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David Simon

Thank you, Tom. Good evening, everyone. We're off to a good start for 2025 with results that exceeded our plan. We completed the acquisition of the mall luxury outlets in Florence and Sanremo, Italy. And opened our first outlet in Jakarta, Indonesia.
We continue to enhance our retail real estate platform through development, redevelopment, and acquisitions. Our A-rated fortress balance sheet with over $10 billion in liquidity sets us apart, and we have the lengthy track record of the adapting our capital allocation and operating strategy to confront and take advantage of diverse macroeconomic cycles.
And now I'm going to turn it over to Brian, who will cover our first quarter results, and we'll take it from there.

Brian McDade

Thank you, David, and good evening. Real Estate FFO was $2.95 per share in the first quarter compared to $2.91 from prior year. Domestic and international operations had a very good quarter and contributed $0.14 of growth driven by a 5% increase in this income. As anticipated, interest income, land sales and lease settlements were $0.10 lower year-over-year. We signed 1,500 leases for more than 5.1 million square feet in the quarter.
Approximately 25% of leasing activity for the quarter were new deals and approximately 80% of the leases expiring through 2025 are complete ahead of last year at this point in time. . Malls and premium outlet occupancy at the end of the quarter was 95.9%, an increase of 40 basis points compared to the prior year.
The mills occupancy was 98.4%, an increase of 70 basis points compared to the prior year. Average base minimum rents for the malls and outlets increased 2.4% year-over-year and the mills increased 3.9%. Mall and premium outlet retailer sales per square foot was $7.33 per foot for the quarter. Occupancy cost at the end of the quarter was 13.1%. Driving domestic NOI, which increased 3.4% year-over-year for the quarter, and portfolio NOI, which includes our international properties at constant currency grew 3.6% for the quarter.
First quarter funds from operations were $1.0 billion or $2.67 per share compared to $1.33 billion or $3.56 per share last year. As a reminder, the prior year results include $0.81 per share in after-tax net gains, primarily from the sale of the company's remaining ownership interest in ABG.
First quarter results include a $0.17 per share loss primarily from the noncash unrealized mark-to-market and fair value adjustments on the Klepierre's exchangeable bond. This is offset by a $0.07 gain on the sale of securities. The noncash loss on the derivative is due to the outperformance of Klepierre's stock price, which increased 11% in the first quarter. The first quarter also includes an after-tax loss of $0.05 per share related to Catalyst and restructuring costs.
Turning to our development activity. At the end of the quarter, development projects were underway across all platforms, with our share of the net cost of $944 million to a blended yield of 9%. Approximately 40% of net costs are mixed-use projects.
We expect to begin construction on additional projects in the coming months. including a residential development at Brea Mall and new retail dining and outdoor spaces at the Shops at Mission Viejo, both in Orange County, California, as well as the redevelopment of a former department store at the Fashion Mall and Keystone in Indianapolis into dynamic mixed uses starts for this year will be approximately $500 million.
Turning to the balance sheet. We were active in the first quarter where we completed 12 secured loan transactions totaling approximately USD2.3 billion. The weighted average interest rate on these loans was 5.73%. At the end of the quarter, we had net debt to EBITDA of 5.2 times and our fixed charge coverage ratio was incredibly strong at 4.6 times. And as David mentioned earlier, we are well positioned to allocate capital and be opportunistic to various economic sites.
Turning to the dividends. Today, we announced our dividend of $2.10 per share for the second quarter a year-over-year increase of $0.10 or 5%. The dividend is payable on June 30.
Turning to guidance for '25. We are reaffirming our full year 2025 Real Estate FFO guidance range of $12.40 to $12.65 per share. As we stated in February, when issuing our initial full year 2025 guidance, our range reflects Real Estate FFO and does not include OPI. We expect the results to trend towards the middle of the range given the current macroeconomic and tariff uncertainty potentially impacting retailer sales.
With that, thank you to everyone. David and I are available for your questions.

Question and Answer Session

Operator

(Operator Instructions) Steve Sakwa, Evercore ISI.

Steve Sakwa

David and Brian. I guess I know the tariff situation has certainly been de-escalated but I'm just curious what sort of conversations you were maybe having with retailers kind of leading up to today's announcement? And how do you think it impacts if at all, the leasing? And I guess, Brian, you sort of talked about sales, but I guess what are you baking in for sales today maybe versus three months ago?

David Simon

Yes. Steve. So I'll -- let me take that and Brian can add color. So just on the new leasing when we ask, obviously, every week to the leasing team, but it's only affected four deals that I am aware of from one European retailer because they were worried about the import cost bringing over goods from Europe. And it was -- big deals. But that's the only one.
Other than that, at this point, it hasn't really affected any demand. And we're hopeful that it won't because as you know, retailers are looking long term on these stores. And at some point, we're all hopeful that this stabilizes.
Projecting and predicting sales is really difficult because to the extent that there is a retailer that imports goods from China, even with today's kind of reduction in the kind of tit for tat. You're still talking about 30% tariff, which is material.
And at this point, many retailers are either holding offering into goods from China, which could affect their inventory levels, trying to source it elsewhere, which they may or may not be successful with. And so it's a relatively big unknown to the extent that there's a reliance on China even on today's recent news. And given margins, those tariffs in the 30 percentage-Ish are -- I think are going to give retailers pause whether or not they can afford to have good ship to them. from China.
To the extent that it is in the more flat 10%, I think it's really retailer-dependent. I think they're going to probably operate business as usual. I think they'll try to pass a little bit on to the consumer. They'll try to get the manufacturer to take some of it and they meet some of it as well. But it shouldn't affect how they operate and how they inventory their stores.
But China still is a big unknown. And so that's why, as Brian said in his comments, look, our sales were relatively flat. If we were relatively flat, as you know, we have a history of certainly beating the midpoint and always trying to achieve the upper end and even higher, it's impossible for us to say where sales are right now just because we don't know inventories. I mean I think we're going to obviously land within our original guidance, which is good given all the uncertainty.
But we're thinking that inventory levels could be affected because of the China tariffs even with these reduced ones as I went through. And so I think it has the potential to affect sales. And that's why we're being a little more conservative, and we're thinking it's probably going to be more in the midpoint 1 quarter-Ish into a very a very uncertain volatile thing.
But I'd also say to you, the good news is, other than this one anecdote on some small deals from one European retailer, demand is still strong, and we haven't seen across the board by any stretch of imagination, a reduction in leasing demand. And so that, in a nutshell, is the latest and greatest.
I'm sure if you ask us in a couple of weeks, we might have something new, but you've got retailers that are scrambling. Now remember, the way this thing works is that for retailers, the US retailers pay the tariff. So they can't get the goods on the boat unless they pay the tariffs at the time it's delivered to the boat.
So that's why you're probably seeing a lot of boats not make the journey over or a lot of inventory at the shores in China. And so it's an unusual situation that we're just going to have to see how it shakes out. Now we're obviously pleased to see that at least the relationship -- late relationships seem to be showing and seem to be on a more constructive path. But how it all shakes out. I mean, our guess is as good as yours or your economists or anybody else.

Operator

Craig Mailman, Citi.

Craig Mailman

Just as a follow-up there, David, that was really helpful providing your thoughts. I'm just interested in where you think kind of retailers stand from an inventory perspective in terms of when they do start to run out to the extent shipments from China don't kind of reaccelerate here following the filing. And have you seen that kind of pull forward of demand in your traffic data here in April and May as consumers kind of pull forward to get ahead of the tariffs.
Just kind of curious how you think that plays out for just the cadence of retail sales this year. The last few -- how you think the de minimis rule impacts some of your retailers who -- do you feel like we get a market share boost from the loss of that kind of avenue for customers to (technical difficulty).

David Simon

Yes. All right. So let me take it in because only because I can remember it this way, I hope Tom took notice. But de minimis is great for American-based companies, de minimis really hurt a number of retailers that obviously pay tariffs and weren't able to avoid that loophole. So -- and obviously, a couple of Chinese companies took real advantage of it.
So that is a great outcome, I want to applaud the administration for dealing with this loophole. Hopefully, it continues. And I think that's going to be a material benefit to our retailers to defend themselves against Chinese retailers that ship directly to the consumer, okay? So that was really important. Now with respect to Forever 21, I wish they had done it a couple of years ago because it would have leveled the playing field, but -- it is what it is.
Your second question or maybe was your first, I would say that the -- we don't see in our -- what we -- what our retailers sell all that pull forward that's been talked about. So I think what you have to look at in the first through basically April now. We will get April sales shortly, because we're in arrears on that from our retailers. But I'll give you a general thing. First of all, two or three things happened, and I'll touch on traffic.
One is at an Easter that was in April versus March. So that was obviously very important. So that's why March sales were a little bit higher last year than this year. You had weather issues certainly in the outdoor outlet centers for us in February. The weather was historically back compared to 24%.
And traffic through the quarter was I would say down slightly, but when you look at year-to-date through April, it's actually up year-to-date because now we've taken into account a -- so traffic is holding up. The malls are actually performing above and the outlets are relatively flat. And I would say what we're seeing in the outlet on a traffic point of view is we have assets on the boat whether it's Mexico or Canada.
And obviously, there's been a slowdown in traffic and sales on some of our border great long-term assets, but currently, with all the rhetoric, we're seeing some traffic give you -- on some of the border assets with Canada and our Mexican customers. So hopefully, as that rhetoric die down, we'll get back to normal.
On what -- and I think your first question, what retailers basically have, the way I understand it, which is not perfect and every retailer is different. I would say they have probably another month or so, maybe longer to decide what they're going to do with respect to China for Q4 inventory.
So -- and I've seen a number of retailers have already reduced their exposure to China dramatically. And so as I said earlier, those retailers are more or less taking a 10% told you kind of how they're thinking about it, but it's business as usual. To the extent it's China, they're either trying to replicate the goods elsewhere, if they can't, they're, I think, holding off on making a China decision.
And I think they probably -- this is squishy, but they probably have a month-Ish to win if they still are in a holding pattern whether to pull the trigger or not, it could affect inventory levels in Q4.
But I think that so retail idiosyncratic. It's hard for me to make that blanket statement. And then obviously, I think the European retailers have much better control over their production, and I don't see any change coming from them. I think their approach will be more on how they're going to price their goods to the ultimate end consumer. Hope that's helpful. I think I covered all three.

Operator

Sameer Khanna, Bank of America.

Sameer Khanna

David, I guess given the uncertainty out there and kind of what you said retailers scrambling to make sort of a long-term decision, has that -- has your approach changed and kind of how you're dealing with your tenants, whether -- when you're negotiating leases, whether it's on new deals, whether it's pricing or TIs, I mean how are you're approaching the situation sort of here given the uncertainty out there for tenants to make long-term decisions?

David Simon

Like I said, the only anecdotal thing is one retailer backing out of four outlet deals but that's not a big deal to us because they were replacement tenants that we're -- that we already have leased. Honestly, as I said earlier, it's business as usual. So supply is still very much constrained. Demand is still strong. And the reliance, as I said earlier from China is much reduced.
So right now, I can't guarantee it, but right now, it's business as usual. I don't think we're doing really anything out of the ordinary or dealing with them. Obviously, to the extent they have a specific issue, we'll try to address it. But they have come a long way on their supply chain and been reducing the Chinese imports for a long time.
I do worry a little bit about not the bigger ones. Again, we haven't seen -- I think the bigger retailers have sophisticated supply chains and long-term relationships with suppliers everywhere. I do think the Main Street retailers, local moms, and pops, we all need as a country to be focused on. I think they could have more -- again, we haven't seen it.
But if I had to venture if things don't stabilize -- which today is a good step, but if they don't ultimately stabilize, I think you'll have potential pressure points on the local mom-and-pop retailers that are important to the country. And obviously, we do lease space to them. So again, I'm not -- hopefully, I'm not anticipating. We're not seeing a problem, but I do worry about that a little bit more than say XYZ that has 100 stores.

Operator

Michael Goldsmith, UBS.

Michael Goldsmith

Can you talk about the back leasing of those Forever 21 boxes. What types of tenants are you seeing interest in taking the space, those are -- tend to be bigger boxes. So have you need to break them up? And -- how quickly can you get lead to (technical difficulty).

David Simon

Yes. I'll -- look, I think the demand has been really good. We've got basically over half of them leased with that -- those economics, we've already replaced the rent that Forever 21 was paying us. So -- and I think it's a combination of -- we're doing a lot of business with Primark, ZARAs of the world. They are, in some cases, splitting it up, and we're very focused on it.
But we will more than double at the end of the day, and it will take a couple of years, but all in to at least basically 100 stores, but we'll more than double the rent at the end of the two-year process. Brian, do you agree with that?

Brian McDade

Yes. No, absolutely. We've got about 50 of them addressed. We think those 50, about half of those are commencement of rent this year, the other half next year with the balance kind of finishing out as we complete our leasing efforts, (technical difficulty) But to David's point, we do think rents are going to at least double.

Operator

Alexander Goldfarb, Piper Sandler.

Alexander Goldfarb

David, I appreciate your comment about the mom-and-pop retailers pretty interesting, especially given your platform. So a question, if I hear you correctly, it sounds like the consumer is fine despite what we read online in the newspapers, et cetera, recession, job loss, whatever. But it sounds like the consumers find the shopper is fine. It sounds like the real wildcard are inventory levels.
So it sounds like restaurants and the other similar services that aren't impacted by tariffs are doing well. So is that correct that we should -- the real concern to earnings is really about inventory levels and whether they can sell out products and hit percent rents? Or are there other things that are playing into your outlook?

David Simon

No. I'd say it's all around sales. Now sales is more than just inventory levels, right? It's consumer sentiment, right? And that's hard to predict, Alex, as you know. I mean, right now, it's pretty good. Our sales are flat ex to retailers are basically flat. And again, we don't have April sales. But that was -- that's basically flat through end of March. And again, I explained the Easter being in Q1 versus Q2 this year.
So I expect sales once I get April numbers to be up first four months over the year compared to last year. So the consumer, I think, is fine. I do think they're being a little more cautious. And I do think tourism is -- I don't -- this may be the wrong word, flattening, waning. What are the different phases of the [moon]? Waxing, waning whatever it is.
I think tourism to the US is going to be cautious this year, whether it's from Mexican nationals, Canadians, Europeans, I do think -- and again, we have -- we've just seen a little bit on the border. On the other hand, the dollar is weaker, so maybe that offsets it. But I do think there should be a little bit caution to win on just some -- the sales that are generated by non-US consumers.
And so you put it all together, the economy is clearly a little bit uncertain to put it all together and it makes it really hard to predict sales right now. But even if it's -- like I said, we're just thinking it's going to be a little more cautious, and that's why we're indicating it's probably more likely.
We have this history of beating and raising and we're trying to be realistic, given the set of circumstances that we're dealing with, and that's why we're thinking sales and it's really only sales that have the variability that could ultimately produce us more in the middle of the range.

Alexander Goldfarb

And David, if I could just ask a clarification. Your comments on the US consumer, is that the same for your European and Asian portfolios or those consumers are experiencing different trends in the US?

David Simon

There actually, the or -- and it's basically our portfolio investment in Klepierre. Japan is -- it's all international, it's all very good, right? So they're not -- they're playing field (technical difficulty) hasn't changed. So we don't expect that whole business, whether it's Europe and/or Asia for us is basically stability. So we're outperforming in Europe and in Asia.
And obviously, there's fluctuations in Korea, it could be up. Japan could be down. But generally, it's basically according to plan. I don't expect any change there. The US consumer that goes to these places really doesn't drive our business. It's for the Germans going to Italy and that kind of stuff. Certainly more likely the Chinese go to Europe when they come here.

Operator

Caitlin Burrows, Goldman Sachs.

Caitlin Burrows

Maybe one thing that's tougher to predict then the tenant sales result is OPI. But with that in mind, I guess, wondering, David, if you could go through some of the OPI performance in 1Q, kind of talk about what's going on there?
And I know they aren't part of guidance, but just trying to understand how some of the revenue and cost synergies that were planned for 2025 are going expectations for those to progress throughout the year? And then, I guess, separately would be how the tariff situation could impact, JCPenney and the other catalyst brands this year?

David Simon

Again, OPI is -- had improvement. Again, OPI is basically three businesses. Just so everybody knows. It's our e-commerce business, RGG, Shop Simon, which we own roughly 45% and our interest in Catalyst Group, which is Penny and the other operating brands, Brooks Brothers, Lucky, et cetera, which we now own remind me 39% and our 50% interest in Jamestown. So that's all it is. That's all it plans to be. And it's not what we live and breathe every day though. We're focused on creating value there as we have with ABG and our other OPI investments.
So getting to your question, we had quarter-over-quarter improvement in -- the other two businesses are stable, fine, going according to plan. The Catalyst brands had real improvement quarter-over-quarter. As you know, part of that was being not only the synergies that it was achieving in the merger, but also the F-21, bankruptcy 21 is gone. And they're getting their synergies. And Penny, in terms of sourcing goods, they have a lot less reliance on China.
There is some reliance on China. We're trying to source it elsewhere. And if not, I think they're going to be one of these retailers that has the side in the next six weeks, whether to pull the trigger to bring goods here or not.
And obviously, they're negotiating very hard with their suppliers. And they have -- I mean, the administration is right. They have more leverage in negotiating with suppliers because the US is a big market, but it's we're -- they're in a tricky spot. It's very hard to predict sales for those brands, just like it would be for some other retailers.
But some of the brands in catalysts like Brooks Brothers is doing great. So they're achieving the synergies that they wanted -- the business is on plan. And the bottom line is even with today's uncertainty, we still expect to have -- again, it doesn't show in our numbers because of depreciation that I've explained to everybody, but we expect Catalysts to have positive EBITDA this year, even with all the tariff and economic uncertainty that it's causing going forward.
So again, I would suggest you don't worry about it all that much. That's what we're telling the market, but we're happy to answer any and every question except what the price of a cotton shirt is a -- that I don't know.
That's what I do, but I don't want to be a know at all. Okay. That's a good look at share -- it's better than those -- you used to wear those weird shirts, okay. So I think he's a Brooks Brothers consumer.

Operator

Greg McGinniss, Scotiabank.

Greg McGinnis

The balance sheet continues to be in great shape. But has macroeconomic uncertainty reached a point where you're making adjustments to capital plans to maybe become a bit more defensive, whether that's reconsidering certain development activity, CapEx, or your appetite for acquisitions or otherwise.

David Simon

That's a great question. And I would say we're still making a long-term decision. So -- we're very fortunate to -- since we've been public as far as I can remember, even with COVID thrown at us and the great financial recession and everything else. We've never -- since I've been involved, we've never been over our skis. And we are -- we haven't even put on our skis, I can keep with the analogy, right? Is that the right word.
So we're not -- we haven't even put on our skis recently, right? So we've been cautious to begin with -- or we have all these opportunities. We're very studious in them. But I would say, yes, instinctively, we're more cautious right now. We are expecting -- our development pipeline is there, but it's not -- we're not going crazy with it. I think it will continue. We are expecting construction costs to increase. So the things that haven't started.
Obviously, we don't start construction until we have to guarantee (technical difficulty) anyway. But the things that are on the docket to start or we're getting through -- we're not pulling triggers until we have all the costs finalized and everything else. So I think caution is the word of order, but that doesn't mean we won't buy something or that we won't continue to do our pipeline. But it'd be foolish for us not to be a little more cautious.

Brian McDade

Greg, I think the only thing I would add there is, as you know, as volatility increases, sometimes for us, opportunities increase. And so we have a strong pipeline, and we are clinical with our capital, as you know. So nothing really materially changed, but obviously, a bit more caution relative to the headlines these days.

David Simon

I'll give you a simple example. I was just thinking out loud, but we had one development in Asia. I was going to say it. But it just didn't feel like the right time to do it just because it wasn't material. And it just feels like we should be a little more cautious. And again, I don't want to say that we aren't going to do a couple of deals here that could even be nontrivial. But caution is the word of order right now.

Greg McGinnis

Okay. So if I'm looking at the development pipeline, maybe we don't go much above this kind of $1 billion level for now and acquisitions still on the table, but of course, everything depends on the underwriting.

Brian McDade

Well, Greg, I would say, as you heard me in my prepared remarks, we ultimately believe that we're going to start about $500 million of projects that are not included in that $1 billion spend level. So we are still advancing our projects that are ready to move forward, but we're just doing so thoughtfully.

Operator

Floris Van Dijkum, Compass Point.

Floris Gerbrand van Dijkum

David, you sound very chipper. I'm glad to hear your voice. Can I ask you about the SNO pipeline, where it stands today? I think end of the fourth quarter was the 250 basis points. Has that grown? And how do you see that -- can you quantify that for us? And what's the timing of those rents coming online?

David Simon

You may ask, but I'm going to have Brian answer that.

Brian McDade

Floris, it's about 300 basis points today. From a SNO pipeline, we're spending about 300 basis points when you run the math on that. About $150 million worth of rent at our average rents. But again, that's not all incremental to the existing kind of space. So it's not all going to be additive -- we probably believe that the back half of this year, you're probably going to see 30% to 40% of that.

Floris Gerbrand van Dijkum

And the bulk of that will hit in 2016? Or is there also some spillover into 2017?

Brian McDade

'26 is sub '27. We are seeing some -- looking out further or have been looking out further. So some of that is included in that as well.

Floris Gerbrand van Dijkum

And that includes the Forever 21 spaces as well.

Brian McDade

It does, yes. The ones that are least signed up. Yes.

Operator

Vince Tibone, Green Street.

Vince Tibone

Could you discuss trends in tenant sales in a little bit more detail? I'm curious if there are any specific tenants or categories that are having an outsized impact on the decline in trailing 12-month portfolio sales results.

David Simon

Well, I mentioned -- one of the decreases -- I mean, it's a marginal decrease, but you have to -- we don't like to get into specific retailers. We had two that were basically flat if you put those two retailers aside. And again, Easter was not in this versus last 12 months or last time. So when you -- Vince, when you cut through it, it is relatively flat. And we had a little -- the malls were a little bit above, outlets were a little bit down, and I mentioned earlier, part of that was because of the weather.
We had a very tough -- you probably never experienced it being in Southern California and Newport Beach, where it's sunny most of the time, you have other issues there, right, or the quakes unfortunately, fires.
But -- so -- and then again, we had a little softness in some of our border activity. But I would say, by and large, our top 25 retailers had we're pretty much doing okay enough. So no -- other than that color, nothing unusual on sales.

Vince Tibone

No, that's great to hear. I appreciate the color. And then one more, switching gears. You didn't mention department stores as it relates to any tariff-related or inventory concerns. But I would imagine many of their products are sourced from China. I'm just curious, what is your current outlook for department store closures over the next few years? Has it changed at all with any of this macro uncertainty.

David Simon

Yes. So it depends on the department store. So for instance if they don't have private label they really don't have -- they're not sourcing their own goods. They really don't have the tariff -- the China tariff exposure that you might think. So it really depends on which department store you're talking about and how big their private label business stands.
So if they sell mostly branded goods, then it's really their relationship with the wholesaler and what the wholesaler -- so the wholesaler has to pay the import if they get it from China or elsewhere, how they want to negotiate that between wholesalers manufacturer and what they want to pass that on to the department store, and that's a whole complicated and what the consumer pays.
So there's just no way to really know how that all shakes out. And as far as we can see on department store closures, we don't see -- as you know, we had the Macy's announcement. We had one that was affected by that. It wouldn't surprise me if, again, you don't see pruning just like you do from every retailer on their store level. But I don't expect any real any real major changes right now.
And again, the tariff situation is idiosyncratic to that department store and mostly impacts whether or not they have a big private label business.

Operator

Mike Mueller, JPMorgan.

Michael Mueller

Going back to sales for a second. I know you flagged Easter and two retailers, but would your recent sales trends be materially different, either positively or negatively if you look at things on an NOI-weighted basis?

David Simon

Yes. I would say we used to always do that. We have -- I didn't see it. We haven't -- we don't do by waiting -- we should do that, by the way. But let's -- that's another that's me telling my guys.
But I would say when I look at it, they do -- there's no question that the better properties are getting better. So the simple answer to that sales would be up and we can't give you the specific numbers, but sales would be up if you NOI weighted unequivocally.

Brian McDade

100 assets are up about 1.5%.

David Simon

And that doesn't include that, again, has Easter in March of last year, not April this year.

Michael Mueller

Got it. Okay. Great. And one other one. On the $500 million of development starts, I think, Brian, you mentioned mixed-use components in there. How much of those dollars or even the overall redevelopment pipeline of those dollars are directly retail versus some other property type, whether it's office, hotel, resi.

Brian McDade

I mean, effectively, the 60% that isn't mixed use, quite honestly, Michael. So 60% is retail and the other 40% would be mixed use all the other component.

David Simon

By the way, that's in our share. So some of the -- so we have -- again, we're going to do a big residential development in Brea Mall, but we have a partner for that. So that's 500 new starts is our share. So it's a bigger pipe than just that. It's just we boil it down to our shares.

Operator

Ron Kamdem, Morgan Stanley.

Ronald Kamdem

Great. Just wanted to go back to the guidance and I think some of the assumptions and inputs are to come into the last time. I appreciate it's still early, but how are you guys thinking about sort of domestic property NOI, bad debt as well as the $0.25 and $0.30 interest cost headwind for this year? Just how has those sort of changed since the last three months.

David Simon

No change really.

Brian McDade

Yes. No change in any of those masses. You can see the interest income starting to come down. It's about $0.06 in the quarter. We would expect that to carry forward through the balance of the year. You will also see some more interest expense come through as we refinance our debt later this year -- high coupons on. But no material change to the other elements of the guidance -- we out the beginning of the year.

Operator

Haendel St. Juste, Mizuho Securities.

Ravi Vaidya

This is Ravi Vaidya on the line for Haendel. I hope you guys are doing well. I wanted to particularly ask about your luxury tenants. Are you seeing -- what are you hearing from them in terms of sales and foot traffic? And maybe has there been any sort of pause or pull back on leasing demand from luxury tenants in particular?

David Simon

Not really. Again, and I think it's very brand-specific. So -- you have some that are absolutely on fire, others that are bringing in new designers and updating the brand, but all of that's been pretty consistent for our outlook and what's been going on. So they think very long term like we do. So there really hasn't been a change of move or commitment from those brands.
And overall, I'd say the business is -- there's always ups and downs. But I'd say, overall, from a sales point of view, relatively flat. So it's -- we haven't seen the big sales growth, but I think a lot of that is more -- you have a few brands that are just in the midst of bringing in new designers and more of updating their brand.

Operator

Linda Tsai, Jefferies.

Linda Yu Tsai

In terms of not seeing pull forward in demand now, do you think there's a scenario where a pull-forward demand materializes in 3Q if consumers shop earlier for the holiday season, if there's concern that inventories are low or product is more expensive?

David Simon

We have seen that a little bit historically. So I would say it's possible. And if that's the case, margins might be okay because in our price from -- for retailers, prices could go up. So I do think it's possible. We have seen it in other cases. So I wouldn't rule it out. And I think it's to be determined, but I wouldn't rule it out.

Operator

Omotayo Okusanya, Deutsche Bank.

Omotayo Okusanya

Just a quick question on the $2.8 billion of debt refinancing. I wonder if you could just talk a little bit about what market looks like today, any big change in terms, LTVs or how lenders are generally kind of looking at the asset class at this point?

David Simon

Well, I'd say that lenders are very comfortable with the asset class. We've been upgraded with -- we've been upgraded from -- a positive from look.

Brian McDade

From an S&P perspective. From an unsecured perspective, $1.6 billion of maturities here, we will refinance that back in the unsecured market throughout the balance of the year. And on the mortgage side, you continue to see vendors, CMBS, life insurance companies and other looking at the asset class and looking to deploy capital given our leverage levels. We are relatively conservative from a financial point of view, as you know.
And so that opens us up to an opportunity to refinance what we did earlier in the year was representative of that home roads done in the first quarter. I think the market is up for us to continue to refinance. But importantly, we're rolling over our debt. We're not looking for incremental capital. We're not looking to extract excess proceeds to redeploy to our business. We're doing that with our free cash flow.

David Simon

But the good news is good retail real estate as people are very financial -- they're very comfortable financing and certainly our company.

Operator

This concludes the question-and-answer session. I'd like to turn the call back over to David Simon for closing remarks.

David Simon

Okay. Just thank you, everybody. I think we'll talk soon. And I believe at least I do think the mood is getting more certain and more stable. So we're optimistic about this uncertainty resolving itself shortly.

Operator

This concludes today's conference. You may disconnect your lines at this time. Enjoy the rest of your day.