David Simon likes his position in retail — a type of side hustle for his mall giant Simon Property Group — but he’s content to be the one accepting the rent payments and doesn’t expect to purchase more retailers within the near term. 

Partially, that’s since the business of being a landlord is paying up for Simon. 

For the quarter ended Dec. 31, the true estate group’s net income increased 33.9 percent to $673.8 million, or $2.06 a diluted share, from $503.2 million, or $1.53, a 12 months earlier. Comparable funds from operations — a normal yardstick amongst retail real estate corporations — inched as much as $1.18 billion from $1.17 billion. 

The retail portfolio shifted some throughout the group. 

On a conference call with analysts Monday, Simon said net income for the quarter was boosted by 25 cents a share, or $90.5 million, as the corporate traded its direct stake in Eddie Bauer for more shares of its partner, Authentic Brands Group. 

The CEO said Simon now owns 12 percent of Authentic, a stake valued at about $1.5 billion — giving all of Authentic a valuation of about $12.5 billion. (Simon has a three way partnership with Authentic called SPARC, which owns Reebok, Perpetually 21, Brooks Brothers and Aéropostale in addition to Eddie Bauer).

“We actually don’t have any plans to amass anything,” Simon said of SPARC. “If we do, it’ll be opportunistic…Most of our work has been on the bankruptcy front or where someone desired to unload the business, but generally there’s not a number of distress in retail at once. 

“I’m not saying it won’t develop within the 12 months, but there’s some brands on the market which might be in trouble that obviously people find out about, but we don’t see playing in any of those situations,” he said. 

Retail is stronger, partially, because so most of the weaker players fell into chapter 11 through the pandemic — like J.C. Penney, which Simon owns with Brookfield Asset Management — while the remainder of the industry worked to shore up their balance sheets. 

Retail still makes up a small a part of the corporate’s business, nevertheless it’s a high-profile cog within the machine and one which did cause a little bit trouble last 12 months.

Simon acknowledged that, while SPARC was profitable in 2022, it didn’t meet expectations and he offered “a little bit mea culpa.”

“We made the error that … we budgeted principally flat to ‘21 and ‘21 was for a few the brands there [was] just extraordinarily profitable,” Simon said. “We made some tactical mistakes at Perpetually 21. We brought in a latest CEO [Winnie Park] to rectify those mistakes. She’s doing a terrific job. So we’re more than happy there. We are also more than happy with J.C. Penney. It’s unbelievably profitable.

“But we did make the error of considering ‘21 would repeat after which obviously, you understand, we had a number of volatility from a macro point in ‘22 with huge increases in rates of interest, huge increase in price and food and energy cost that the patron was whipped and we felt the impact of it,” he said. “It stabilized now, we consider.”

It’s a mistake that much of retail seems to have made as well. 

But Simon, after all, at all times has his mall empire to fall back on.

Occupancy at the corporate’s U.S. malls and premium outlets stood at 94.9 percent at the tip of the 12 months, up from 93.4 percent on the close of 2021.

Minimum rent per square foot rose 2.3 percent to $55.13 over the 12 months and retail sales per square foot for the 12 months increased 5.6 percent to $753.

For the complete 12 months, Simon’s comparable funds from operations rose 3.5 percent to $4.5 billion, or $11.87 a share — with $2.8 billion of that going to shareholders in the shape of dividends and share repurchases. 

The mall giant is expecting its comparable funds from operations to are available concerning the same this 12 months with an outlook of $11.70 to $11.95 a share.