Simon Property Group (SPG) Q4 2020 Earnings Call Transcript

Simon Property Group (SPG 0.42%)
Q4 2020 Earnings Call
Feb 08, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Simon's -- fourth-quarter 2020 Simon Prime & Property Group earnings conference call. [Operator instructions] I would now like to turn the conference over to senior vice president of investor relations. Please go ahead.

Tom Ward -- Senior Vice President of Investor Relations

Thank you. Apologies for the delay getting started this evening, and thank you all for joining us. Presenting on today's call is David Simon, chairman, chief executive officer, and president. Also on the call are 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. [Operator instructions] For our prepared remarks, I'm pleased to introduce David Simon.

David Simon -- Chairman, Chief Executive Officer, and President

OK. Good evening. As all of us know, 2020 was a difficult year for all of those affected by COVID-19, including our company. Even with the unprecedented operating environment, we accomplished a great deal.

We earned $9.11 per diluted share and funds from operation for the full year, which includes a $0.06 per share dilution from our recent equity offering in November. We generated over $2.3 billion in operating cash flow. We acquired an 80% interest in the Taubman Realty Group, made strategic investments in several widely recognized retail brands at attractive valuations and have already made significant progress in repositioning each brand and increasing their operating cash flow. We raised over $13 billion in debt and equity markets; opened two new international shopping destinations, expanded two others, completed three domestic redevelopments; abated rent for thousands of small and local businesses, regional entrepreneurs and restaurateurs who, frankly, needed our help to survive; paid $700 million in real estate taxes which, unbelievably, was an increase from 2019 despite losing approximately 13,500 shopping days in our domestic portfolio during the year due to the restrictive governmental orders placed upon us, and that's roughly 20% of the whole year to put in perspective; and we returned $2 billion in cash to our shareholders in dividends.

These results and, frankly, these accomplishments are a testament to the entire team, Simon team, for the resilience, relentless focus on operations and cost structure and the safety of the communities we serve and, obviously, focused on giving back to the communities in terms of what we did from an abatement and real estate tax point of view. Now let's go to the fourth quarter, and then we're going to turn the page. Fourth-quarter FFO was $787 million. That's $2.17 per share.

Obviously, that was affected by the dilution of our equity offering that I mentioned. I'm pleased that -- to report that with the solid profitability and the $900 million in operating cash flow we generated within the fourth quarter, our domestic international operations in the quarter were negatively impacted by approximately a net $0.95 per diluted share, primarily due to the reduced lease income, including sales-based rents and other property revenues caused by COVID-19 disruption and $0.06 also from the international operations due to various restrictions placed upon those properties. Collection from our U.S. retail portfolio continued to improve.

As of last week, we have collected 90% of our net billed rents for the second, third and fourth quarters combined. We made significant progress in the fourth quarter in addressing previously unresolved amounts with certain large tenants. We still, even to this day, have a handful of large tenants, unfortunately, who have yet to resolve their receivables. And we are hopeful that -- and we anticipate resolving those, certainly, in the next few weeks.

And you can review the collection details in our press release that we issued. Now let me walk through, as I have for Q2, Q3 and Q4, the year-over-year change for the fourth quarter in the context of our portfolio NOI presentation, which you can find on Page 17. Again, to remind you, these are on a gross basis and not a company share. Last year, our NOI was $1.6 billion in the fourth quarter.

This year, it's $1.2 billion. That's a decrease of 23.9% or approximately $380 million. And here are the components of the decline: $220 million in aggregate from domestic rent abatements and higher uncollectible rents, primarily associated with retail bankruptcies. And this is an important reminder, we do not amortize any of the abatements.

Even though through FASB, you could, we chose to write those off in the period that they were granted. And hence, they affect our lease income in the period that we decided to go ahead and grant the abatement. Approximately $205 million from lower minimum rents reimbursement, short-term leasing, ancillary property revenues and terminations associated with bankruptcy tenants and lower sales volume due to COVID-19 disruption, obviously, lots of government restrictions on restaurants and amount of people we could have in the properties and, just as a reminder to you, we have a great deal of seasonality in the fourth quarter, so obviously, the card kiosk overage rent was impacted by, again, the immense restrictions that we had in terms of operating our portfolio by government mandates. And then, we offset some of that decline by our diligent cost reduction initiatives.

Operating metrics at the fourth quarter was basically flat compared to the third-quarter 2020, and we were down year over year. Average base minimum rent was $55.80, up 2.2% for the year. Leasing spreads declined primarily as a function of mix. We had some boxes last year that rolled out and are no longer in the 12-month reporting period.

Good news is leasing momentum is continuing. We signed over 1,400 leases, representing 6 million square feet and have a number of -- significant number of leases in our pipeline. And that's a testament to our quality of our real estate. And I do think we're starting to see our retailers get back to what they do best, and that is operate stores.

We opened two new outlets, frankly, in Spain and Bangkok, which we're proud of. We have an outlet under construction in England, which will open this spring. Redevelopments, as I mentioned to you, we completed a number of properties. We also added, which is essentially the Woodbury of Asia, the Gotemba outlet expansion, another 178,000 square feet and another property in Japan, adding another 110,000 square feet.

So look for those to add to our cash flow in future years. We continue to densify our centers with the opening of a multifamily residential complex and hotel. We also have three hotels under construction. We completed the redevelopment and -- of another Northshore Mall, and we started construction on an expansion in Naples.

So we're back to focused on continuing to add improvements across our portfolio worldwide. We also have a pipeline, as you know, of redevelopment, new development that is under consideration. Now let me just turn to our retail investments, and I think and I hope this puts all of this in proper perspective. Obviously, we have an unbelievable track record in capital allocation, making significant returns on investment.

During the year, we capitalized on buying four recognized retail brands in bankruptcy. So we bought them at attractive valuations. They include Forever 21, Lucky Brand, Brooks Brothers and Penney. Each of these brands, we believe, presents a very interesting repositioning opportunity, and each investment has completed at attractive valuations, and we've made significant progress improving the positioning and operating results of the company.

And let me just give Forever 21 as an example. And as you know, we bought it in February, pre-COVID, well before we knew COVID would have the impact it did on 2020. And despite all of that -- despite all of that, Forever 21, both in -- in the company generated a positive EBITDA pre-royalties of approximately $75 million in 2020. And we basically paid $67 million for that.

So our share of that is $30 million. And you can divide it by $67 million to give you our return on investment in COVID 2020. Now you could probably conclude that that's a pretty good return on investment. Now if you put all of our retail brand investments in context, we have approximately $330 million of remaining invested capital, net of cash distributions and the value of appreciation of our ABG investment, which has just had a recent trade.

And so in marking that to market, our net investment in all of these activities is $330 million. And all of these brands will generate for us in 2021, our share, $260 million of EBITDA. So you can take $260 million, divide it by $330 million to get a sense of our return on investment. Now I want to remind everyone that we do not add back the depreciation associated with these retailer investments to our FFO because it's not real property.

So the contribution of that from an earnings point of view will, obviously, be much less. But the EBITDA is the EBITDA. So the other point to make in these retail investments is all of these brands generate $3.5 billion in digital sales. $3.5 billion in digital sales.

And all we have to do is look at how e-commerce brands are being valued today, and I think you could all conclude, we hope you do, that we've been making some wise investments here. Now with respect to Taubman, I'm very pleased to have completed the transaction for 80% TRG and their premier retail portfolio, asset portfolio. Our teams have worked -- started working together. In fact, I'm up, but I can't wait to go to Detroit tomorrow night in the cold and snow -- it's slightly colder than Indianapolis, but I'm sure I'll be welcome.

And we are off to a very productive, good spirited start. I really do look forward to the partnership and growth inherent in the portfolio, and I think we'll all work very well together. As many of you know, we recently filed an S-1 with the SEC to raise $300 million in a Simon-sponsored special purpose acquisition corporation, i.e., SPAC. We are currently in a quiet period for the filing and are unable to speak to it, about the proposed offering, at this time.

We've been very active in the debt and equity capital markets, raising $13 billion in the last 12 or so months and, just some highlights, amended and extended our credit facility with a $6 billion facility that included a $2 billion term loan, which was used to fund the Taubman transaction; issued $3.5 billion of senior notes including the recent $1.5 billion offering in January, addressing all of our 21 unsecured maturities and, obviously, before the treasury really moved up; we completed 15 secured loan financings -- refinancings for $2 billion; and again, in November, we completed a common stock issuance of 22 million shares for $1.56 billion. The term loan funded the Taubman deal, and our net debt was flat compared to last year, exclusive of the properties that we added with the Taubman transaction and the term loan drawdown. Fourth quarter, we ended our liquidity with $8.2 billion, consisting of about $1.5 billion of cash, including our share of joint venture and $6.7 billion of available credit facility. This is net of $623 million of commercial paper outstanding at quarter end.

Dividend, we paid our fourth-quarter dividend of $1.30 per share, which is $6 in total for the year. We paid more than $2 billion in 2020. We're up to over $34 billion in dividends of our history as a public company. And we're really proud that we paid the cash dividend when many of our other companies are either suspended or completely eliminated or dramatically reduced their dividend.

Now, finally, let's move on to 2021 because I do, frankly, want to turn the page on 2020 as I'm sure we all -- as you all do. We feel confident we've turned the corner. We expect growth in cash flow and earnings. In 2021, our guidance is $9.50 to $9.75 per share.

This range, it includes approximately $0.15 to $0.20 per share from our retailer investments. Again, keep in mind that we can't add back -- or we don't add back depreciation for those investments. That's a growth range of 4.3% to 7%, compared to our full year of $9.11. And just no more -- our diluted share count will be 376.

No significant acquisition or disposition activity and no further government mandate shutdown of our domestic retail properties is in that guidance. As you know, we are dealing with certain shutdowns in Europe as we speak. So let me just conclude, one heck of a year. Let's not repeat it in any stretch of our imagination.

Let's turn the corner. And I want to thank my Simon colleagues for their continued resolve in running our business under these trying circumstances. In a very tough environment, we've dealt with just basically about everything. And I want to thank them and, again, thank our shareholders for their support.

And everyone out there, be well. And we're ready for any and all questions, though I'm sure people want to go home and warm up because it's cold.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from the line of Steve Sakwa with Evercore.

Steve Sakwa -- Evercore ISI -- Analyst

Thanks. Good afternoon, David, or good evening.

David Simon -- Chairman, Chief Executive Officer, and President

How are you doing?

Steve Sakwa -- Evercore ISI -- Analyst

Good. Good. I guess, first, I just wanted to maybe talk a little bit about the leasing momentum and pipeline that you talked about. And just given that things are moving forward, the economy seems to be getting better, vaccines are getting rolled out, we're not completely out of the woods but, certainly, there's light at the end of the tunnel here, what sort of discussions are you and the retailers having about unresolved leases and, maybe more importantly, new leases to backfill the vacancy that got created over the last sort of 12 to 18 months?

David Simon -- Chairman, Chief Executive Officer, and President

Well, look, I think we're -- as I said to you, we are expecting to grow our cash flow. Are we back to normal? Not yet, but we're working our way back. Generally, it's still a very serious, intense negotiation on renewals. Retailers are generally cautious.

But the ones that want to grow their business are excited. And we hope to be able to certainly increase our occupancy for 2021, and it's going to take some time to, obviously, get back to where we were in '19. But the healthy retailers that believe in their business and believe in their plan are making deals, and we have such a high-quality portfolio between what we have and what we've acquired with respect to TRG that we're going to be -- we're going to get our fair share of open to buys.

Steve Sakwa -- Evercore ISI -- Analyst

OK, thanks. And maybe just as a follow-up. I appreciate some of the comments you made around the guidance. I was a little surprised at the tightness of the range just given the uncertainties out there.

But is there anything else you can sort of provide? And I realize there's a lot of inputs that go into to that number, in that range of numbers, but anything just on same-store growth or occupancy or lease spreads just to give us a little bit of a feel for how much of the deferrals that you provided or abatements kind of come back online in '21.

David Simon -- Chairman, Chief Executive Officer, and President

Well, certainly, the abatements better not repeat, OK? So that's Step 1. I would say to you, generally, again, it's -- our portfolio NOI growth will be 4% to 5%. We have taken a further reserve, but I'm not going to give you a number as to what we think should be a cushion to whether -- whatever it is, further bankruptcies, additional abatements to the extent that we cut an appropriate deal. We still have some large retailers, frustratingly, that we have not solved.

Not because of us. We've tried, but we haven't gotten to the finish line. So I'd say generally around 5% in the comp NOI number. We have a reserve.

Sales are really all over the place, so it's really hard to give you a good number there, and we would expect occupancy to edge up. And I gave you that people wanted to hear about how much was retailer. I gave you that. And we have TRG factored in there.

Obviously, we made our financing assumptions. Those are pretty straightforward. We have our share count increased because of the offering. And then, we roll it into the blender, and that's kind of what's spit out.

We have some variability. You're right, the range is tight. But we did -- I mean, we did add a reserve to it based upon gut feel that we're, like you said, not -- we are turning the corner. It's kind of my phrase.

But are we completely out of the woods? Not yet, but well on our way.

Steve Sakwa -- Evercore ISI -- Analyst

That's great. Thanks very much.

David Simon -- Chairman, Chief Executive Officer, and President

Sure.

Operator

Thank you. And your next question comes from the line of Rich Hill with Morgan Stanley.

Rich Hill -- Morgan Stanley -- Analyst

Hey, good evening, David. Thanks for the time this evening. I wanted to maybe just spend a little bit more time walking through the line item where Taubman and some of your other investments are held. Not because I'm questioning them, I actually think they're becoming increasingly important.

So could you just maybe walk us through how we're supposed to think about that line item relative to the full FFO guide for '21 and maybe how you think you can grow that line item even after '21, into '22 and '23 because I recognize there's just a lot in there, and it seems increasingly important?

David Simon -- Chairman, Chief Executive Officer, and President

Well, look, it flows through -- listen, I used to -- I'm still pretty good at it. But it flows through our equity, they're all equity accounted. So now in -- we show a couple of different things. So we do separate out our retailer NOI and our supplemental.

So we do, do that. TRG will be in our property NOI next year. We had -- we took no financial implications for TRG in the fourth quarter, obviously. I think we owned it for like 12 minutes, right? When did it close?

Brian McDade -- Chief Financial Officer -- Analyst

29th.

Tom Ward -- Senior Vice President of Investor Relations

29th.

David Simon -- Chairman, Chief Executive Officer, and President

On 29th. All right. See? I'm always faster than what -- we took no other than -- obviously, our debt increased at the year-end because we drew down on the term loan to fund it. But from a GAAP point of view, it will be in the equity, all lumped together with our other equity investments.

But in our supplemental, we'll have TRG in our portfolio NOI and the retailer will be in that separate line item. Guys, do you want to add anything?

Brian McDade -- Chief Financial Officer -- Analyst

No, that's exactly right. You'll see the retailer results that David mentioned come through the NOI from retailer investments line item, Rich.

Rich Hill -- Morgan Stanley -- Analyst

OK. I think I understand that.

Brian McDade -- Chief Financial Officer -- Analyst

Yes.

Rich Hill -- Morgan Stanley -- Analyst

And David, obviously, as you said, 2020 has been a remarkably abnormal year. But you've been in a really interesting position whereby you've been able to buy some retailers and negotiate retailers -- with retailers. Could you maybe just walk through some of the biggest lessons learned about who you want to be your tenants, how you negotiate with them, how they negotiate with you? I just think it's important as we think about how to model cash flows in the out-years.

David Simon -- Chairman, Chief Executive Officer, and President

Well, I mean, that's a tough one, Rich. I mean, I could go in a lot of different directions. Listen, when you end up in bankruptcy or near bankruptcy, you've, obviously, made a lot of mistakes. It just doesn't happen overnight.

And by and large, the ones that we bought, retailers, we have bought in bankruptcy. So then we go in there and just run it like we run Simon Property Group, obviously, with the help of our partners. And we make fast, commonsensical, cash flow-oriented decisions and return on investments, etc. And we have a sense of, just because of our experience in the retail real estate world, what makes it successful, what successful real estate they should be in, what's the right rent to pay in spaces.

And we bring all of those -- all of that to bear. And then, obviously, when you're in bankruptcy, you have the chance to deal with leases or other contracts that are wildly expensive that you might be able to change. I mean, the most amazing thing -- I shouldn't really say this, but the most amazing thing is that every retailer that we purchased in bankruptcy, the one -- all the tech companies get hundred cents on the dollar, OK, that they pay for whether it's services, whether it's for their e-commerce business, whatever it is. And the landlords ended up -- us included, end up getting the shorts.

That's an interesting thing that would be great to, like, rethink that whole process. But they're -- those tech companies are so powerful that they can check you off if you don't play ball with them. So landlords, us included, don't have that kind of power. So I mean, that -- I don't know if I've answered your question.

It probably is -- you probably have a lot of nuances to it, but it's probably -- I could go on for hours. If you don't mind, let's go on to your next question or another question.

Rich Hill -- Morgan Stanley -- Analyst

Yeah. No, that's it for me, David. We can discuss off-line. It just seems like there's a lot of really interesting drivers of growth here, and we're trying to get our arms around it.

So thank you. I'll get back in the queue if I have any questions. But thank you.

David Simon -- Chairman, Chief Executive Officer, and President

Yeah. No, no, thank you, Rich.

Operator

Thank you. And our next question comes from the line of Alexander Goldfarb with Piper Sandler.

Alexander Goldfarb -- Piper Sandler -- Anayst

Hey, good evening, David. And I hope you're enjoying the snow out there.

David Simon -- Chairman, Chief Executive Officer, and President

Yes, sir. it's pretty. It gets a lot pretty when it gets closer to March. Let me assure you.

Alexander Goldfarb -- Piper Sandler -- Anayst

Yeah. But the skiing gets better, so that's a positive. So two questions here. First, in the fourth quarter, it looks like on your -- on that rent collections, yes, that 90% table that you guys have, it looks like the bankruptcies leveled off, the deferrals leveled off.

But it looks like you guys took about $141 million of abatements in the quarter. Also noticed that you had a big straight-line write-offs and then you had a big lease term. So it seems like there was a lot of cleanup in the fourth quarter. Is that the way that we should interpret it, like, basically, you guys got to the end of the year, you shouted up and down the hall, saying, what have we got here, let's clean the books and start '21 in a good way? Or is that not the right interpretation? Because you didn't say what the actual buffer is and guidance for this year, you just said you're allotting for it, but it does seem like you guys cleaned up a lot at year-end.

David Simon -- Chairman, Chief Executive Officer, and President

Well, the bottom line is when it came to abatements, we took it in the period that we actually made the deal. And if we had done everything in the second quarter, we would have done it then in Q3. It just took an unbelievable amount of time to get -- I mean, there was a lot of horse trading, a lot of big accounts got settled, as you know, in Q4. And it really -- I mean, we -- it really was when the deal was done.

So that's the -- yes, we certainly want to go into 2021, and we did as much as we could to finish 2020. But those abatements were done in the period at which we cut the deal and signed up the retailer.

Alexander Goldfarb -- Piper Sandler -- Anayst

OK. So we shouldn't interpret the acceleration in the fourth quarter as lingering into this year. It was just stuff done in the quarter?

David Simon -- Chairman, Chief Executive Officer, and President

I think I said there is some negotiations that we still have left to do. But I think we dealt with that, in a sense, in 2020 based on kind of where the deal was headed. So we did use some judgment at year-end in a couple of these cases. But it isn't done until the cash comes into my bank account -- not my -- that was terrible.

My bank account is the Simon Property Group representative, OK, so to make that perfectly clear, OK?

Alexander Goldfarb -- Piper Sandler -- Anayst

Yes, it's -- trust me, it's clear. Second question is you always treasure your balance sheet, and Moody's already downgraded you back ahead of the third-quarter earnings, S&P still has you on negative watch. So just a question here, as you guys think about your balance sheet, I mean, on one hand, your debt trades wider than what the ratings would indicate. Obviously, the bond guys want to get the best deal that they can.

At the other hand, you guys can access the market. But still, how -- I mean, if something were to happen, you've got like a two-notch downgrade, is that -- I mean, it almost seems like the market is pricing that in. But on the other hand, you guys got a ton of debt that you were able to issue. So can you just give us some color on, like, the buyers of the debt and how the debt people are looking at it? Are they just trying to get their ounce of flesh while they can and the way that you've outlined your plan for the rating agencies, you'll be able to maintain something that starts with an A? Or are there other concerns out there that people are -- or that the rating agencies are talking to you about that you need to address?

Brian McDade -- Chief Financial Officer -- Analyst

Hey, Alex, it's Brian. Look, I think the last debt deal we just did here in the beginning of January is representative of where we've seen our spreads go. I mean, spreads are in 100 basis points since the summertime. And so I think that the market is representing and supporting Simon kind of going forward.

With respect to the agencies, we are certainly in deep dialogue with them on a regular basis and are comfortable with what they have done thus far. I mean, I think they're looking at our deals and our ability to raise capital, to David's point, in excess of $13 billion last year, as a testament to the company's balance sheet. So I think they're comfortable. I won't speak for them, but I believe they're comfortable where we're at right now.

David Simon -- Chairman, Chief Executive Officer, and President

Yeah.

Alexander Goldfarb -- Piper Sandler -- Anayst

OK.

David Simon -- Chairman, Chief Executive Officer, and President

There's just no way we're going to get downgraded, not a chance. So next question.

Alexander Goldfarb -- Piper Sandler -- Anayst

OK. Thank you, David.

David Simon -- Chairman, Chief Executive Officer, and President

Yeah. No worries.

Operator

Thank you. And your next question comes from the line of Derek Johnston with Deutsche Bank.

Derek Johnston -- Deutsche Bank -- Analyst

Hi, everyone. Thank you. So what have you learned about traffic, your tenants and demand? And specifically, in the centers within states that have less mandated restrictions, are there any inspiring read-throughs or green shoots for those centers with tighter restrictions in, say, California or Northeast that you can pinpoint share?

David Simon -- Chairman, Chief Executive Officer, and President

Well, I would say you take a state like Florida as a pretty good example, and I mean, you are getting -- the one element that's missing is international tourism. But if you put that aside, you're getting some real domestic traffic increases, and you're getting -- and sales aren't quite what they were last year. But this time, what you're seeing -- I would say to you that, like a state like Florida, it's really showing green shoots, vibrant economy. The only element that's missing to make that really hot would be international tourism.

But everything else is kind of clicking along, and it's pretty good. Texas is probably the next closest. But again, it depends. I mean, that also is somewhat dependent upon whether it's near the border or not and what -- it is such a big state that do you have COVID in this one area versus that area, but I'd say Texas is showing green shoots as well.

But Florida is a great example, I would say to you, that you can get on with business and you start to see green shoots. And there's a lot of energy there. And no, I did not go in Super Bowl, OK?

Derek Johnston -- Deutsche Bank -- Analyst

OK, OK, great. So we did go back, David, to 3Q '19. And this was the last quarter before the pandemic was known. And at that time, the redevelopment buzz and pivot to experiential and mixed-use concepts, it was really high.

And thus, the redevelopment pipeline stood at a record $1.8 billion. So how has this pipeline and redevelopment priorities changed besides being much lower? And how do you stack or prioritize redevelopment spend, especially as we see the pandemic escape velocity in front of us later this year?

David Simon -- Chairman, Chief Executive Officer, and President

Yes, sure. I'd say simplistically, as we look at restarting the pipe, the pipe didn't go away. We just put it in the freezer. Now we are thawing it out.

And I would say to you the biggest change, Derek, is that we believe in the mixed-use component pretty significantly to the extent that we were adding what I'd call retail. We're probably looking at those plans again to make sure that we're adding the appropriate amount. That's kind of the biggest change. But I would tell you this, I do feel very strongly about this, that the high-quality suburbs are going to be where the action is in the future.

And all of the urbanization two, three, four years ago, the question was why are the suburbs going to exist, everybody is going to live in an urban environment, yada, yada, yada. I'm telling you the suburbs are going to be hot. And our quality real estate is going to be where the action is for those well-located suburban centers of commerce. And that's going to be the big change coming out of the pandemic.

Next question.

Operator

Our next question comes from the line of Michael Bilerman with Citi.

Michael Bilerman -- Citi-Analyst

Hey, David, good evening. David, my first question is just -- sort of just talking more broadly about vertical integration. And I know you can't talk about the stack that's in -- under review right now. But can you talk just a little bit broadly about doing things on balance sheet versus in joint ventures or other structures and maybe just provide -- give an update on some of the retailer investments but maybe give an update, too, on shop premium outlets and how that was set up conveniently before the pandemic and how that has happened? And maybe just tie everything together, the vertical integration and being able to control a little bit more of your own destiny.

David Simon -- Chairman, Chief Executive Officer, and President

Well, listen, I would say that whatever we do, we look at the return on investment and cash flow potential -- shareholder value potential and cash flow growth and, obviously, top-line growth. And each business is evaluated based upon what those particular characteristics are important to that investment. But there is no reason -- even though we're in a REIT format, there's no reason why we can't make money in other areas that are consistent with what we've been doing. I think we've proven that time and again.

Have we made mistakes? Yes, we have. But we've been pretty good investors, and we hope to do that in the future. And we're pretty good sponsors. And we have -- our relationships between the brands and our partners spans the globe, essentially.

From a real estate footprint, we are in Europe and Asia and, obviously, domestic. The only place, I'd say, we're really not in is in South America. But our retail brands span a lot of places and we're focused on value. And at the end of the day, Michael, I look at our retail footprint, it does $3.5 billion of commerce.

And I look at the value we get for it, and it's probably nothing. And in some cases, people view it as a negative, which I can't understand, but they do, that's their prerogative. Maybe there's something -- maybe we should unlock that value. We're absolutely going to look at every opportunity to unlock value to the extent we can, but we -- and figure out the right structure.

But the most important thing is to make the good investment. The second thing then is where it should reside, how do you get the value, how do you grow it. And all of those are in the works. But SPARC is a great example.

We believe in the model. We can -- we believe that we can run brands across a common infrastructure. We know that e-commerce brands, they spend a lot of money on infrastructure. We know that if you combine those into one entity, you're bound to save a ton of money.

We've seen it in the overhead, in retail companies. So we're at the early days of figuring out what the right structure is. But in the meantime, we are going to make investments that make us money. And believe me, there is value there that we'll unlock where we'll get the credit for it.

Michael Bilerman -- Citi-Analyst

And then, just the second question, just in terms of guidance. And I greatly appreciate the transparency, actually putting out a number of guidance which, given everything that's going on, it's great. If you think about just sort of the building blocks to that guidance. If you look at 2019 relative to 2020, right, you had that $2.50 per share or almost $3 a share, well over $1 billion decline.

You're picking up at least $200 million going from '20 to '21. But I almost want to think a couple of years of getting back to NOI and FFO and bridging that gap. You threw up the $0.15 to $0.20 of retailer investments per Page 17. It looks like that was pre-D&A, about $0.06, so call it 10 of the 50 increase is coming at least from the retailer side and the positive investments you've made.

But maybe you can just sort of break down some of the other bigger components of what's coming back, not specific -- I don't need specific G&A guidance or NOI, but there's, obviously, a pretty big moat of earnings to get back and maybe you can just share some of the bigger pieces with us.

David Simon -- Chairman, Chief Executive Officer, and President

I mean, look, I think the biggest thing is not to replicate the abatements and the bankruptcies. I mean, that's the biggest component. But look, our portfolio, again, at gross, not at share, did over $6 billion in '19, right? We lost $1 billion and all of the stuff that we did, net. And again, we worked our you-know-what off to mitigate that through cost savings.

What's not going to replicate are the cost savings, in a sense, and the abatements. And we were pretty aggressive in running the ship as lean and as tight as we could. And we had no choice, even though people across the street were open, we weren't allowed. So we have $1 billion to make up.

Again, this is pre-TRG. And I think the biggest thing is going to be the abatement. The big unknown is how long is it going to take to lease up. We lost 350 basis points, what, 380?

Brian McDade -- Chief Financial Officer -- Analyst

380.

David Simon -- Chairman, Chief Executive Officer, and President

380. So we lost 380 basis points on occupancy. Sales, vaccine rollout and everything else, I mean, we did our -- roll up our best guess, our comp NOI is going to be positive. We've got a reserve.

But at the end of the day, we're going to make the $1 billion up over time. We're also going to -- some of the properties we're going to sell will go away. So that's in there, too. I can't give you -- Steve Sakwa kind of tore it out on me already.

He gave me more -- he's got a nicer voice than you do, so I gave him more information than I probably normally would but -- no, I'm kidding. But I mean, that's kind of where we are. We're also dealing with the international shutdown. I mean, they're picking on malls like what happened in the U.S., again, without science, but they're also shutting down outlets.

But yet, they keep high street open, so go figure it out. So we are still dealing with some c*** everywhere. But I mean, I'd say the big thing that won't replicate, we hope, is the abatements. Same thing on the cost savings and sales and then buildup of lease income and bad debt, we put all these numbers in.

We also put a reserve just because we have a lot of uncertainty, and we put it in a blender and that spits out. I can't add much more than that.

Michael Bilerman -- Citi-Analyst

OK. Thanks.

David Simon -- Chairman, Chief Executive Officer, and President

Sure.

Operator

Thank you. And our next question comes from the line of Craig Schmidt with Bank of America.

Craig Schmidt -- Bank of America Merrill Lynch -- Analyst

Hey, good evening. I had a question about the redevelopments in the U.S. Could you put on your Rick Sokolov hat on and kind of run through who you're thinking as possible anchor replacements? I realize they may not be retail. They could be wellness, healthcare or e-sports or whoever.

But who are some of the replacement anchors you're thinking in terms of your U.S. redevelopments?

David Simon -- Chairman, Chief Executive Officer, and President

Well, I mean, Craig, that's a retail -- I mean, I'm sorry, real estate specific. But I think what I said earlier is the most important thing. I think some of these we are relooking at with the idea toward reducing the amount of new retail that we might put onboard but also the restaurants, and we're making up to that with what I'd call the opportunity for suburbs to get exciting again. And I think that's going to be through a lot of the mixed-use efforts that were already under way but I think will be accelerated.

So some of the anchors are doing new deals. I mean, we're talking to Kohl's, we're talking to Primark, we're talking to all sorts of those kind of guys, to Dick's. We still are making new -- we've got a couple of Dick's under way so -- and I would hope that some of the more thoughtful entertainment-oriented retailers, once the COVID restrictions get back, would also continue to be in our property. So it's still at work, but I'm hopeful we'll have a lot more of the mixed-use stuff that we are doing.

And we're in some hot, what I'd call, very strong markets for that, like, with TRG in Nashville, we're in Austin, we're very strong in South Florida, obviously, Texas. So we're in some of these markets that want growth and are looking to facilitate growth. And we are going to make the next evolution of our real estate that much more interesting with time.

Craig Schmidt -- Bank of America Merrill Lynch -- Analyst

Great. And then, I was just curious, how are you interacting with the Taubman management given their properties? And how are they interfacing with the Simon people?

David Simon -- Chairman, Chief Executive Officer, and President

I'd say fantastic. We are, on the leasing side, talking significantly both on COVID-related issues, renewal-related issues, new business. As you know, Craig, we've got a new business group dedicated kind of to up-and-coming retailers which, by the way, it's exciting. All of those retailers -- and this is where I do miss Rick, he could start -- and you're kind to mention him, but I will never do his list, I could never do it justice.

But most of those retailers are looking to grow. And they include from the Warby Parker, the Shake Shack on and on. So that's very encouraging. We're talking to the TRG about that relationship between Bobby and myself.

It's great. In fact, Bobby, he figures out how to get to me very easily. He makes me rugelach, which is fantastic. I look forward to having some tomorrow night.

And I think it's going to be a great partnership. I mean, they're dealing with what we've dealt with. In terms of COVID, it's been a tough year for them, but I think we're all looking forward to the future, and we'll go from there. And as you know, they've got -- the family has got a lot of capital tied up into TRG.

And believe me, they want to grow that. And to me, that's a win-win.

Craig Schmidt -- Bank of America Merrill Lynch -- Analyst

OK. Thank you.

David Simon -- Chairman, Chief Executive Officer, and President

Sure.

Operator

Thank you. And our next question comes from the line of Caitlin Burrows with Goldman Sachs.

Caitlin Burrows -- Goldman Sachs -- Analyst

Hi, good evening. Maybe just on the balance sheet side. Could you clarify whether the Taubman debt is included in the debt metrics on Page 29 of the supplement? And if it's not, is it just because it happened so close to the quarter end or something else?

Brian McDade -- Chief Financial Officer -- Analyst

Hi, Caitlin, it's Brian. It is not included. The only debt that would be included relative to Taubman was the $2 billion term loan that we drew down ahead of the closing.

Caitlin Burrows -- Goldman Sachs -- Analyst

And going forward, will it be reflected more similar to other joint venture debt you have or not?

Brian McDade -- Chief Financial Officer -- Analyst

Yes, it absolutely will.

Caitlin Burrows -- Goldman Sachs -- Analyst

OK. And then, this quarter, the metric you guys had shown in the past on debt to NOI, it looks like that's not there anymore, but I think it's about seven times, using think the net debt from Page 28 and NOI from Page 17. So I'm wondering, a, would it be higher when including the Taubman portion of those metrics and also with your near and medium-term target for leverage?

David Simon -- Chairman, Chief Executive Officer, and President

Yeah. That's -- look, the fact of the matter is, I think, that statistic, you have to be very careful with. And I personally chose that I think we need to look at it again because, as you know, many of those properties are nonrecourse, and it overstates leverage. And I think part of our job is to educate the investment community how we look at the business.

And Brian and myself will begin that effort this year. But look, EBITDA -- debt to EBITDA, if you look at our -- it's not in our financial covenants anywhere. So it's a gratuitous metric that is not as thoughtful or as refined as it should be. And we're in the process of refining it to clearly articulate what it is.

But you've got to separate what's recourse, nonrecourse, what's in JV, what's not in JV in a more thoughtful manner, which we'll embark upon in 2021, so you'll have a better understanding of it.

Caitlin Burrows -- Goldman Sachs -- Analyst

Got it. OK. And then, I guess, just considering where that leverage is, and you'll educate us on how we should think about it, what's your current interest in making property-level acquisitions in 2021? Or under what conditions would you consider raising additional equity?

David Simon -- Chairman, Chief Executive Officer, and President

We have no need for raising additional equity. The balance sheet is in very good shape. Rating agencies are very comfortable with the transaction that we did, both to finance Taubman and the equity deal. Obviously, they put us on watch just because of COVID.

It had nothing to do with Taubman or the financial metrics. And I think as we get -- as we go beyond the shutdown, remember, we lost 20% of our ability to operate in the year, which is material and then, obviously, a lot -- not counting the restrictions that we had to endure coming out of it. I think once we show that we're -- we've turned the corner in terms of that, you'll see that negative watch go way. No issue, not worried about one iota.

And on the property acquisition side, a, if I can buy it at a good value, and it's a great asset and a guy wants to sell and it adds meaningful to our portfolio, we'll take a serious look, but we are in no -- there's no need to do one thing or another. If it's accretive to our portfolio and our financial wherewithal, we're happy to look at it.

Caitlin Burrows -- Goldman Sachs -- Analyst

OK. Thanks for those details.

David Simon -- Chairman, Chief Executive Officer, and President

Sure.

Operator

Thank you. And our next question comes from the line of Juan Sanabria with BMO Capital Markets.

Juan Sanabria -- BMO Capital Markets -- Analyst

Hi, good evening. Thanks for the time. Just a question on sources and uses. You continue to pay the dividend but at a lower rate than previously.

You expect cash flows to go up. So any color or thoughts you can give us around the dividend going forward and other maybe uses of capital? I'm not sure if you have a sense of what could be contributed or used to further invest in retailers at this point, so maybe just a general conversation on sources and uses and touching on the dividend.

David Simon -- Chairman, Chief Executive Officer, and President

Well, again, our net investment in retail is $330 million. So I think when we have properties that are worth $1 billion plus, it is what it is. I think it's important to note that we are 400 basis points below our mean FFO multiple as a history of being a public company. And if you look at our retailer, what we've seen from retailers and the correlation, they've all had a much greater bounce-back in terms of performance on the -- on their stock year to date for the last few quarters than we have.

So we're optimistic that the future will begin to -- that our value will begin to be appreciated again, which it has been in the past. And frankly, there's no reason why it won't in the future. With respect to the -- and the reason I bring up the past is as follows. If you look, we're -- the best case analogy that we're looking at and, again, no one's really dealt with COVID before, is what happened in '08, '09 where we had -- don't hold me exactly to these numbers, but in '08, we were earning around $6 a share.

Our '08, '09 bankruptcies dilution that we had on issuing stock, high interest rates, I think we earned in the $3.50, $4 range. And then, we ended up growing out of that earning $12, OK? Now we are at $9, we earn $9.11. We're saying we're going to earn $9.50 to $9.75. And I'm hopeful that we'll replicate what we did in '08, '09.

And not only did we do it in '08 and '09, but we added immensely to the quality of the real estate. We separated ourselves from our peer group dramatically. We -- the balance sheet got better, all of the same -- we diversified, we did this, that and the other. We grew internationally.

I truly believe all of these things will happen again. That's what we're made for. And this is a long way of saying that the dividend tracked basically what we did in earnings. We actually paid a scrip dividend in '09, if you believe it or not.

We cut it and scrip it and did all this crazy stuff. And that was -- all of that in '08, '09, I feel like, if history repeats itself, given the quality of the real estate, the team, the balance sheet, the diversity, we are going to replicate the same good work we did coming out of that. And we'll do it coming out of COVID. We're already beginning to do it.

And that's the important thing. So I think that's a long way of saying, assuming we can completely get out of COVID, you're going to see increases in earnings, which beget increases in dividends. And we have the history that ultimately should repeat itself.

Juan Sanabria -- BMO Capital Markets -- Analyst

Thanks for that. And then, just my follow-up. On the lease terms, can you give us any sense on how lease terms have changed, if at all, during the last few months in your discussions with retailers, either for new renewals and how maybe that trending over periods of past dislocation, whether it be the financial crisis or the Tetrarchy? Just the perspective historically would be helpful.

David Simon -- Chairman, Chief Executive Officer, and President

Yes, sure. I would say, simplistically, certainly, prior to COVID, they were more or less the same. There is certainly more of an interest to go a little bit shorter term, say, three years. And by the way, we are OK with that because I'd rather negotiate two or three years from now than right now.

So they're -- at least in '20 -- the new step that we did in 2020 and some of those renewals -- some of the renewals we're doing in '21 are shorter two, three years. But I think, actually, that could be in our best interest, too, because, obviously, we've had a -- being shut down and restricted and all this other stuff, we don't have quite the ability to point to sales as a way to increase rents. So I think we're -- and I think it's actually a two-way street. It's working out fine with the vast majority of our retailers.

Juan Sanabria -- BMO Capital Markets -- Analyst

Thank you.

David Simon -- Chairman, Chief Executive Officer, and President

Sure.

Operator

Thank you. And our next question comes from the line of Floris Van Dijkum with Compass Point.

Floris Van Dijkum -- Compass Point -- Analyst

Thanks for taking my question. David and Brian, maybe, if you could talk a little bit about your debt philosophy, in particular, your mortgage profile. Your mortgage maturity profile is significantly shorter than your unsecured debt maturity profile. And presumably, some of that is due to the fact that mortgage debt these days is less readily available.

Maybe if you can talk about some of your upcoming mortgage debt that's coming, as in the Fashion Centre at Pentagon, the Fashion Valley in San Diego, Florida Mall, some of these big JVs, how are your partners talking about the funding of those mortgages and -- or the reupping of the mortgages there? How are the banks doing that? And also, I think you've qualified that you've -- or indicated you've got about $714 million of mortgage debt. That's probably -- in fact, we know some of this is already in the news, is being handed back, those are not, obviously, those premium centers. But talk -- if you can walk us through some of the -- your thinking regarding your mortgage debt. And do you think you'll have less or more mortgage debt after this year?

Operator

I'd say pretty similar -- the couple, like, the Florida Mall, Fashion Valley, pretty straightforward doing it. In some cases, it's not 10-year deals, it may be a little shorter. We did, what, 15 secured refinancings even in this period of time. So I don't find it overly complicated or overly concerning or any risk that there's not the ability to refinance stuff.

On nonrecourse, there's certain debt that's nonrecourse that may be in special servicing. That's kind of a contractual right for the borrower, which is a stand-alone entity that's nonrecourse to SPG. It's also the right from the special servicer, right? So we've done -- we've dealt with those for a number of years. In some cases, they'll be restructured, mutually agreed to.

And if not, and the special servicer would like to own the real estate, we're more than happy to cooperate and do it in a professional manner. We did one just recently. And it's absolutely in the best interest of Simon Property Group shareholders, those decisions that we're making on that front. So very straightforward, very professional, honoring the contract's rights on both sides.

Make -- hope to make deals in some. If not, then they'll no longer be part of our portfolio, and we wish that new owner the best of luck.

Floris Van Dijkum -- Compass Point -- Analyst

Great.

Brian McDade -- Chief Financial Officer -- Analyst

So maybe just one thing from me on the duration here. Obviously, our unsecured portfolio benefits from the ability to issue 30-year debt, so that's going to naturally drive the duration higher on a weighted basis.

Floris Van Dijkum -- Compass Point -- Analyst

Thanks. That's helpful, Brian. The other question, I guess, I have, one of the unknowns from the market is what are the right cap rates for malls, in particular, what are the right cap rates for A malls. I mean, I think the market sort of has gone on the fact that C malls are worth very little and assigns very high cap rates, i.e., low values, but the question is more regarding your portfolio.

And you've mentioned your low FFO multiple. We've seen the Brookfield transaction at a much, much lower cap rate than where you're trading at. As you look at -- and we also know that there's a large portfolio owned by -- or the Westfield portfolio owned by Unibuy potentially that could be in play as well. How should the market think about cap rates for A malls? And maybe give your view on that.

David Simon -- Chairman, Chief Executive Officer, and President

This is a known unknown, right, as opposed to an unknown unknown, right? I would simply say there's -- the cap rate is what we want it to be because I think we are the only buyer out there. So I'll look at the mirror and I'll decide what the right cap rates are. I think Brookfield is busy buying out -- them as busy buying out BPY. And I think we're the only buyer.

As far as I know, everybody has herd mentality one way or another. We are buyers of high-quality real estate. And the funny thing is when we decided to buy something that doesn't count as to what cap rate should be, then we're the only buyer. So go figure that out.

I don't know if that's a known known or whatever. But the fact of the matter is we're really the only -- I mean, we're really the only buyer. And yet, everybody wants to point to a cap rate that we are not the buyer. But I don't -- never understood why we're not good enough to be the arbiter of what cap rates should be.

But I'll let you figure that out for us. I can't figure that out.

Floris Van Dijkum -- Compass Point -- Analyst

Fair enough. But also, presumably, as we've seen a lot in the tech business is when you buy something, all of a sudden, that reinforces what the right -- so you actually can determine what the right cap rate for your own value can be based on the value you're willing to pay for somebody else.

David Simon -- Chairman, Chief Executive Officer, and President

Well, listen, we did close just a recent transaction. And that's a pretty good indication.

Floris Van Dijkum -- Compass Point -- Analyst

The Taubman transaction you're referring to?

David Simon -- Chairman, Chief Executive Officer, and President

That's correct. So in any event -- but I want you -- Floris, I want you to get back to me and explain why we can't be the arbiter of cap rates, why it has to be a state pension fund, why it can't be Simon Property Group. I don't get it, OK? Anyway, I'm kidding but -- not really, but I'm kidding, mostly.

Floris Van Dijkum -- Compass Point -- Analyst

So you think if I were -- sorry, I guess, I'm slightly going over.

David Simon -- Chairman, Chief Executive Officer, and President

You're over your allotted time. Call anytime. Thanks, Floris.

Floris Van Dijkum -- Compass Point -- Analyst

All right. Thank you.

David Simon -- Chairman, Chief Executive Officer, and President

You're welcome.

Operator

And our next question comes from the line of Mike Mueller with J.P. Morgan.

Mike Mueller -- J.P. Morgan -- Analyst

Yeah. Hi. Just a quick one. You mentioned boxes were skewing the 2020 releasing spreads.

Can you tell us if they would have been positive if you strip those out? And just give us any color on '21 activity as well.

David Simon -- Chairman, Chief Executive Officer, and President

Tom Ward is shaking his head, yes. And for those of you who know Tom Ward, you can count on it. They would have been positive, yes.

Mike Mueller -- J.P. Morgan -- Analyst

Got it. And any color on '21 expirations?

David Simon -- Chairman, Chief Executive Officer, and President

In terms of renewals or what the spreads are.

Mike Mueller -- J.P. Morgan -- Analyst

Yeah, exactly. Yeah, all of the above. Yup.

David Simon -- Chairman, Chief Executive Officer, and President

Or in terms of what percent were done yet or not?

Mike Mueller -- J.P. Morgan -- Analyst

Percentage done, if the trends are consistent, if they're still renewing at positive rates as well.

David Simon -- Chairman, Chief Executive Officer, and President

Well, I don't -- I mean, it's factored in. I don't know what's -- I don't know. I can't really answer off the top of my head on spreads, but what -- do we have the percent done what -- does anybody know off the top of their head?

Brian McDade -- Chief Financial Officer -- Analyst

I think over 50% done.

David Simon -- Chairman, Chief Executive Officer, and President

Yeah, over 50%, but we can get you a more -- I've seen it, but I'm sorry to tell you, I just don't remember.

Mike Mueller -- J.P. Morgan -- Analyst

Yeah, that's fine.

David Simon -- Chairman, Chief Executive Officer, and President

But Tom can give that to you, the percent done.

Mike Mueller -- J.P. Morgan -- Analyst

Got it. Appreciate it. That was it. Thank you.

Operator

And our next question comes from the line of Linda Tsai with Jefferies.

Linda Tsai -- Jefferies -- Analyst

Hi. Thanks for taking my question. I just want to clarify, in terms of the 4% to 5% portfolio growth, this is overall NOI, right, not same store?

David Simon -- Chairman, Chief Executive Officer, and President

Correct. We are -- given the -- I don't know how to show comp anymore given that we were shut down with restrictions. So I made the decision that we're just going to show you portfolio NOI, all in, because you can argue that none of it's comp because, I mean, how do you -- or all of it's comp. I don't really know what to do.

So the simple thing is we're just going to show you our portfolio NOI without the comp distinction. So it's all the real estate, all of the NOI. And hopefully, that will be helpful to you.

Linda Tsai -- Jefferies -- Analyst

Thanks. And it looks like U.S. gross contractual rents went down 2% to 3% each quarter from 2Q to 4Q. What accounted for this fluctuation?

David Simon -- Chairman, Chief Executive Officer, and President

Which one does?

Linda Tsai -- Jefferies -- Analyst

I'm just looking at like, when you take the 3Q sup and you look at the reconciliation page with -- and like the first line is U.S. gross contractual rents, it's the same. Then on the 4Q sup, it went down 2%...

David Simon -- Chairman, Chief Executive Officer, and President

It would have gone down because of bankruptcies, yeah, for sure.

Linda Tsai -- Jefferies -- Analyst

OK. So the $1,625 versus $1,591 versus the $1,547. OK.

David Simon -- Chairman, Chief Executive Officer, and President

I mean, I -- why don't you talk to Tom, he'll give you the more detail, but spatially, I would just say it had to go down because of bankruptcies. I mean, that's my -- but he can fill that in.

Linda Tsai -- Jefferies -- Analyst

OK, thank you. Sorry, one last one. You mentioned that the ABG brands generated $3.5 billion in digital sales.

David Simon -- Chairman, Chief Executive Officer, and President

Not ABG, I'm sorry, Linda, not ABG, all of our retail brands, OK? So our investment in Penney, Aero, Rue La La, Gilt, Brooks Brothers, Forever 21, put them all together, and that's $3.5 billion.

Linda Tsai -- Jefferies -- Analyst

OK. And any sense of what this growth rate looks like going forward?

David Simon -- Chairman, Chief Executive Officer, and President

Well, I mean, I'm kind of torn because it's been pretty good with COVID, right? Our stores aren't open. But -- or we're shut down for a long time, but it's growing reasonably well. So we have -- I think the important thing here is we have embedded in our company an e-commerce company, OK? Now again, I know it's -- we've got a complicated structure. We own 100% of everything.

But we are in -- at a pretty reasonable scale, we have an e-commerce company that does $3.5 billion of digital sales. That's the most important point. Now it's up to us and the management team how to put it all together so the market recognizes the value.

Linda Tsai -- Jefferies -- Analyst

Great. Thank you.

David Simon -- Chairman, Chief Executive Officer, and President

Sure.

Operator

Thank you. And our next question comes from the line of Vince Tibone with Green Street.

Vince Tibone -- Green Street Advisors -- Analyst

Hi. Good evening. I just have a follow-up to Linda's question on the comp NOI piece. I just want to make sure I'm understanding the guidance you stated correctly.

So the 5% increase in portfolio NOI for next year, is that number inclusive of the incremental NOI from Taubman because, based on my math, that would make -- most or all of that 5% increase would be due to Taubman and the legacy Simon assets would maybe be flat or slightly down. Is that fair? Can you clarify that?

David Simon -- Chairman, Chief Executive Officer, and President

Vince, you're trying to paint a negative picture, my friend. That's just domestic, right? That's just Simon's portfolio. It doesn't include Taubman, OK?

Vince Tibone -- Green Street Advisors -- Analyst

For the guidance piece.

David Simon -- Chairman, Chief Executive Officer, and President

Yeah, for the guidance piece, correct.

Vince Tibone -- Green Street Advisors -- Analyst

No, I just want to make sure and clarify that.

David Simon -- Chairman, Chief Executive Officer, and President

Yeah. It's a fair question. It's just our existing portfolio does not have anything to do with TRG.

Vince Tibone -- Green Street Advisors -- Analyst

And then, in the fourth quarter, is it fair to say the domestic portfolio NOI is pretty close to the old comp NOI definition then?

David Simon -- Chairman, Chief Executive Officer, and President

It's always been -- yes. I mean, it's always been, always been -- as you know, our comp NOI has been, frankly, 90%, 95% of the portfolio. So we said here and I looked at them, I go, why do we put comp NOI? What do we take out? What do we don't take out? It's just -- it's more -- there's just no need for it, especially given what we endured in 2020. We'll just give you the number portfolio, whether it has a redevelopment that's taking the NOI down or we added something to take it, the NOI, up.

It almost is irrelevant. It's all on the margin. And again, I'm glad you clarified that. That does not include TRG.

And we'll figure out exactly how to portray it for 2021.

Vince Tibone -- Green Street Advisors -- Analyst

OK. That was my next question. Just going forward -- I mean, it totally makes sense on the redevelopment piece just to lump it together. But I think, yes, next year, with Taubman getting added, it would be helpful to have some sense of ongoing operations versus the incremental NOI from Taubman going through that line.

David Simon -- Chairman, Chief Executive Officer, and President

I think that's a fair statement. So we will figure it out. If we lump it, we'll make sure that we highlight what the number is.

Vince Tibone -- Green Street Advisors -- Analyst

Great. Thanks. And then, maybe just one more quick one for me. Just could you provide a little additional color on the leasing spreads, specifically maybe comparing, providing a little commentary on malls versus outlets today?

David Simon -- Chairman, Chief Executive Officer, and President

That's a good one. I don't know. Do you know off the top of your head?

Tom Ward -- Senior Vice President of Investor Relations

So the malls, obviously, the reported number of minus 6.8, we talked about the fact of mix. We think about some of those anchors that were in the mix previously that was driving the mall spread negative, but the premium outlook is positive.

Vince Tibone -- Green Street Advisors -- Analyst

OK. Thank you.

David Simon -- Chairman, Chief Executive Officer, and President

Thank you. Thanks, Vince.

Operator

Thank you. And our next question comes from the line of Haendel St. Juste with Mizuho.

Haendel St. Juste -- Mizuho Securities -- Analyst

Thank you. Thank you. Thank you, David. So I guess, a question for you on the outlook for retail sales more broadly.

We've talked to some people who've expressed concern that as COVID subsides, that retail sales from malls and outlet specifically could be negatively impacted because there will be an outsized demand for travel, entertainment and social gatherings. And that's where consumers will be spending their dollars. And additionally, because of COVID, there's been a lack of new fashion trends outside of leisure and sweats for us to wear comfortably at home, which could make apparel sales challenging for a while. And then, there is the concern of the further e-commerce share gains.

I guess, I'm curious how you're thinking about the near-term opportunity and the risk for retail sales here, how that plays into your expectation for rents and also the projects you're starting and how you're populating those redevelopment projects. Thank you.

David Simon -- Chairman, Chief Executive Officer, and President

Yeah. Listen, I can't sit here and make a prediction other than what I said earlier, which is I think suburbia is going to be -- really make a major comeback. It was all about street retail. It was all about urbanization.

I think you're going to see a movement toward suburbs, and that will be -- that will spell a good opportunity for us. And I'm not overly concerned about people who are going to have their disposable income and go here and there. And I think we'll get our fair share of the growth that's expected when we get past COVID and resume our more normalized -- not overly worried about it.

Haendel St. Juste -- Mizuho Securities -- Analyst

Fair enough. Fair enough. And just following up on spread, I know you've been asked questions several different ways. But I'm curious overall, is there anything here in the recent leases you're signing or anything you're seeing in the numbers that suggest that spreads could trough here in 2021? Curious what your assessment of the prospect for that here.

David Simon -- Chairman, Chief Executive Officer, and President

Well, look, I think, I mean, again, I think we are -- if I could put a lot of these recent questions in perspective, I mean, in evaluating what we think we are going to earn next year is, certainly, science. But there's an element of art because we are dealing with a very uncertain macro environment, predominantly because of COVID and the impacts that it has on the psyche and how much stimulus we're going to have. There's a lot of uncertainties there. So we try to do the best we can to kind of give you a portrait of what we're going to earn.

And there's a lot that goes into it. I think it's -- hopefully, we'll be in that range, and we'll execute like we have historically and we'll be in that range. But it's really hard to pinpoint a specific statistic one way or another because there's just so many variables out there. And we try to put it all together in this range to give you a sense of what we think the earnings will be next year -- or this year now, I should say.

Haendel St. Juste -- Mizuho Securities -- Analyst

Fair enough. Thank you.

David Simon -- Chairman, Chief Executive Officer, and President

Sure.

Operator

Thank you. And our next question comes from the line of Ki Bin Kim with Truist.

Ki Bin Kim -- Truist Securities -- Analyst

Thanks. Good afternoon. Just talking about your development pipeline, the yield of 8%, I don't think that's changed over the past couple of quarters. I'm just curious, is that because the projects are pretty much leased and ready to go so there's not much risk to that yield? And secondly, if you had to put new dollars to work, is 8% on development or redevelopment enough to justify it?

David Simon -- Chairman, Chief Executive Officer, and President

Well, the answer is it hasn't changed much because the development -- I mean, not much has changed, I mean, it's been on lockdown, as you know, dealing with COVID. So we hope to look at where we can accretively add. And the answer is no. 8%, there is no guide, it's got to be over 8% or not.

It's got to be what's the value in the property, what it's going to do to the property. I mean, if the property is an 8% cap rate property and you get an 8% return, you're essentially treading water unless you think you're going to suddenly make it a 6% property, which is possible in certain redevelopments. On the other hand, if you spend an eight on a five, then you've made a lot of money. So if everything blows down to the specific real estate that we're trying to create over a long-term basis -- now remember, we give you these numbers kind of more or less out of the box, but if you get 8% with growth, I mean, that's a pretty good return, unlevered return, going forward.

So again, it depends on the real estate.

Ki Bin Kim -- Truist Securities -- Analyst

OK. And just last question for me. How do you think about -- any early thoughts on the $15 minimum wage and how you think your retailers will handle it and, at the end of the day, like, how much exposure you might be -- you might have as Simon the company?

David Simon -- Chairman, Chief Executive Officer, and President

Yeah. I really don't -- I'm going to stay out of politics. And we'll -- I mean, I think we all were frustrated with the -- what was stressed upon us last year because of the way that we got treated versus other boxes and other warehouses. The mall seem to get the brunt of a lot of the restrictions.

It would seem more symbolic than in science. Now the reality is all I want is a level playing field. Just level it for everybody, and we'll figure out how to operate in that environment. And I would just say, if it's level and it makes sense, then great.

I could look at that from two, three, four different vantage points. And as long as it's a level playing field, then that's all that I'm focused on beyond that.

Ki Bin Kim -- Truist Securities -- Analyst

OK. Thank you.

David Simon -- Chairman, Chief Executive Officer, and President

Sure.

Operator

Thank you. And our next question comes from the line of Michael Bilerman with Citi.

Michael Bilerman -- Citi-Analyst

Hey, David, I just had two other questions. As you talk about sort of the retailers now that you own and, obviously, with the amount of closures at the mall side, obviously, their e-commerce sales were rising pretty significantly, you and I have talked over the years about how so much of a retailer's brand was driven by the physical footprint and how you, as a landlord, weren't sharing in those e-commerce sales, especially when your assets were serving as the reason why some of those people may go online. And you had expressed a lot of frustration about not getting your fair share of that. I guess, now that you're sitting on both sides, can you comment a little bit about how you may be restructuring your leases with those retailers to be able to, a, share in those e-commerce sales and what you're doing to benefit from that?

David Simon -- Chairman, Chief Executive Officer, and President

Well, there's no real -- I mean, it's -- there's no real change. I mean, we discussed with a lot of retailers, what happens if they buy online, return to store, what happens if it ships from store, what happens if they pick up and reserve it in store. And those are all -- we have a pretty consistent approach to it. And we're -- even with the pandemic and all of the pressures that we've had to deal with, I mean, we are still more or less sticking to what we think is the right approach on that front.

So I mean, I'm never -- we're not looking to get our fair share of their e-commerce sales. So I think you mischaracterized it. I think we're just looking to not get hurt when they do sales. But somehow, the store is involved in that sale.

And that's all that we're looking for. We're not -- but if they do all their business online, God bless. But if the store interaction is important to them, we don't want our sales to be reduced because the store is providing a service. And therein lies the discussion.

And really -- that's ongoing, and that's -- and I think we are making a lot of progress on that front.

Michael Bilerman -- Citi-Analyst

Right. So if now owning more of the brands, owning more retailers, as you sort of get involved in figuring out what is the right split and how it would all be handled, and I understand the credit aspect of those, where are those sales and how it happens, whether it's returns, but I would imagine that, obviously, your assets serve as a good marketing for those brands. And calculating what rent you want that retailer to pay based on the sales that they generate within that trade area is something that you would want for Simon shareholders. I'm just trying to figure out how you balance the two sides today.

David Simon -- Chairman, Chief Executive Officer, and President

Well, we've been balancing things for years and years and years. That's what we do. Look, I would say, for most retailers, having a store is extremely important because if they're in a market, out of sight, out of mind. There are certainly retailers that are going to experiment with shrinking their store print -- store footprint dramatically.

And assuming that they're going to pick up -- it online, maybe they may -- maybe it works. I think it won't. But we'll see. Some will take that chance, and they certainly have that right to do whatever they want as leases expire.

But I don't think they'll make it up on the Internet. And the most and best successful retailers are ones that really figure out how to do both really well. And that's the ones that we want to do business with. And our brands, we want to be in that category.

And in some cases, we're not quite there. I mean, I would tell you that Penney's e-commerce business is not where it needs to be, and the same thing, their store business isn't either, but we're going to mutually go after both elements. I would tell you that the Aero store business is terrific, and they're picking up their e-commerce business. I would tell you that Forever 21 doesn't quite have a fully developed e-commerce business.

And we want that to happen because we think that makes the store business better. Not that complicated. There'll be some folks that are in our industry that will say, I've got 300 stores, I've got 400 stores, I can do it 100 and all the growth will come online. My personal view is I don't think they'll succeed.

It's really hard to shrink to grow. That really -- that's a really hard thing to do. Now maybe you have to shrink to survive. But shrink to grow to be a better company, that's a tough one.

It's few and far between, but maybe some can make it work. And if they do, God bless. And if they do, then they'll probably want stores to grow again, so they will be back at it. We'll see.

I mean, I don't know if I've answered your question, but that's really my frustration. It's -- we just want the recognition that -- we certainly don't want to get penalized if the store is a critical component for that transaction to have taken place.

Michael Bilerman -- Citi-Analyst

Great. Thanks for the color, David.

David Simon -- Chairman, Chief Executive Officer, and President

Sure. OK, we exhausted me and the whole team and our time. So thank you. Happy New Year, even though you're not supposed to do it in February, and we'll talk soon.

Thank you.

Operator

[Operator signoff]

Duration: 100 minutes

Call participants:

Tom Ward -- Senior Vice President of Investor Relations

David Simon -- Chairman, Chief Executive Officer, and President

Steve Sakwa -- Evercore ISI -- Analyst

Rich Hill -- Morgan Stanley -- Analyst

Brian McDade -- Chief Financial Officer -- Analyst

Alexander Goldfarb -- Piper Sandler -- Anayst

Derek Johnston -- Deutsche Bank -- Analyst

Michael Bilerman -- Citi-Analyst

Craig Schmidt -- Bank of America Merrill Lynch -- Analyst

Caitlin Burrows -- Goldman Sachs -- Analyst

Juan Sanabria -- BMO Capital Markets -- Analyst

Floris Van Dijkum -- Compass Point -- Analyst

Mike Mueller -- J.P. Morgan -- Analyst

Linda Tsai -- Jefferies -- Analyst

Vince Tibone -- Green Street Advisors -- Analyst

Haendel St. Juste -- Mizuho Securities -- Analyst

Ki Bin Kim -- Truist Securities -- Analyst

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