Thomas Ward - Simon Property Group, Inc. David E. Simon - Simon Property Group, Inc. Richard S. Sokolov - Simon Property Group, Inc. Andrew A. Juster - Simon Property Group, Inc..

Craig Richard Schmidt - Bank of America Merrill Lynch Paul Burton Morgan - Canaccord Genuity, Inc. Christy McElroy - Citigroup Global Markets, Inc. Alexander Goldfarb - Sandler O'Neill & Partners LP Jeremy Metz - UBS Jeff J. Donnelly - Wells Fargo Securities LLC Omotayo Tejumade Okusanya - Jefferies LLC Vincent Chao - Deutsche Bank Carol L.

Kemple - J.J.B. Hilliard, W.L. Lyons LLC Richard Hill - Morgan Stanley & Co. LLC Michael W. Mueller - JPMorgan Securities LLC Floris van Dijkum - Boenning & Scattergood, Inc. Paul Edward Adornato - BMO Capital Markets (United States) Ki Bin Kim - SunTrust Robinson Humphrey, Inc. Linda Tsai - Barclays Capital, Inc.

Michael Jason Bilerman - Citigroup Global Markets, Inc..

Good morning, ladies and gentlemen, and welcome to the Simon Property Group Fourth Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will have a question-and-answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded.

I would now like to turn the call over to your host for today's conference, Mr. Tom Ward, Senior Vice President, Investor Relations. Sir, you may begin..

Thank you, Bridget. Good morning and thank you everyone for joining us today. Presenting on today's call is David Simon, Chairman and Chief Executive Officer. Also on the call are Rick Sokolov, President and Chief Operating Officer; Andy Juster, Chief Financial Officer; and Steve Broadwater, 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 prepared remarks, I'm pleased to introduce David Simon..

Good morning. We had strong results to wrap up a very good year. We completed and opened several new developments and redevelopments.

We successfully executed several capital market transactions, further increasing our liquidity, extending our average term, and reducing our average weighted – average interest cost, and we continued to achieve strong financial results.

Our full year 2016 FFO per diluted share was $10.49, which includes a $0.38 charge for the early redemption of our 10.35% notes. On a comparable basis, full-year FFO per share was $10.87, and increased 9% year-over-year.

We once again delivered compelling FFO growth and we have achieved a compound annual FFO growth rate of more than 11% over the last three years and 13% over the last five years.

The $10.87 exceeded our initial guidance range of $10.70 to $10.80, even after the impact to our FFO of the $0.08 charge we recorded in the fourth quarter due to our decision to postpone the construction of the Copley Residential Tower.

We are excellent project managers and had obtained 14 out of the 15 required approvals needed to proceed with the tower and expected to get the last one, but unfortunately, the goalpost kept moving.

The change in the project approval dynamics and the uncertainty of receiving the last approval, combined with the rapidly rising construction cost and our heightened concern about supply in the Boston residential market, prompted us to postpone the project and take the charge.

While write-offs of development costs can occur in the real estate business, it is rare for us to experience a charge of this size and we're not pleased about it. For the fourth quarter, FFO of $2.53 per share includes the $0.38 per share loss on the extinguishment of debt.

On a comparable basis, excluding the debt charge, but including the $0.08 charge of the Copley Residential write-off, FFO per diluted share increased 6.6% year-over-year and comparable FFO per share growth would have been 9.5% without the Copley charge.

Moving on from our results, now could be the time on the call where I could go into a lengthy philosophical discussion on the popular misconceptions about the mall business, created by the never-ending current public narrative.

And I could counter that by pointing that we have 434 department stores in our portfolio, and only one is vacant, and how in the recently announced department store closing, we have only one closure in our portfolio, or how we have added more than 275 sit-down or quick-service restaurants, more than 20 entertainment concepts, and more than 80 big box tenants across our portfolio over the last four, five years, or how we've added mixed use components to our centers in the last several years, we have built 10 hotels and residents representing nearly 3,000 units, or how according to a recent survey a Generation Z members, a group that outsizes Millennials, 70% of those surveyed visit the mall at least once a month and visit more than four stores during the visit, or how the consumers still like to shop in stores, because they want to touch and feel the products before they make a final decision, or how online retail sales have grown to less than 10% of total retail sales, and that the retailers who occupy our centers represent approximately two-thirds of those total online sales, or how leading e-commerce retailers, like Warby Parker, Blue Nile, UNTUCKit, Shinola, among others, are opening physical stores, because the inherent advantage a physical location provides as well as being a natural extension to the digital world, or how basket sizes are higher, return rates are lower in stores compared to online purchases, and margins are much higher in the store than they are in the Internet, or how emerging brands like GUIDEBOAT, NIC+ZOE, Peloton, to name a few, continue to see the mall as the launch pad to build their brand awareness, as a result of the significant traffic they experience being at the mall, much like Apple or Microsoft did several years ago, or how we are making all these changes and enhancements to our center, even though Congress has tilted the scale towards e-commerce by not implementing the Marketplace Fairness Act, which not requiring the sales and use tax to be paid by consumers who buy products online, even though they are required to do so under existing laws.

But I could do that, but I won't, because we've talked about that all before, so I'd rather focus on what we do and how we do it, and that is we reinvest in our properties, making them the best centers in the respective markets.

We grow our earnings, we generate excess cash flow, we pay higher dividends, and we achieve all of this while maintaining the industry's strongest balance sheet. That's our model and that's what we do for the benefit of our shareholders, our communities, and our retailers. We continue to record solid key operating metrics and grow our cash flow.

Over the last six years, we have doubled our dividend from $3.50 in 2011 to an expected payout of at least $7 this year and increased our annual cash flow after distribution by more than 20% from $1.2 billion to $1.4 billion even after having taken into the account the loss of cash flow from the spin-off of WPG.

We continue to see strong demand for space across our portfolio. Our malls and premium outlets occupancy ended the year at 96.8%, 70 basis points higher than year-end 2005 and near historic high levels. Leasing activity remains solid, the malls and premium outlet recorded leasing spreads of $7.82 per square foot, an increase of 12.7%.

In our supplement this morning, we have provided new information regarding our leasing spreads.

Our new disclosure is based upon an open and closed methodology, excluding less than one year terms and captures a higher percentage of our leasing activities than our previous calculation with over 8 million square feet of annual leasing activity included.

Our base minimum rent was up to $51.59, which was up 5.4% compared to last year, reflecting strong retailer demand for our locations. Total portfolio NOI increased 6.7% or more than $380 million for the year. Comp NOI increased 3.8% for the quarter and 3.6% for the year.

Comp NOI growth was impacted by more than $30 million decline in overage rent for the year due to the lower sales volume at our tourist-oriented centers. This lower overage rent impacted our comp NOI growth by approximately 60 basis points for the year and to put this all in perspective, which we think is important.

Over the last five years, our comp NOI has increased an average of 4.4% per year and our annual comp NOI has increased by $1.2 billion since 2012. Now let's talk about reported retailer sales at our malls and outlets, were $614 per foot compared to $620 per foot in 2015.

Sales per square foot for our combined malls and outlets increased in each successive months during the fourth quarter, reflecting consumers' strong interest in holiday shopping at our centers. Reported retailer sales continued to be impacted by the strong dollar at some of our tourist-oriented malls and outlets.

Excluding the impact on those centers, sales per square foot was flat for the year. We are the industry leader in gift card offerings and productivity. In 2016, we achieved record gift card sales with a 14% year-over-year comp growth. Consumer interest in our gift card program is a really good indicator of traffic to our centers.

And these sales support our view that traffic was up in our centers for 2016. Quickly on redevelopment, at the end of the fourth quarter redevelopment and expansion projects were ongoing at 29 properties across all three platforms, with our share of the net cost at approximately $1.1 billion.

We completed a number of strategic developments in the fourth quarter and we'll complete a number of transformations throughout 2017, including The Galleria and La Plaza Mall, College Mall and a new development we opened two new projects in the fourth quarter, which promise to be great additions to our portfolio.

First of all, Clarksburg Premium Outlets had the strongest open of any premium outlet in a long time, shoppers swarmed the D.C. area's new premier home for outlet shopping and Brickell City Centre in Miami opened in the fourth quarter. We believe it's a landmark mixed-use development offering unparalleled shopping, dining and entertainment experience.

Construction continues on another full price development in Fort Worth at Shops at Clearfork, which is anchored by Neiman. We also have five new outlets under construction, one in Norfolk, Virginia; four in the international markets, France, South Korea, Malaysia and Canada, all scheduled to open this year.

At the end of the fourth quarter, our share of investment at these six new development projects was $506 million. Now let's talk about our fortress balance sheet, which continues to differentiate us compared to our peer group. 2016 was the first year that our annual fixed charge coverage was over 5 times.

We completed three senior note offerings during the year totaling $3.8 billion, with an average weighted coupon rate of 2.86% and weighted average term of 11.4 years. The $3.8 billion is a record amount of notes we have ever issued in a single year.

We also retired five series of senior notes comprising $1.9 billion at a weighted average coupon of 6.5%. We completed 27 mortgage loans with a weighted average interest of 3.67% and 9.4 years respectively.

Our share of these mortgages was $3 billion, another record amount in a single year for us and contrary to media reports about the inability or ability to finance malls. Our current liquidity stands at $7 billion. We also repurchased 1.4 million shares of our common stock for $255 million in the fourth quarter.

Dividend, we have paid a record dividend in 2016 of $6.50 per share and have achieved the compound annual growth rate of 12% over the last three years. Today we announced a dividend of $1.75 per share for this quarter, a year-over-year increase of 9.4%.

As I mentioned previously, we expect to pay at least $7 per share in 2017, which will be an increase of 7.7% compared to 2016. Finally, guidance, our 2017 guidance range is $11.45 to $11.55.

This range represents approximately 9% to 10% growth compared to our reported FFO per share of $10.49 in 2016 or 5.3% to 6.3% compared to our comparable FFO per share of $10.87, which, without question, will be the high end of our peer group.

Once again, our range is based on the following assumptions, comparable NOI growth for our combined mall, premium outlet and mills platform of (16:31) 3%, no plans or disposition activity, a rising interest rate environment, the impact from a continued strong U.S.

dollar versus the euro and yen compared to 2016 levels, including the translation impact of our international operations and the impact on domestic spending by international tourist and a diluted share count of approximately 361 million shares. And we're now ready for your questions..

Thank you. And our first question is from Craig Schmidt with Bank of America. Your line is open..

Thank you.

I was wondering, your redevelopments, you have previously said, you think you can spend $1 billion through 2018? Does it look like if you go past that 2018 and still continue to spend that $1 billion a year?.

Craig, I think the answer is most likely. Obviously, we do expect to redevelop a lot of the Seritage joint venture projects over time. And there may be other department stores.

But I think, we feel reasonably good about that kind of number but we're going to also – look, I think, the most important thing that we've done for ourselves and probably I could say for the industry is we've invested in our product. We are in the physical real estate business.

And by having a good product, well tenanted that looks and feels good, we think drives traffic and we think helps our retailers and our consumers. So we'll continue to invest in our projects because we know it does pay dividends literally and figuratively..

Okay.

And then you touched on the international shopper, I mean, is that shopper plateauing – not plateauing but leveling out, stabilizing? And should we think of 2017 increase in percentage rent relative to the amount collected in 2016?.

Well, we're being relatively conservative. I mean it's impossible to project what's going to happen with tourism and the dollar vis-à-vis the yen or the euro or the real in terms of – down in South America, so we're taking our best estimate. Obviously, we've experienced a lot of volatility in that area.

These are great assets that we want to own for the long run. But we are suffering a little bit of extra volatility. I think we did see a plateau in the fourth quarter, Craig, on that as evidenced by our sales increase in each and every month.

It was below the 2015 levels, primarily because of that tourism spend, but it is starting to get a little bit better. I think you've seen a number of the luxury players announcing better results, but it's just a volatile world, volatile market and we do our very best at projecting what we think it is.

And that's our number and we're kind of more cautious than anything at this point..

Okay. Thank you..

Sure..

And our next question is from Paul Morgan with Canaccord. Your line is open..

Hi. Good morning..

Good morning..

Just on the lease spreads, you changed the reporting and I get your reason in terms of it being a bigger chunk of the activity. I mean, it still kind of shows a drop year-over-year.

And I'm wondering, I mean, if you were to have reported it on a kind of the same basis, would it kind of have been comparable to the 10.9% you had last quarter and how should we think about next year?.

Yeah. I figured it would – you would ask that and it would be a 11.7%. But let me take a step back, because I think this is really – so Paul, it would be a 11.7% spread, okay. That's the question to your first – that's the answer to your first question. But let me take a – let me explain to you how we think about our business.

We run our business for cash flow growth, NOI growth. Okay. And the metrics spit out but we don't manage our business for metrics. So, when the market reacted to our leasing spreads, we said, well, we kind of have a feel for them, but that's not how we run the business, we run the business for cash flow growth.

Obviously, that's been a pretty good strategy because we've grown our comp NOI by $1.2 billion over the last four years, five years, guys. So, that strategy that I've had about growing our cash flow and focusing on comp NOI has been pretty damn good because $1.2 billion is bigger than most REITs.

I don't even know how many REITs have $1.2 billion of NOI. So, put that aside. So, we were looking – boy, the market react to these spreads, what is it? So we did some research. And I'll give you a small example. So, we have a – because it's same space to same space is how we historically calculated our spreads.

So, we're picking up, as an example, a – taking back a Forever 21 box in St. Johns mall, okay, which was, I don't know, 15,000 square feet thereabouts.

We split it up into three rooms, Tesla, Apple, what was the third?.

Tory Burch..

Tory Burch. We had huge rent spreads, but because it wasn't same space to same space, for whatever strange reason, it wasn't in our numbers, okay.

So we said, look, one of the goals that we're going to do to run our comp NOI is try to downsize as many of the retailers to increase their productivity and to put in as many tenants as we can and in these great malls because we'll get – we'll actually get more productivity, which could lead to higher rents.

But because it wasn't same space to same space, it wasn't in our numbers. So we said, well, timeout. We've got to do this on a basis that gives you a better perspective of our strategy. Again, we are not overwhelmed about lease spreads, and it's all about getting the best retailer in the best space at an appropriate rent.

And we're going to be downsizing tenants where we can, upsizing them where we can. And if they're not that same space, it's not going to be in the spread. So we went back to 2015 and did it based on the new calculation. We're going to be doing – we did it for 2016 in total.

And I gave you the number for what it's been under the old methodology, but we think, this is better. And it will pick up the ability for us to do what we do best, which is grow our comp NOI.

As I mentioned to you, that's what I focus on, that's what we – when we sit and go through the mall, we don't talk lease spreads, we talk about how we're growing the cash flow. And we've had this discussion, we had this discussion on tenant sales one year, we had the discussion on occupancy one year, now, it's lease spreads.

My friend, we focus on cash flow growth. Now that's allowed us to increase our comp NOI by $1.2 billion and increased our dividend from $3.50 to $7. I don't know, what else I can tell you..

That was very helpful. And just a quick – a follow-up on Sears. You mentioned how you have almost no anchor vacancies in the portfolio and a little exposure to the closings that have taken place. Obviously, there is kind of speculation about maybe a larger volume at a faster pace coming back.

Maybe you could just give a little bit of color on kind of how something like that might play out in terms of your portfolio even if it's maybe a longer-term positive, what would kind of be the short-term dislocation and kind of what do you think it would look like in terms of backfilling space?.

Well, let me just – without – let me tell you why we've been able to grow our comp NOI is because we believe in our product and we invest in our product.

And I think what we have seen from some in the retail world is, they're not investing in their physical stores and they're investing more online and the margins online are not what they are in the physical environment.

And so, if they're not keeping up with our – the bargain that we're doing, we have – we'd love to get the space back and redevelop it. And so, we're prepared for any and all scenarios. Hopefully, they will invest in their stores, but if they don't we'd rather take them back and redevelop it. But Rick – I'll let Rick add to that as well..

One of the things that we are doing, have been doing and will continue to do is we have a constantly updated grid on all the boxes that are interested in each of our properties and we know exactly where we can accommodate them based on the opportunities that present themselves.

David mentioned in his comments, we've replaced over 80 of them in the last five years. We're ready, we've done it on a disciplined basis. All you have to do is look in our 8-K in every quarter, you're going to see all that activity, it's continuing and we are ready to do it.

And in virtually every instance, where we have replaced an anchor, we've increased our sales, increased the number of reasons that people come to shop our properties and we've made good returns on our capital..

Great, thanks..

Thank you..

Our next question is from Christy McElroy with Citi. Your line is open..

Hi, good morning..

Good morning..

David, just related to your comments regarding managing the business for cash flow, in terms of your approach to the leasing environment today. On one of the last calls you talked about your experience with Aéro and PacSun and maybe not offering as much rent relief going forward as you did in 2016 and just letting stores closed.

And so with a lot of retailers out there today talking about store closures, just wondering what your thoughts are on managing that process today and are you seeing more request for rent relief than you did a year and two years ago. Just trying to piece together the noise and versus what you're actually hearing..

Yeah. Sure. I think that it's – Christy, I think it's safe to say we're seeing more request for rent relief. And I wish there were like – we're certainly prepared to look at it as leases expire. However, we're not going to go into 2018s, 2019s and 2020s for retailer who wants to do that.

And the fact of the matter is, our view of it is, a lot of times they ask and you certainly don't lose anything by asking. So we do – we deal with it at, at least expiration and it really is a case-by-case basis. But I'll tell you a fascinating thing that I've learned at Aéro – with the Aéro investment.

So and it's just the dynamic of Wall Street, retailers, chasing Internet sales, there is a whole philosophical discussion that will take too long on this call to do.

But one thing at Aéro that I learned is that that management team could produce higher level of profitability, higher gross margins if they didn't have the Wall Street constraint on worrying about comp NOI or comp sales growth i.e.

they could generate more cash flow because they're not worried about posting a comp sales number that's below market expectations. Well, I'm a business guy, okay. And I kind of like cash flows. So we've got this Aéro and we're still in a turnaround and I don't really know, how it's all going to work out.

But it's like the management team has been unleashed in terms of how to run their business for profitability because they have no concern about posting a comp sales number that Wall Street wants to see. I'm not damning Wall Street, but the reality is sometimes it's okay, just to think about cash flow.

And obviously, there is other metrics that people are more interested in. But we sat down and we focused on return on equity, cash flow growth, I mean, I think we'd see different dynamics from the retail community than what we have. But getting back to you, so the point is, if there is a lease action, i.e.

a expiration, it's a case by case or more people are asking about it than in – than they were maybe a couple of years ago, the answer is yes.

We did experience less store closures last year than we did in 2015, the way we had suggested we would, that's why our occupancy went up, but I'm not going to sugarcoat it, retail environment is not – it's not robust, it's doggy dog right now..

Okay.

And then, with percentage rent still trending down a lot year-over-year, I'm just wondering is that decline still only being driven by sort of the pressure from international tourist spend or is there another point of weakness there? And as you think about 2017 and your 3% store NOI growth, what impact are you expecting from any further decline in percentage rent, should we start to see that impact to be?.

Well, I'm hoping it would stabilize. The reality, it's only because of this – the strong dollar and the tourism spend. It's – we've studied it.

Look, there could have been – we have – I think the other thing to keep – I mean, we have energy oriented assets, Oklahoma, Texas, we have the peso, so I mentioned the euro, I mentioned the yen, but you throw in the peso, you throw in the Canadian dollar, I love that all, again, the energy market, that all had an impact on overage.

I'm hoping the energy market is a little more stable. Obviously, the dollar, the currency is going to be a volatile year. We did our best guess by – we estimate every tenant and whatever, we have a formula that does it. But I mean, it's more of an art, not a science, we'll see but that's the sole impact, it's only because of the dollar and tourism..

Okay. And then just one final point of clarification on the re-leasing spreads just because we get asked about it a lot.

With the change in methodology, is the rent relief that you granted last year still in the calculation or no?.

Yes..

Okay. Thank you..

Thank you. And our next question is from Alex Goldfarb with Sandler O'Neill. Your line is open..

Hey, good morning..

Good morning..

Good morning out there. Just a few questions here, David. First, obviously, we all read Internet, newspaper, whatever median it is and you hear all the retailers making noise.

But in practicality, in your experience, you mentioned fewer store closings last year than 2015, how much sabre-rattling is there among the retailer to say hey, we're closing stores versus when you guys get in there, their talk is different?.

Well I think, it all depends upon what point are they in their financial equation. Look, I think – and again, this is more philosophical, but what we'd like to see from the retail community is a dedication back to improving the store environment.

We think a lot of the capital that has been put forward has been to chase Internet sales, a lot of that has been done through promotional efforts. And between that and the promotions required to get them to buy online between the cost of shipping and the returns, it's not a great model for them.

And we think it would be and we've done so much to drive traffic in our centers, we've got decks that all these retailers, we've sent out to them. We did a couple of tests in middle market malls about what we can do, we put an ice skating rink, we did concerts, we've done so much to drive traffic to the mall, to the store.

We think, if they could pivot somewhat, it would do everybody a world of good. And at the end of the day, it is more profitable for them by and large, I'm sure there is a retailer here or there that would argue this. But it is much more profitable for them to have that transaction happen at the store, okay.

And I just think there needs to be a pivot back towards that. And then I think it would be better for everybody's business. With that said, I mean there is a lot of noise, we're going to have to kind of go through the noise, I won't tell you though, Alex.

I mean, the business is – we're growing now, we're pros at grinding, nobody does it better, nobody has ended up at the end of that grinding in a better spot than we have. We've done some of our best work in those grinding moments. We've got the group and the management team and the personnel.

We don't have turnover, where Midwestern roll up your sleeves folks and it's not as much fun but we get the job done. I mean look at our balance sheet, $7 billion of liquidity, a 5.0% no floating rate debt, we did the most financing ever last year, so we got to deal with it.

Don't really know how it will all shake out while we've been relatively conservative on our comp NOI, but that's not to say we don't have work to do to achieve that.

Because I don't want to sugarcoat anything here, I mean we're in a – the retailer have to pivot in my humble opinion, what do I know, but in my humble opinion, they need to pivot a little bit and we're trying to encourage them to do that, but we'll see if we have any success in that.

You know what I'm saying, Alex?.

Yeah. No, absolutely, I don't think anyone would ever say that you sugarcoat stuff. So, no I think it's clear. More to that point, though, the department stores seem to get a lot of headlines when they announced – Macy's announced (38:45) et cetera. You guys mentioned 80 boxes backfilled and that you have plans for basically all of them.

Do you think that there is an ability to see just acceleration of conversion of department stores or based on supply and demand you actually don't want that many back at any one time, the pace that we're seeing right now, whether it be a Seritage or Macy's or whoever the department store chain is, the current pace that we're all seeing is actually the right pace to maximize supply and demand or do you think that you can increase that to get at more?.

Alex, this is Rick. First, let me underline one point, which is we've analyzed all of our department stores. We know their sales, we know their occupancy cost, we know their market position.

And these stores have – witness the fact that of all the closures that have taken place, virtually none have been in our portfolio and that's because the productivity of these stores in our portfolio and the profitability of these stores is in the higher quartiles of all of these operating fleets.

That said, we are ready to take them back should the opportunity present itself, where we can make money and do it on a cost effective basis. We know what we will do with these stores if we get the opportunity. We are, in fact, marketing them now and going ahead with redevelopment plan.

So we know we've got tenants lined up and what we would to do stores if they become available..

Okay, Rick. Thank you. Thanks, David..

Thanks, Alex..

And our next question is from Jeremy Metz with UBS. Your line is open..

Hey. Good morning out there..

Good morning..

It's out here. We are out here..

As you've got more of these anchor boxes back, F&B has played an increasing role (40:53) in terms of some of the re-tenanting of those spaces. I was wondering can you talk strategically about your desire to add more F&B.

How do you weigh the credit risk versus doing more traditional in line, maybe just framing out how much of the portfolio is F&B today versus where you see it growing?.

Well I would say – yeah, one of the best things that we've done, we – the industry has done is add a lot better restaurants over the last five years. And I think, we've added, what, 275 was the number over the last five years. So we think, that's a trend to continue.

We think one of the best things that we've seen in terms of our entrepreneurial focus has been on the F&B side and not only that, but also on the entertainment side. Like what we're doing at Clearfork, what we've done with some of the mills boxes. I think, that's a trend, I don't have the exact percent that we've increased it from X to Y.

We can get that for you, I don't have in front of me. But it's clearly been a meaningful increase. And we do think, as some of these like Seritage joint ventures and even if we get some of the other department store boxes back, part of that will be to add F&B, to add entertainment.

But also and I said a lot in my remarks and I'm not very eloquent, so I stumble over most of my words, but I mean we did add 3,000 units. I actually had us double-check that because I said, let's add that in our text, between apartments and hotels keys, we added three units over the last few years.

So we do think, it's also, we know we failed at Copley and I'm not happy about that, is a mea culpa there. But the fact is we've added 3,000 units, which is not all profitable other than the Copley experience. And we think, a lot of that, that this stuff will be mixed use, as well. So it will be probably generally away from just pure apparel.

If you see what we're doing in McAllen, when we took the Sears box down, we are adding like traditional retail, but the front of that will be five – is it four or five restaurants?.

Five restaurants..

Five restaurants kind of front of the mall there. So I think that's going to be an absolute – continue a trend and we're seeing more and more exciting concepts like – look, Shake Shack came out of nowhere four, five years ago, great operator, great company, great people to do business with.

But we're seeing more and more of that creativity coming in that whole category..

And, Jeremy, let me just say, it's not only just adding restaurants, but I encourage you to go out and visit the Westchester and Roosevelt Field and King of Prussia, and look how we are transforming the environment in which these food operators are conducting business in our properties; greatly enhanced seating areas, entertainment areas, play areas, you name it.

So with a much more sophisticated environment, which we know will extend the stay of our shopper and attract a more affluent shopper, because they are more inclined to spend time in the environments we're creating..

Appreciate it.

And would that include adding grocery stores at any point?.

Sure. I mean, we added Wegmans recently. We're under construction with 365, which is a Whole Foods product, and there is a bunch of other activities in that whole area. So we think that's a nice mix to add to..

Appreciate that. And if I could ask one more. I mean, in the opening remarks you mentioned no dispositions in 2017. Just given some of the commentary about the increased pressure in retailers, there is a secular change we are seeing in shopping online.

Does this alter your view at all on the appropriate size of the portfolio long-term and strategically make you think about possibly considering for any more assets from you?.

Look, I think we've always shown that we've – we'll prune. So, it is very likely that we'll sell additional assets throughout the year. But we're not – I do not believe in selling. You have to understand, I'm maybe a little bit different. But I look at the present value of the cash flow stream first when I decide whether we should sell or not.

Obviously, we think the mall or the asset's going away, then that present value, you can get a – if you can get it for – you can get a little premium to the present value of that stream, it can go away. But we don't sell assets, because of my help or sales per square foot go up or down. I look at cash flow.

That's worked for us, because – I mean, look at our balance sheet, look at our NOI growth, look at any metric you want to compare us against, nobody in this industry has done that. So that kind of strategy has worked, but we still have assets that probably don't fit in our long-term view point and if we can make a decent trade, we will.

But we're not going to be – we're not going to give away stuff just because we think it might help our metrics..

I appreciate the color. Thanks..

Sure..

Our next question is from Jeff Donnelly with Wells Fargo. Your line is open..

Good morning, guys. Just, David, I guess, I'm curious to build on your earlier remarks.

What's the catalyst that you think is needed to allow retailers to make that pivot? Does it require more privatization of retailers, like you've done with Aéro? Is it we need e-commerce sales to slow, so that refocuses Wall Street maybe on profits? I'm just curious how that never-ending narrative converges maybe with the perspective of the mall owners, because it is a wide chasm and it – I'm curious what your perspective is..

I think it takes leadership and courage. And I think they have to believe in the product that they are selling, and if you believe in the product, then you should invest in the product. And if you are a physical retailer, then your product is stores. And if you believe in the store model, you should invest in the stores.

Just like we're in the mall business, we believe in the malls, we're going to invest in the malls, and it takes leadership. It's contrary to what Wall Street wants, because they want Internet sales and, I don't know, maybe Wall Street is right. But I think it is very easy to shop on the Internet.

So, if you don't have a good looking physical store and good looking service, quality service, and if you don't have inventory in the store and you're promoting more online than going to the store, in my humble opinion – I don't know a lot, but in my humble opinion, it's a self-fulfilling prophecy.

So I would like a little bit more conviction in what they do. Let's talk about the casino business. You could say the gaming could all go online. But if you're Steve Wynn, you build the best product, you have the best service, and lo and behold, people show up, they gain, they participate, they stay there, and he gets great returns on equity.

He has got unbelievable conviction and he puts his money where his mouth is. We need that in our business. What's hurt our business in retail, frankly, is that there has been too many leverage buyouts with too much debt, and we all know no matter how good a retailer you are, you're going to run into ebbs and flows.

And lo and behold, when you run into that scenario, you've got a balance sheet that can't withstand it. I can't tell you how much pressure is because of that as opposed to because of the Internet. We can go chapter and verse, and what that also does means they don't invest in the stores. So there needs to be a complete shift.

I don't have any influence with how they think and how they operate, but we have conviction in our business. We're going to invest in our product and we're going to drive traffic to our malls. And that's everything that we do. So you're going to see that from our stand. We're not going to starve our malls. We're not going to starve our marketing.

We're not going to starve our personnel. We're going to try to be as efficient. We're going to look for return on investment to be as high as possible. But at the end of the day, we believe in our product, we have conviction in it, and we're going to invest in. And that's not to say the internet doesn't play a very important role.

And we've all talked about the omni-channel and the seamless and this, that and the other, but my friends, it's more profitable to get the consumer to shop in your store. That's what we'd like to see a little bit more of..

And when you talked to the leaders at other retailers and your tenants, I mean, do you find that there is broad conviction of what the end game looks like for them, that mix they want between online and store based or is that still being felt out and that's really kind of the root of this uncertainty, the never-ending narrative?.

I think it's a lot more uncertainty than it should be..

And I'm just curious because you mentioned....

In a sense, we're at their mercy, but we've been at their mercy before, but we'll figure a way to deal with it. I mean, that's what we do..

Has the way you asses tenant risk changed at all? Because like you kind of referenced is that transition to maybe more of an e-commerce or omni-channel platform is putting a lot of stress on these guys.

So you could have a great experience for the retailers in your properties, but chain-wide they could be having issues, because of debt or other issues.

Have you guys changed how you assess tenant health for people you sort of select for your properties?.

Well, we haven't – I mean, we're very – we're probably as conservative about tenant improvement or tenant allowance, given the balance sheet and for long-term than anybody. But I don't think that's changed. I mean, we have a great credit department. They do an analysis and we listen to them.

That's not to say we won't experiment here or there, throw some spaghetti against the wall. But, no, I don't think that – I don't think, Jeff, that's changed at all in terms of how we'll underwrite that..

And I'm curious just on the share repurchase.

Off-hand, do you know how much capacity you have remaining under your authorization? And, I guess, how are you thinking about future repurchases?.

$1.4 billion – look, I think we'll continue to do that, given kind of where the world is. Obviously, until you do our earnings, we -- there are some restrictions on that, I won't bore you with that. Look, we believe in that, but on the other hand, I think you've just got to be thoughtful about how you do this.

I do think – I've seen retailers run into problems, because they brought stock back, because that's what they thought Wall Street wanted. And, again they did it. They did it because – and they did it – they didn't invest in their stores, because of that in some cases. And again, I'm not trying to be overly critical.

I'm just – we've got to – our industry has to invest in its product, just like Amazon. What a great company. But, are they making investments? You betcha, in more ways than I can even keep track of. If we don't have that same conviction, or any industry, -- look at the drug companies. They invest in R&D for this drug. It's not that complicated.

We don't invest in the physical product. We got no shot, and so you got to be careful. You can't buy so much stock back, and we've seen a little bit on the retail side that at the end of the day take the capital away from investing in your product. And so, we'll do it kind of like – I think we -- what did I say, we had $1.4 billion left.

So we'll continue to take advantage of market imperfections..

That's great. Thanks, guys..

Sure..

Our next question is from Tayo Okusanya with Jefferies. Your line is open..

Yes, good morning, everyone. David, you guys have a track record of kind of consistently beating your initial guidance, and I was looking for signs in your commentary about if guidance could be conservative in any way. You did mention that you might possibly have conservative same store NOI guidance for 2017.

And I was just kind of curious why the conservatism and where could the potential upside come from..

Well, I think I outlined it in my talk, which was basically, first of all, Tayo, as you know, our FFO per share is higher than anybody in our peer group that I know of.

If there is somebody in the retail that's – real estate that's got a better per share FFO growth, I would like to know it, but I've looked at all, everybody's numbers and I don't think anybody is out there. But put that aside, we are a large – and we are, obviously, the largest company in that space.

So that puts even more pressure on a per share number than if you are a smaller company. But put that aside, I mean it's basically translation. Why are we being conservative? Translation, the retail world is squishy. We have the potential on the stronger dollar based upon what all of the stuff that's going on out there.

And we think we are projecting in our numbers the highest – higher. We have very – not a lot of floating rate debt, but we do have debt that matures and stuff that we refinance it, and then our floating rate debt is the lowest in the industry, again.

Right, Andy?.

Right..

So it's about 6%, less than that?.

Right, 5%..

5%, see, I'm always more conservative. 6% – 5%, so we're projecting a higher rate environment, we've got translation, strong dollar, we've got the impact on tourism, and a squishy retail world and that's our number. I mean, we've always beaten in the last – I don't even remember the last time we missed our numbers.

I mean, does anybody here in this room know? It's a long time, it was – Rick was -.

In 42 of the last 44 quarters (58:39)..

Okay. All right. So it's been a long time. I mean, over 10 or 11 years, that's a pretty damn good streak. I think Rick was 35 back then. The number is the number..

In diapers..

Got you. Then one more for me, if you could indulge me. Just in regards to the share repurchases, again, you guys have authorization for up to $2 billion. You've done about $600 million so far. Did a decent amount in fourth quarter, but doesn't seem like you have any share repurchases built into the 2017 guidance.

Just kind of curious why not and kind of what decision process you go through to determine when it's best to kind of execute with the share repurchase program..

Well, we want to take advantage of any market volatility and we're going to be conservative on it as well, and I explained to you, I think the most important thing for us to do is invest in our product. But the simple way to look at is we were planning this big Copley investment.

It doesn't look like it's going to be, so I'm kind of thinking like, okay, let's reallocate that within reason towards share repurchase, because now we are not going to need the capital to build this tower, but at the same time, I've been more philosophical than I normally want to be on these. We're going to invest in our product.

So it – we expect to do it over a period of time. It's hard to pinpoint exactly the number, so we think it's better just to tell you what the reality of our guidance is at this particular moment..

Got you. All right. Thank you very much..

Yeah, no worries. Thank you..

Our next question is from Vincent Chao with Deutsche Bank. Your line is open..

Hey, good morning/afternoon, everyone. Just wanted to ask a question. Sandeep on the GGP call earlier today talked about an increasing – tenants being more agnostic today about the type of retail that they're located in and more focused on just the overall quality.

I am just curious if you guys share that sentiment and if so, how that is or may change the dynamic between your conversations with traditional mall guys that may be looking to go out of mall and vice versa, traditionally non-mall tenants that may be looking to get into the mall?.

Well, certainly, I agree with that statement. But we've been a retail real estate company since we went public, as we've had a very diverse retail portfolio. We started with malls and community centers. We ended up participating in The Mills product. We ended up, obviously, participating in the outlet product.

We spun-off the strip center business, the small mall business. So we think we have very deep relationships with all the retailers and we always have thought of our company as a retail real estate company, if you go back, from the get go.

But I agree 100% with Sandeep's comments that – and that's why I do think the product, whether it's an outlet or a mall or a big power center, retailers are going to gravitate towards the best location with the most critical mass.

And we do think that that – if, in fact, we do get some of these department stores back, we're probably going to have the ability, we're probably going to have some supply that will allow us to bring – create more critical mass with more diverse uses, and I think that will very much compete effectively with other products around the mall environment.

We all know how retail has evolved. I mean, the mall location has always more or less been the central hub of retail in that community. So the fact that we're going to get potentially some of these department stores back, I do think that – and the critical mass is already a real advantage to the mall, that should bode well to increase the uses..

And I will tell you that we have already been in conversation with a number of retailers, whose predominant footprint is in power centers, and they are very anxious to come into our properties.

The only constraint, as David has said, is being in a position to afford them enough square footage that meets their requirements with parking and visibility from the street, well, that's what all these department store boxes provide. And frankly, I alluded earlier to all of our conversations about redeploying these boxes.

A lot of those conversations are being had with retailers that are now predominately in community and power centers..

We did an analysis, I won't name a name, but a well-known retailer, big retailer. I think we have 30 leases with them, and given where their rents are, we felt like we would only have to lease four boxes, four out of the thirty, to replicate the income stream. And I don't want to sit and name retailers and who knows whether we'll get those back.

But, I mean, that's the opportunity. So you've got 30 leases, but they were done a gazillion years ago, and the quick and dirty analysis that we had is we had to lease four boxes to replicate that income stream.

So the rest of the 26 or thereabouts, don't hold me exactly to these numbers, but it gives you the order of magnitude, that's exactly kind of the potential upside that we have, and now if in fact we get those leases back, we're going to have more product available, but we're also going to have, I think, great opportunities to increase our income stream..

Okay. Thanks for that, and maybe just going back to Aéro. You sounded pretty positive on the ability of the management team to unleash some additional cash flow now.

I was just curious if you could share some of the things that they're doing differently today than they were prior to the bankruptcy in terms of sourcing or merchandising or branding or even the price points that they are targeting..

Well, I mean, they're doing all of that. I'd just say the simple thing is they're focused on – it's a different mindset. It's a more efficient company. It's a smaller company. It's more focused on gross margin, and it's got better relationships with its suppliers and they don't have to chase, unless you guys make us report what their comp sales are.

But since it's a completely immaterial investment from us, don't expect me to provide it to you. We're focused on cash flow, which is liberating to that team, and frankly, liberating to us and the partners and I mean, it's great. It's interesting. We're learning a lot. We've still got ways to go.

It's never easy to take a company out of bankruptcy, but we've got a shot at doing it..

Okay. And just last question on the FX headwinds that you mentioned that are embedded in guidance.

Is there any quantification you can provide in terms of FFO per share impact or maybe just what you're assuming for yen and euro for the year?.

I mean, obviously, we have, but I would focus on $11.55 times 361 million shares, which gives you our total FFO close to – what?.

$4.2 billion..

$4.2 billion. Within that $4.2 billion of earnings, there is always going to be $100 million, thereabouts. I mean, we are a big company. I mean, I could give it to you, I have it here, but it would bore you. You don't need it..

Okay. Well, thanks..

Okay. Yeah, don't worry about it, we'll do our best..

And our next question is from Carol Kemple with Hilliard, Lyons. Your line is open..

Good afternoon. It sounds like your investment in Aéropostale has been a very educational and rewarding experience for you all.

How is your appetite for doing a similar investment in the future?.

Well, given how the market reacted to the Aéro deal, it's probably not high on the list. But I don't know, look, I think we've got to prove to ourselves that what we're doing there we're going to be able to accomplish. So, I would never rule anything in or out. It's not high on the list, so..

Okay. It'd probably be several years down the road..

It's just not high on the list..

Okay. And then in the quarter, your G&A expense was up a little bit from last year and from the third quarter..

Yeah..

Was there anything one-time?.

Yes, there was. Our General Counsel retired, as you're aware, and so basically the pop is also associated with that retirement..

Okay. Thank you very much..

Yeah. Thank you..

Our next question is from Andrew Rosivach with Goldman Sachs. Your line is open..

Hi. I know we're over an hour, so I'll just try to be quick with two here. The first was in terms of The Limited, there one of the retailers that we've heard are going to be closing stores and we counted about 75 in your portfolio back in December.

So, I was wondering if you could comment on your plans and any progress so far in backfilling that space..

Yeah. Obviously, that has been on the horizon for a while. We have been actively leasing their spaces there across our platforms and we've already got a significant number of those spaces, where we are processing leases and our proposals out to a lot of tenants.

And we will deal with it just like we've dealt with all the others that have come down the pike and the ones that will come down the pike tomorrow. The best defense to all of these things is having great properties. And as David's been articulating, we're spending the money to have great properties.

And when you have great properties, you have demand, and the downside is just the downtime while we replace them..

Okay. And then in the prepared remarks earlier you guys touched on the gift card sales and traffic being generally up, and that being a good indicator.

I'm just wondering since we get asked, is that how you judge traffic, by the gift card sales or is it by a number of things meshed together?.

Well, we have traffic counters in a handful of malls that supports that statement. We also have parking counters in all of our outlet business, which I think was up 1.5%.

Right, guys? So it's a combination of what we have invested in the mall – in the mall thing with basically our camera technology and then the traffic parking counters in our outlet business..

And just a quick follow-up on that, up 1.5% in the outlet, was that for the year?.

Yes..

Okay. Thanks..

Sure..

And our next question is from Rich Hill with Morgan Stanley. Your line is open..

Hey, good afternoon. Just two quick questions here. First of all, on how you're classifying the same-store pool, I think it changed to comparable for the period compared to at the beginning of the period for past quarters.

Is my understanding correct? And if so, is that so you can sort of better capture redevelopment, development projects that might be included in the same-store pool that come on during the course of the year, but might not have been there at the beginning of the year?.

No. It comes in the year that is after a year, so it comes in that quarter after a year, so it's not a change at all..

Okay.

So no change in how you're reporting the same-store pool?.

Correct. I mean, that pool changes, because if it's been open a year, it goes into that pool..

No, no, no, I get that..

But – yeah, no, no, no..

Okay, great. And then just maybe more specifically Bangor Mall, I recognize that was a property with Macy's in it. I did notice it was classified under other properties, whereas previously it was malls.

Any sort of thoughts as to if that's meaningful or how we should think about that?.

Extremely immaterial. Our FFO contribution from Bangor Mall is $1 million out of $4.2 billion..

I recognize it's immaterial.

I was just wondering, it moved to other properties, at least from a CMBS perspective, is that...?.

It's immaterial..

Okay. All right. Thank you..

Our next question is from Michael Mueller with JPMorgan. Your line is open..

Great, thanks.

Just wondering, are there any updates on the Klépierre stake that we should be thinking about or how the McArthurGlen investments are progressing?.

Generally, the business on both fronts is decent. Klépierre reports next week, so I can't add much more than that, and McArthurGlen has been a terrific investment for us. We open a big mall in Provence in April. And it's actually gone better than we anticipated and a great partnership..

Got it. Okay, that was it. Thanks..

Thanks..

Our next question is from Floris van Dijkum with Boenning & Scattergood. Your line is open..

Thank you. Good morning or good afternoon, I guess, we've just passed the 12:00 hour. Quick question, David or Rick, you mentioned 434 department stores today, one vacancy.

How many department stores in five years' time do you expect to have in your portfolio?.

You want a number? It would be just a guess. I mean, my guess, it will be – if I have to guess, I don't know, maybe – it really depends on the one big guy out there, so I can't – I don't want to guess. It will be less than that, but I don't want to put a number on it..

Is there potential where we could see maybe a halving of that or 40% reduction of that, in your view?.

No. No, no, no way, no way, no way..

Okay..

I don't see it. No, I don't see that..

And then maybe a related question, your $278 million investment in Hudson's Bay, what are the plans for that and is that company mulling a potential IPO similar to Seritage?.

I mean, it's always the possibility. I don't think it's been a huge focus at this point. The investment's going according to what we thought it would be. We're looking to grow that partnership with some redevelopment of that portfolio and potentially some other transactions. But at this point pretty stable..

Great. And then last maybe, but not least, you mentioned there is a weighing in your capital allocation between buying back your stock and investing in your real estate and always trying to maintain a healthy investment in your real estate.

Do you have sort of a target of how you think about that per annum, in terms of reinvestment versus the obvious attraction of buying back your own stock right now?.

Well, look, I think the investments that we make at this point are extremely accretive, because the redevelopment, new development I think on average is 8-plus percent. So, that's had a multiple that is lower than buying our stock back.

And, obviously, as you know, we've always – the most important thing we can do besides that is have a balance sheet that can withstand whatever craziness that maybe out there. So – and those are the two priorities.

And then as well – and then frankly, we'll dabble in the other one when the markets – when we're out of favor and the market, for whatever reason, doesn't believe in our product, we'll try to add to that. But we still have a number of accretive investments.

We're at 8% plus and we want – we, obviously, want a balance sheet that continues to – I would not look – I would not overlook the fact that our coverage is 5.0. I mean, I know people rather talk about leasing spreads, but that's something to mention..

Agreed. It's very few of your peers have that..

Yes. But we'll dabble, but it's not going to be a priority..

Great. Thanks..

Thank you, Floris. Thank you..

Our next question is from Paul Adornato with BMO Capital Markets. Your line is open..

Thanks.

Just a follow-up in terms of capital allocation, could you comment on tenant allowances in new leases? What should we expect going forward? Is that you're at the point at which you have some leverage over their capital allocation in their space?.

The TA has been very constant year-over-year and it's right in line. It's right around $40 a foot, and that's what it's been for the new leases..

Okay, great. Thank you..

Sure..

And our next question is from Ki Bin Kim with SunTrust. Your line is open..

Thanks. Just had a related question to that. You talked a lot about reinvesting in the malls. So, besides redevelopment towers, should we just longer term expect to maybe a change or increase in operational CapEx overall? And then maybe you could talk about how that differs for different quality mall spectrum..

I don't think, Simon. I think we've been pretty active. We still have – we're about to start on a major redo of Boca Town Center, this – once we get all the permits. We've done a lot of work. I mean, the good thing about what we've done is, once we kind of felt like the world – we had a big pike, we had 2008-2009 hit. We chased a couple of deals.

We got a couple, but we didn't get everything, and in 2009, at the end in 2010, we've been very active on redevelopment. In fact, we've done a lot of good stuff. So we still have a lot to do, but we've done a vast majority. So I don't think there's going to be this significant change. But we have got to invest in the product. We will continue to do so.

Certainly we still have a reasonably stable economy. And let's also put in perspective about everything, and the economy grew, the GDP was 1.6%. So if you take out 1% of inflation or thereabouts, I mean, that's pretty pathetic. So we're holding our own in a very, very non-real growth environment..

Okay. And just a quick one. There is some volatility or decreases in management fees and operating costs.

Any comments around that?.

Yeah, it's all related to WPG and losing those management contracts..

Okay. Thank you, guys..

Sure..

And our next question is from Linda Tsai with Barclays. Your line is open..

Yes, hi. There was a Journal article not long ago discussing how Washington Prime has Amazon Lockers in 50 of its centers.

Do you have any of these in your malls, and if so, has it shown to be an additional traffic driver or a source of conversion at the other stores?.

We do not and better luck for them, to answer that..

Thanks..

Sure..

And our last question is from Christy McElroy with Citi. Your line is open..

Hey. It's Michael Bilerman with Christy, and thanks for staying through lunch time. David, in your opening remarks and the list of things you said you were not going to talk about, but you talked about, you mentioned Main Street Fairness, and I'm curious where things stand with the administration on trying to get that through.

And at the same time, how much time you're spending with your retailers on border adjustability and how that could impact them, and is this the year in terms of how all the stuff will unfold?.

Well, listen, on Marketplace Fairness Act, I don't think it's an administration issue. It's really a Congress issue. The Senate's ready to go. What I gather, the administrations understand it. It's really being held up by the Chairman of the Judiciary Committee.

He's actually had – his district has actually come under – had some tough retail news that's come out of his district. Frankly, I don't understand it. I don't get why there has been no progress there, but I don't believe it to be an administration issue. It's really just one committee in Congress that's sitting on it, and it's a travesty.

And we've all lobbied, but – I mean, it needs to change. It's just not fair. And if anything, the government should be about fairness and not picking winners and losers.

At the end of the day if the consumer wants to shop online as opposed to bricks and mortar, that's life in the fast line, but they shouldn't choose that because they can save sales and use tax that they already own. And I mean it's a sad state of affairs that hasn't been done..

Well, I guess if we have a new President that's focused on jobs and if online is stealing sales away from bricks and mortar, that's affecting profitability of some of them, one would imagine that's a job issue..

Well, yeah and not only that, but what the courts – there is a number of states that are going to basically overturn the Supreme Court decision anyway, in our opinion. So it's just – they are taking it out of Congress' hands and it's just going to end up in litigation in every state, and it's silliness.

It ought to be done, but – I mean, I don't know what else to tell you..

You also mentioned gift card sales as a predictor.

How much of the gift card sales are coming back and being spent in Simon Malls? And are you able to determine what that activity, where – what type of retailers is it going towards in terms of the people who are actually using the cards?.

We actually can't keep track of it. But I think in – we think, just anecdotally, that there is a good percentage of that, very high percentage..

And then just lastly, we've seen a number of retail locations bring in the Amazon Lockers.

And I'm curious more so on the logistics companies and I don't know if you listened to UPS' call this morning, but the fourth quarter they saw 10.5% increase in deliveries to residential homes, which was the largest increase that they've seen in 10 years, and that they are wrestling with how to deal with that volume of packages that are needed to go.

I'm just curious if you've had conversations with the FedExs and the UPSs of the world to leverage the significant amount of parking field (1:26:55) that you have for that last mile delivery, if perhaps retailers are shipping from store, doing other things, where you create a little bit more of a vertical perspective..

I mean, look, we've invested in Deliv, which basically is – the mall group is basically invested in that. There is couple of other concepts out there that we're looking at clearly. We do think shipping from store, picking – delivery or pickup at the stores is all very important and the mall, we think, will play a big role in that.

But, again, we think lot of the online activity, on the research that we've done, one of the highest things is price and saving the sales tax. And that equalizes and we do think a lot of retailers are promoting a lot more to get online business than they are in the physical world. I mean, all that can balance out pretty quickly. We'll have to see..

Right.

I guess, is there a probability you put on Main Street Fairness this year or (1:28:14)?.

Honestly, I don't understand it. It's the most frustrated thing we've had to deal with. You've got jobs at risk. You've got – it's not fair. You're going to have Congressmen in certain districts where retail facilities close, because of it potentially. You're going to have less sales revenue in those states, in those jurisdictions.

It is one of the most confounding things I have ever seen. The courts are going to take it out of Congress' hand, and it makes no sense to me and I'm hopeful the administration knows that. But I don't think their – I don't think this is their issue. I mean, I think it's stuck in one particular area of Congress and it makes no sense to me..

Right. But one would hope the administration potentially can use blunt force and some other things (1:29:26)..

I can't comment on that other than, obviously, I'm encouraged by the focus generally on business being part of the equation to get this economy growing. That to me has been very encouraging to see. What can we all do to make this economy grow better and faster. And I – that to me has been encouraging..

Yes. Okay. Thanks for the time, David..

Yeah. Thank you. Okay.

I think, operator, I think that's it, right?.

That is all the questions. Yes, sir..

All right. Thank you. Sorry to have kept everyone so late. But as you know, we want to answer any and all questions that you may have. We appreciate your support, your interest, your questions, and I'm sure we'll talk to you all soon. Thank you..

Ladies and gentlemen, this does conclude the program and you may now disconnect. Everyone, have a great day..