thank you. Our next question comes from Nick Yulico with Scotiabank. Your line is now open.

Nick Yulico -- Scotiabank -- Analyst

Thanks. Just going back to the guidance, can we get what the total NOI growth embedded is? And as well, are there any one-time charges that are dragging down the FFO number?

David Simon -- Chairman, Chief Executive Officer & President

No, not that -- nothing material, no.

Nick Yulico -- Scotiabank -- Analyst

And what about the total NOI growth number?

David Simon -- Chairman, Chief Executive Officer & President

We -- this is what we gave. It's consistent with our past practice.

Nick Yulico -- Scotiabank -- Analyst

Okay. I guess I'm just wondering if there is anything else that's -- if the number is going to be similar to your comp NOI number like it's been?

David Simon -- Chairman, Chief Executive Officer & President

Yeah, I mean, look, I think, on some of these that are in our non-comp pool, we have -- we have this downtime that I've alluded to. I mean I -- we can quantify it for you, but we all kind of put it in the blender. And that's where our guidance is. I mean, we had significant -- put it this way, we expect in 2021 to generate around $70 million of additional NOI and most of that is still dealing with our downtime, then we've got expansions that are opening up worldwide, which usually come in -- the strategy there is a little bit different. Lease-up is not 95%; tends to be a little bit lower.

So we just have one of these years that because of all the activity, you are not -- it's not manifesting itself in the growth, but we don't have a throwaway, yet we're still going to grow our earnings. We're still going to grow our dividend. We're still going to have the best balance sheet. We are still going to make these fund investments. We are still going to keep moving the portfolio. And it's just -- I mean, the people do have a year that doesn't necessarily had terrific growth because we're making all these investments. It's -- you see it elsewhere. We were a static company; I get it, but we're not. We're really busy. Does that help?

Nick Yulico -- Scotiabank -- Analyst

Yeah. And then, David, it is helpful to get that $70 million benefit to NOI in 2021 from the redevelopments coming online later this year. I guess, what we don't know is what this ongoing drag from redevelopment could be? Meaning that, is that going to be purely a benefit in 2021, or are there still some of this redevelopment downtime to deal with?

And I guess, I'm wondering, at some point, would you think about maybe providing some sort of NOI bridge? I mean it's something the office REITs have done to deal with lumpiness and tenant move-outs and tenants being refilled. And I think it would be pretty helpful to understand what that -- how that plays out to get to the growth of the Company over the next couple of years.

David Simon -- Chairman, Chief Executive Officer & President

Yeah. I mean it's possible. We don't -- we -- like people just have seen what we're doing and then the results of it manifests itself. But this is an active year of investment and redevelopment, and the growth will have some impact to do that. We've also had a history of outperforming our guidance. And I mean, let's face it, we're being conservative. There is a lot of noise around the world from an economic and obviously, it's an election year. We've got this terrible situation on the virus, and we don't know what that means. So, there is a lot going on. But I'll go back to -- I think Alex had phrased. I mean, we're investing in the future and we feel really good about kind of all the stuff that we're doing and it will manifest itself in 2021 and beyond. But like Phipps -- I mean, Phipps is a great example. I mean the malls torn up and that stuff is going to come on late '21. So that's not even in that number.

So -- but your point is valid. We've never wanted to do that because we've never wanted to have people think we're having a throwaway year, but this will be somewhat of a year of investment. And that happens with -- I mean it's happened with them, nothing compares to Amazon, but it's happened with the big companies that say, yeah, they are investment, I mean. So that's what we're doing. We'll see where it shakes out. Not unusual.

Nick Yulico -- Scotiabank -- Analyst

All right. Thanks, David.

David Simon -- Chairman, Chief Executive Officer & President

Sure.

Operator

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

Michael Mueller -- J.P. Morgan -- Analyst

Yeah. Hi. Just a quick one. Were the rent spread trends in the fourth quarter outside of Forever 21 stable? Would you characterizing this?

David Simon -- Chairman, Chief Executive Officer & President

Yeah. We had a very -- we had a -- like I said, we underperformed in our overage all year with the outlet business, and they had a really good fourth quarter. It just didn't -- if you understand how overage works, you've got to get over the break point and you've got to do it. So we caught up on that. We actually were underperforming all the way through the fourth quarter. They had a very good fourth quarter. We didn't see any real retailer changes too much, and I think sales were pretty good and we leased up space. We didn't think we would get to 95. We got a little over 95 once. So, I think we had a pretty good fourth quarter, all things considered. I mean, again, I don't do your models, but I look at -- I know my business pretty well. And the reality is that I think we had a pretty good fourth quarter.

Michael Mueller -- J.P. Morgan -- Analyst

Got it. And then, I think you mentioned you could quantify the redevelopment drag on that 1% same-store outlook. Can you do that?

David Simon -- Chairman, Chief Executive Officer & President

Yeah. We will do that at some point.

Michael Mueller -- J.P. Morgan -- Analyst

Got it. Okay. That was it. Thank you.

Operator

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

Linda Tsai -- Jefferies & Co. -- Analyst

Hi. Could you share with us some very broad steps you took to get Aero EBITDA positive and how these processes might translate to getting Forever 21 in a similar place? I mean in your opinion, is retail distress somewhat formulaic and what's holding back retailers from fixing themselves?

David Simon -- Chairman, Chief Executive Officer & President

Well, every retailer has its own particular sort of issues. I think Forever 21, really the biggest issue that it had historically was that it took its eye off the ball, primarily because of the international growth. And then it created another brand that took its eye off the ball and then, obviously, the store size got too big. So, we are really good at sourcing and that's where Authentic Brands Group is fantastic at sourcing product. We think, in Forever 21's case, it was fast-fashion and the time that we got for delivery of goods would shock you in terms of how long it took. So, we kind of took the fast-fashion out of fashion and obviously, Forever 21 -- or I'm sorry, ABG's graded branding.

I mean if you look at -- we're an investor in Sports Illustrated. They bought the Sports Illustrated IP. If you have seen kind of how they've already created all the buzz around Sports Illustrated, it's a great example of what they do. You look at how they branded Shaquille O'Neal as an example. That's what they do. So, they bring all that marketing and the brand awareness expertise to bear. We did the same thing with Aero. So each year -- you have to diagnose the problem. There is a lot to restructure at F21. On the other hand, it is a brand that does close to $2 billion of volume, even with the -- all that's going on.

So, I mean that was what we looked at Aero. When Aero -- when we took it over $900 million, we are talking about $50 million business. So that gives us -- it gives us a comfort and it's sourcing, marketing, it's better efficient, more organizations, better technology. And it's just common sense being better operator and between the -- our and it's also being an owner that can withstand just -- withstand stock, right. So, you don't panic. And you just -- you keep your head down and you keep plowing. We did that with Aero. We told Aero we don't care about comp NOI, comp sales. What we care about is building the business for the future, focus on EBITDA margins, focus on gross margins, focus on increasing the quality of the product and we don't care about comp sales.

Now, it's a little bit like our business. There is a too much of a focus on quarter-to-quarter comp NOI growth. We get it. We focus on it because we love cash flow. But at the same time, we've got to make investments for the future that will accelerate that comp. There is no difference. The only difference is that we don't panic and others do. And that's why we're here calm about it.

Linda Tsai -- Jefferies & Co. -- Analyst

Do you think the timeframe for getting Forever 21 EBITDA positive will be similar to that of Aero?

David Simon -- Chairman, Chief Executive Officer & President

I would say that -- it's a good question. And I would say it's a little more complicated in a little bigger business. And it depends on whether one or two of my guys are going to spend all this time in Los Angeles. So, I'm negotiating it right now, Linda. Stay tuned.

Linda Tsai -- Jefferies & Co. -- Analyst

Then just one other follow-up. Given this environment of closures, how are you thinking about the credit worthiness of the new tenants you're signing on? What sort of process do you go through to get comfort around their brand relevance and stability and liquidity?

David Simon -- Chairman, Chief Executive Officer & President

Well, historically, we've been very focused on that. We're very -- we are very -- look, that's not to say we don't take flyers here and there. But we're probably -- if you asked around, we're probably as thoughtful on that as anybody in our industry. And it's very important to us, especially if we make any kind of tenant improvements. We're very focused on payback and credit worthiness. We don't bet a thousand there, but we are -- it's extremely important to us.

Linda Tsai -- Jefferies & Co. -- Analyst

Thanks.

David Simon -- Chairman, Chief Executive Officer & President

Sure.

Operator

Thank you. Our next question comes from Steve Sakwa with Evercore ISI. Your line is now open.

David Simon -- Chairman, Chief Executive Officer & President

Hello? Okay. Let's go to next.

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. Thanks for taking my questions. So first one is on redevelopment. Looking ahead to 2021, and what appears to be a positive inflection in your earnings growth, helped by the expansion of the redevelopment last year, up to, I think was $1.8 billion, well above the one point, the lower ones if you via graph couple of years. And hopefully, some of that incremental NOI growth can help change that narrative around the stock.

So, I guess my question is on the sizing of the pipeline beyond this year. Your intention to keep the redevelopment pipeline size around where it is. It was $1.8 billion where it's been over the past year. Are you more inclined on reducing that back to the level that you've run over the past few years in the low $1 billion and maybe preserving more cash flow for other uses and potentially unanticipated other tenant events or even opportunistic investments?

David Simon -- Chairman, Chief Executive Officer & President

Well, again, a good question. I would say to you, just wonder because of our diversity in product type, geography, etc., every incremental investment can and will stand on its own. So, we don't feel compelled to save an asset because we're worried about the -- hitting our numbers or anything else. So, we're making all of these investments with an eye toward incremental return.

And we do expect, as we said, historically, yeah, we're going to be busy because we're going to get the ability to get a lot of great real estate back hopefully at reasonable prices that we can add accretive returns to. So, I don't view it as a zero-sum game. And I also don't think that it's -- that we don't have the firepower to make additional investments outside of our, what I'd say, our core businesses. So -- but the important thing is I don't feel compelled to say, oh, this small, if I don't do this, I got to do a low return deal. Just to say that, I mean the reality is, if it ain't worth, then we don't invest. And it's not going to -- it's not going to -- it's not going to really cause too much of a debt from it.

So -- and we are looking at other investments that are outside of kind of the traditional bricks and mortar and I think we'll continue to do that. But we'll also continue to make investments in brick and mortar because there's -- nothing has changed about it. It's a good business. It's just -- yeah, it's -- we are running through a cycle here that's not as robust as what it's been in the past. But you've got to remember, we've been doing this for a long time and we've weathered the different storms.

Haendel St. Juste -- Mizuho Securities -- Analyst

Got it. Got it. Thank you for that. Second question is on the 2020 guide. For another income, is there anything contemplated in the guidance for other income? Anything that could materially move that FFO guide this year one way or the other? And G&A, it looks like it was down $10 million last year. What's embedded in the guide for G&A this year? Thank you.

David Simon -- Chairman, Chief Executive Officer & President

Sure. G&A is similar to what fourth quarter is. So right guidance, yeah. And I -- we don't have anything real extraordinary in other income in 2021 that's quite unusual. As you know, we had the big settlement from the insurance company of Opry in 2019 in the first quarter. So that will -- our first quarter compare to first quarter of Q1 2020, will look different than Q1 of 2019 because that's when we got the settlement from Opry Mills. It only took us seven years, eight years. Okay. That's another story.

Haendel St. Juste -- Mizuho Securities -- Analyst

All right. Thank you.

David Simon -- Chairman, Chief Executive Officer & President

No worries.

Operator

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

Ki Bin Kim -- SunTrust Robinson Humphrey -- Analyst

Thanks a lot. Good morning out there. When I look at your lease expirations for 2020, it doesn't seem like you made much headway. It's just one quarter from -- going from 3Q to 4Q. But it went down 30 basis points. When I look at last year, you made much more headwind or headway closer toward 100 basis points. Like I said, I know it's just one quarter, but I was just curious if there's anything to read into that or are you kind of just making decision a little bit later?

David Simon -- Chairman, Chief Executive Officer & President

No, it's just process and there is absolutely nothing to read into that. It's all process, no issue.

Ki Bin Kim -- SunTrust Robinson Humphrey -- Analyst

Okay. And just going back to Forever 21. You talked about the flywheel and I think we all get it. But that's why it was also very different for a Simon owned store versus if it was owned by a different landlord. So, how do you balance those things?

David Simon -- Chairman, Chief Executive Officer & President

We -- look, I think the only history we really have on that is Aero. And I think if you ask the other landlord, they said, we were great partners. So no issue there. Interesting question. But we really -- I mean, every store at Aero basically stood on its own. We were not really involved in it. That was all delegated to the team, the operating team at Aero. So, we did not get involved in that. I think at F21, to the extent that we get it, we'll adopt a similar thing. And we, in fact, at Aero -- at Forever 21 because of the need to move probably a little quicker than at Aero and the case is moving a little bit quicker. We'll probably hire a third-party just to go do it.

Ki Bin Kim -- SunTrust Robinson Humphrey -- Analyst

Okay. Thank you.

Operator

Thank you. Our next question comes from Vince Tibone with Green Street Advisors. Your line is now open.

Vince Tibone -- Green Street Advisors -- Analyst

Good morning. You mentioned earlier you have 15 former department store redevelopment projects under way with the total expected spend about $850 million, so that equates to about $55 million per box. I'm just thinking about longer term capex need, is $55 million per department store box a fair assumption?

David Simon -- Chairman, Chief Executive Officer & President

No. And you can't get out of it. That math you really can't do. And I think that it's not -- Vince, I would say to you, it's not necessarily capex. It's incremental opportunity. So -- and I've said this before. But just to put it in perspective, if we don't own the department store and that department store owns 10 acres, then we just now have 10 new acres that we -- that we can develop. It's not like, when we take capex, people think new roof, new tile, new this, new that. It's incremental opportunity because we don't necessarily control that space. And even if we were on a long-term lease, to the extent that we've got that lease, we now control their space. So it's new incremental space that we did in other words.

Vince Tibone -- Green Street Advisors -- Analyst

Right. But I'm just trying to get a sense of -- so that includes probably a lot of other non-retail uses. So, what would be a fair run rate of just trying to think about longer term if we're expecting more department stores to close? I mean just from a -- maybe not from a capex burden perspective, but just how much capital you're going to have to spend every year to keep -- to unlock these opportunities? That's what I'm trying to get at more than anything.

David Simon -- Chairman, Chief Executive Officer & President

Well, look, I think what you should do, we can give you order of magnitude. I mean, I can do a check in personnel, but I might bore you. You can call up -- you can call up Tom. And yes, what would be in order of magnitude? Like, take an example of Phipps. Phipps is $300 plus million. Okay. Midland Park, Texas was $5 million. So it's all over the place. But if you want -- the best thing for you to do, Vince, to get a handle on it is that, Northgate, we could spend $600 million, $700 million at Northgate. So certain boxes are $10 million.

Just take a box over, release it, that kind of thing. So really, really is real estate specific. But maybe you go through our 8-K and Tom could give you order of magnitude. But Phipps is a great example. It's a former department store that was on lease, where we let them terminate the lease for payment and then we're spending literally $300 million in -- little over $300 million to build a hotel, office and Life Time and additional retail, all in that same spot. And so that can skew numbers pretty significantly.

Vince Tibone -- Green Street Advisors -- Analyst

No, that makes sense. That's really helpful.

David Simon -- Chairman, Chief Executive Officer & President

Sure.

Vince Tibone -- Green Street Advisors -- Analyst

Can you just discuss quickly how the overage rent thresholds are reset each year? Just trying to get a sense of like the lower percentage rents paid in 2019, creates an easier comp for '20 or that's not the case. They kind of increase by a fixed amount each year.

David Simon -- Chairman, Chief Executive Officer & President

It usually kind of balances out. So, there's not a lot of volatility. Other than the outlet business, a number of our bigger retailers, they are basically on percentage rent with a very low base. So that's the one that tends to have a little more volatility. In the mall business, we tend to mark the real estate. If they're in overage, we tend to get that as it renews and then others come in. So it's relatively traffic consistent. So, you have overage and then they go -- their leases expire.

You go to basically overage, plus the base rent to get to the total rent and then whole another slew of retailers will go into overage. The outlets tend to be a little longer leases, a little lower base. And therefore, they don't have as much turn. So therefore, the overage rent tends to be a little more volatile in terms of what the math ends up in.

Vince Tibone -- Green Street Advisors -- Analyst

Great. Thank you.

David Simon -- Chairman, Chief Executive Officer & President

Yeah. No worries.

Operator

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

Christy McElroy -- Citigroup -- Analyst

Hey. Thanks for the follow-up. Just a follow-up on Forever 21. Sorry. Just in terms of the approach to making these retailers profitable again and sort of solidifying the business, there is a going concern. You answered Linda's question. But how does your approach differ and is perhaps much healthier for retailing longer term than the traditional private equity approach to retailer turnarounds? And in addition to store closures and the efficiency and technology, and marketing and operations that you discussed, do you look to convert rents to sort of percentage sales for a period of time to get landlords more in partnership with these retailers?

David Simon -- Chairman, Chief Executive Officer & President

I would say, it depends on the scenario. I think if 21, to stabilize it, we might have to do that for a period of time. At Aero, we -- they did a lot of the work on the landlords free during the bankruptcy process. Aero was a little quicker. So, we don't have a lot of time to do. They did initial things. So it depends on -- in fact really depends on the scenario. And it's certainly a tool that's available to us. And there's ways to handle it, I think the landlord will support us to the extent that we're successful in the auction.

Christy McElroy -- Citigroup -- Analyst

Okay. And then just a follow-up on Vince's capex question to you. You had about $192 million of TIs share in 2019, close to $1 billion of redevelopment and development spend. How should we think about that capital outlay in 2020, as we look at use of free cash flow, especially as you know, the turnover is elevated and could push up TIs, and with everything that you have in the value creation pipeline coming on later this year and into 2021?

David Simon -- Chairman, Chief Executive Officer & President

Yeah. I mean, look, I think the TIs went up by $20 million. So to me, that's not going to really change. We're doing more restaurants, a little more entertainment, so you see. The other thing that really spikes that number was we did. A number of kind of a best of brands luxury retailers and I don't want to name names. But they tend to have great build out. It's great for the properties, but kind of the over luxury folks, their investment in there stores tends to be a little bit higher. So, I think you get -- we did some great work last year on that. So, we're seeing a little bit of a spike, but the TI is not really much of an issue and the development. Again, I don't know what else to tell you other than that we are going to have these opportunities from department stores. We think they are, net-net, it's going to be beneficial to our company and to the existing real estate.

And you know the role that we play in the community is unbelievable. So, give you an example, between sales tax and real estate taxes at a place like Roosevelt Field, we pay $135 million and the warehouse down the street pays basically nothing. We did a study that said warehouse and distributions pay less than one-tenth of what we pay in real estate taxes. So, that's what's interesting. We're making these places better for the community, better for the taxpayers. We have a -- we're doing -- believe it or not, we're doing sales activity that other aren't in terms of what -- as you know, we do believe strongly and we refute others that suggest otherwise. But we do think we provide a greener atmosphere for commerce and there's just so much we're doing that, that it's maybe not necessarily appreciated. But we know what we're doing for these communities. We know what we're doing for the taxes for sales and real estate taxes. And we're also making our real estate better and that's fine. We'll take that responsibility on.

Michael Bilerman -- Citigroup -- Analyst

Hey, David. It's Michael Bilerman speaking. Earlier in the call, you talked about buying real estate, that bricks and mortar obviously still has a great future. And that's -- you're not going to deviate from that. And when buying makes sense, you would do it, sort of paraphrasing a comment you made. There was a headline that came across on Bloomberg during the call that you potentially had a merger talk to Tom and that eventually broke off given the market volatility. Can you comment on that, please?

David Simon -- Chairman, Chief Executive Officer & President

What would you -- you know we don't comment. But we don't comment on those market rumors. I haven't seen it. We've been busy on this call. So, I'm not sure what you're referring to but we'll check it out.

Michael Bilerman -- Citigroup -- Analyst

Okay. Yeah. It's always just helpful to sort of get the views on whether something could happen or not. And I know the stock buyback wasn't happening during the fourth quarter. So, I assumed whether there were something else going on that would have done that.

Brian J. McDade -- Executive Vice President, Chief Financial Officer & Treasurer

No, we, obviously made the right trade. The stock went down. So, we can buy it cheaper now.

Michael Bilerman -- Citigroup -- Analyst

Thank you.

David Simon -- Chairman, Chief Executive Officer & President

Sure.

Operator

Thank you. Our next question comes from Steve Sakwa with Evercore ISI. Your line is now open.

Steve Sakwa -- Evercore ISI Group -- Analyst

Thanks. Sorry about the earlier technical difficulties. I guess, David, just to maybe piggyback or ask Michael's question a little differently. Just in terms of like acquisition opportunities. Obviously, there is really a lack of capital that's devoted to the mall space today. Everybody is kind of fleet on the institutional side. Are there opportunities that you see to potentially deploy capital outside of your existing portfolio?

David Simon -- Chairman, Chief Executive Officer & President

Well, I would say you, generally, yes. I mean, we've intended -- we would tend to, I mean, I think they're worldwide. I mean retail real estate is way out of favor worldwide, not just in the US. And as you know, we've built our company to do this. We don't have to do that. We've got lots of -- if anything on this call, I know it's dragged on here, it's like a college football game. But we -- I feel really good about where we're at. So, we don't have to -- on the other hand, as I said earlier, we zig when others zag or we zag when others zig. And sometimes, we usually land on our feet, not always. But we -- our industry is way out of favor worldwide, that's interesting to note. But we know what these properties generally mean to the community and to the consumer and to the retailer. Bricks and mortar are important. This real estate is greatly located. So -- and then we have kind of all the other stuff that we're doing in conjunction with our core business and it's a unique time for us to think what we want to do in the future.

Steve Sakwa -- Evercore ISI Group -- Analyst

Okay. And then, not to beat the dead horse on the earnings guidance in the lost income. But I do think it would be helpful to the extent that you have intentionally take properties offline, similar to what you did in Northgate last year, I think it would just be helpful to kind of know what that drag is within your guidance number this year? Is it a couple of pennies? Is it a nickel? Is it a dime? I think, just kind of frame out kind of why -- when you look apples-to-apples at the midpoint, guidance is down a little bit.

Brian J. McDade -- Executive Vice President, Chief Financial Officer & Treasurer

Yeah. Look, I think that's a good point. We try to do that, maybe not as artfully as we should have, but we try to do it by showing to you that we're going to have a $70 million pick up next year when the stuff comes online. But I guess, what we didn't do is give you a sense of the decrease that we have this year. But I'd just tell you that Northgate certainly -- it's a good example. There was a property doing 15, 16, 17, 18 in that range and it's basically going to be zero for the next future. That won't pick up in 2021 because it's a long-term project but will be great in the future. And it is also base [Phonetic]. So, we've got a property here that we could add to uses incrementally depending on demand. So it's not like, we did over our fees, the best of both worlds.

Steve Sakwa -- Evercore ISI Group -- Analyst

Okay. That's it for me. Thanks.

David Simon -- Chairman, Chief Executive Officer & President

Thank you.

Operator

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

Michael Mueller -- J.P. Morgan -- Analyst

Oh, hey, I'm going to try to get out of the queue.

David Simon -- Chairman, Chief Executive Officer & President

Hopefully, we didn't offend you. Take care.

Michael Mueller -- J.P. Morgan -- Analyst

That's OK.

Operator

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

David Simon -- Chairman, Chief Executive Officer & President

I think Rich stopped, too. Okay. I think that's it. Thank you for your time and interest. And we'll talk to you soon.

Operator

[Operator Closing Remarks]

Duration: 84 minutes

Call participants:

Thomas Ward -- Senior Vice President-Investor Relations

David Simon -- Chairman, Chief Executive Officer & President

Brian J. McDade -- Executive Vice President, Chief Financial Officer & Treasurer

Craig Schmidt -- BofA Merrill Lynch -- Analyst

Michael Bilerman -- Citigroup -- Analyst

Christy McElroy -- Citigroup -- Analyst

Jeremy Metz -- BMO Capital Markets -- Analyst

Alexander Goldfarb -- Piper Sandler -- Analyst

Richard Hill -- Morgan Stanley -- Analyst

Nick Yulico -- Scotiabank -- Analyst

Michael Mueller -- J.P. Morgan -- Analyst

Linda Tsai -- Jefferies & Co. -- Analyst

Haendel St. Juste -- Mizuho Securities -- Analyst

Ki Bin Kim -- SunTrust Robinson Humphrey -- Analyst

Vince Tibone -- Green Street Advisors -- Analyst

Steve Sakwa -- Evercore ISI Group -- Analyst

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