Simon Property Group owns and runs shopping malls, outlet centers, and mixed-use destinations across America and the world. The company makes money by leasing space to retail, dining, and entertainment tenants at its 254 properties. Tenants pay a fixed base rent every month, and many also pay extra when their sales exceed a certain level. Simon also collects reimbursements from tenants for costs like real estate taxes and utilities. That combination of fixed and variable payments flows through a large, spread-out portfolio of physical locations. The diagram below traces where the money goes.
How Simon Property Group Makes Money
flowchart LR
A["Real Estate Portfolio
212 US Properties
42 International"] --> B["Lease Space to Retailers"]
B -->|"Tenant Rents
$0.1B revenue"| C["Operating Income"]
C --> D["Distribute 90% REIT
Taxable Income"]
D --> E["Shareholder Dividends"]
C --> F["Reinvest & Debt Service
$4.1B operating cash"]
F --> G["Debt Markets
Credit Facilities
$8.5B capacity"]
G --> H["Acquisitions &
Development"]
H --> A
A --> I["Klépierre Stake
22.2% equity
Europe Focus"]
I -->|"Dividends &
Appreciation"| C
H -->|"New Properties
Expand Portfolio"| A
Five years of financial data tell a consistent story. Operating cash flow has grown from $3.6 billion in 2021 to $4.1 billion in 2025, climbing steadily each year with only a small dip in 2024. Free cash flow tracks almost exactly with operating cash flow across all five years, which reflects the nature of the business: tenants pay rent, Simon collects it, and most of that money is real cash.
Operating Cash Flow (2021 to 2025)
Operating cash flow in billions of dollars. Source: XBRL financials.
On the occupancy side, Simon's U.S. Malls and Premium Outlets sat at 96.4% full at the end of 2025. Average base minimum rent across the total portfolio rose to $60.97 per square foot, up from $58.26 the year before. Those two numbers together suggest tenants still want to be in Simon's buildings and are willing to pay more for the privilege.
$60.97
Average base minimum rent per square foot across U.S. Malls and Premium Outlets at end of 2025, up 4.7% from the prior year
The debt picture is less tidy. Net debt has stayed in a narrow band between $22.9 billion and $27.6 billion across the five years. The 2025 jump to $27.6 billion partly reflects the October 2025 acquisition of the remaining 12% of Taubman Realty Group, which brought $3.1 billion in mortgage debt onto Simon's books when TRG was fully consolidated. Simon now owes $28.6 billion in total mortgages and loans as of December 31, 2025.
$28.6B
Total mortgages and loans owed by Simon as of December 31, 2025
What is a REIT?
A REIT, or Real Estate Investment Trust, is a company that owns income-producing properties and gets a special tax deal from the government. To keep that deal, a REIT must pay out at least 90% of its taxable income to shareholders every year. That means REITs almost always need to borrow money to fund new buildings and acquisitions, because they cannot keep much cash inside the company.
Because Simon must distribute at least 90% of its taxable income to keep its REIT status, it cannot stockpile cash to fund growth. Every acquisition or development project requires new borrowing. That structural reality means the debt load is not just a side effect of expansion. It is built into the operating model. Simon's effective borrowing rate on its debt rose to 3.87% by the end of 2025, up from 3.62% the year before, as new bonds were issued at higher interest rates.
2025
milestone
Taubman Fully Absorbed
On October 31, 2025, Simon acquired the remaining 12% of Taubman Realty Group it did not already own. This brought 11 additional regional, super-regional, and outlet malls onto Simon's consolidated balance sheet along with $3.1 billion in mortgage debt. Simon recorded a non-cash gain of $2.9 billion by revaluing its previously held 88% stake to fair value. The deal expanded Simon's property count and its debt load at the same time.
The risks Simon faces are specific and documented. The company relies on large anchor stores, the big department stores and national retailers that pull customers into a mall. If those anchors close, nearby smaller tenants lose foot traffic and may follow. Re-filling a large anchor space is expensive and slow. Simon's own filings describe this as a high-severity risk.
A second documented risk sits directly under the first. Simon's income comes almost entirely from retail tenants. If more shoppers move online or the economy weakens, retailers either close stores or go bankrupt. When a tenant files for bankruptcy, it can walk away from its lease with Simon. Bankruptcy law limits how much Simon can recover from that tenant, which means Simon often absorbs the loss and then pays to re-lease the empty space.
What does lease rejection in bankruptcy mean?
When a company goes bankrupt, a court can let it cancel contracts it no longer wants, including store leases. The landlord, in this case Simon, loses the future rent and usually gets only a small fraction of what it was owed. Simon then has to spend money to find a new tenant and often offers incentives to attract one.
The debt risk is also explicitly flagged. Simon must keep refinancing its loans as they come due. If interest rates stay elevated or lenders become less willing, the cost of rolling over that $28.6 billion in debt rises. The weighted average time until Simon's debt matures was 7.0 years as of December 31, 2025, which means a steady stream of refinancings lies ahead. Finally, Simon's entire tax structure depends on maintaining its REIT status. Losing that status would trigger corporate income taxes at regular rates, which would sharply reduce the cash available to run the business and pay shareholders.
Simon signed 1,112 new leases and 2,035 renewal leases in 2025 across its U.S. Malls and Premium Outlets portfolio. That volume of leasing activity is itself a signal worth watching: if that number drops sharply in a future year, it would be an early sign that tenant demand is softening before occupancy statistics reflect it.
Net debt jumped $4.7 billion in one year, largely driven by the full consolidation of Taubman Realty Group in October 2025.
The Bet
Simon's model assumes that physical retail, specifically well-located, high-quality malls and outlet centers, remains attractive enough to keep occupancy near 96% and push rents higher year after year. If that holds, the cash engine keeps growing and the debt load stays manageable relative to income. But if online shopping continues to take share from physical stores at an accelerating pace, or if a wave of tenant bankruptcies empties anchor spaces faster than Simon can refill them, the occupancy and rent growth that justifies the debt burden starts to erode. The whole structure is built on the premise that premium physical retail locations are irreplaceable, not just today, but across the multi-decade life of the properties and the debt that funds them.
Open question
Simon generates more cash than ever, its malls are nearly full, and rents are rising. At the same time, its debt just hit $27.6 billion in net terms, anchor store dependence is a documented high-severity risk, and the business structurally cannot hold cash to buffer against shocks. Can Simon keep pushing rents higher and filling spaces faster than the forces reshaping retail empty them out, and does the cash flow growth justify carrying that much debt through whatever the next economic cycle brings?
Compiled · 10-K · FY2025
Tenant Anchor Store Dependence
Many of Simon's shopping centers depend on major department stores and large national retailers (called anchor stores) to bring in customers. If these anchor stores close or reduce their presence, Simon loses rent money and customers stop visiting the center. Re-renting the empty space is expensive and difficult, which can hurt the center's overall profits.
Retail Environment Decline
Simon's income comes almost entirely from retail tenants. If people shop online instead of visiting stores, or if economic conditions worsen, retailers may close, go bankrupt, or refuse to pay rent. This directly reduces Simon's revenue from lease payments and overage rent based on tenant sales.
Tenant Bankruptcy and Lease Rejection
When retail tenants file for bankruptcy, they can reject their leases with Simon and stop paying rent. Even though Simon might have claims against the tenant, bankruptcy law limits how much money Simon can recover, often leaving large unpaid bills and forcing Simon to spend money to re-lease empty spaces.
Debt Service and Refinancing Risk
As of December 31, 2025, Simon owes $28.6 billion in mortgages and loans. Most of Simon's cash flow must go to paying this debt, leaving little money for growth or emergency situations. If Simon cannot refinance debt when it matures, or if interest rates rise sharply, the company's financial position could be severely damaged.
REIT Tax Qualification Loss
Simon is taxed as a REIT, which gives it special tax benefits that reduce what it pays in taxes and allows it to avoid corporate-level taxation. If Simon fails to meet REIT requirements (which are complex and technical), it could lose this status and suddenly owe billions in corporate income taxes, severely reducing cash available for operations and shareholder distributions.
10-K Item 1A · Risk Factors
