We understand the market is not thrilled with it. So we try to also do it in a way that really, really does not make it the story, it is on the margin and it will always be on the margin, but we do think we can add value to the enterprise by some of these investments. And each investment is so idiosyncratic that it’s hard to say, again, if Express happens, it’s hard to say that that’s the new model because I don’t know that I can say that. I think every one of these things is somewhat idiosyncratic, but we do have the opportunity to do more than lease space in Alabama, someplace, or that’s what this company is all about. We do more — we’re in South Korea. We’re in in Jakarta. We’re building in Tulsa. We’re building apartments in Seattle. So I mean I’m waxing a little bit here but we think of ourselves broader than I think the market thinks of us, that’s accumbent upon us and I think our disclosures have gotten better over time.
I hope you agree, Alex, on OPI, so you can see it not detract from real estate, but at the same time, we’re somewhat different than when you line us up to others that do some of what we do.
Alexander Goldfarb: And that was the point that you guys have this special thing. It’s sort of like Kimco has their retailer unique thing and it would be a shame to do away with it if it was just volatility because clearly it’s made you a lot of cash. So thank you for the answer.
David Simon: Thank you, Alex.
Operator: Our next question comes from the line of Craig Mailman with Citi. Please proceed with your question.
Nicholas Joseph: Thanks. It’s Nick Joseph here with Craig. David, I just wanted to ask on kind of the opportunity to roll out additional luxury, either VIP suites or retailers. We saw what you did at Woodbury and I’m just curious on the opportunity for the remainder of the portfolio and what kind of demand do you think that will drive from some of these higher-income clientele that you’re seeking?
David Simon: Listen, I think we’ve got a great portfolio of real estate that is focused on the very high income consumer. And I think, we need to step up our game in all the services that need to be provided to that consumer and I think Woodbury, Sawgrass are just the beginning of an effort to really — I can’t think of the right word, but really entertain that consumer to make it really special and it’s all the services that they’re accustomed to, it’s the fine dining, it’s the ease of access. It’s right — having the right retailer mix. So we probably have around 20 to 25 properties that are — that have this high — our centers are really big, so they obviously appeal to a broader range of consumers, which is the way we like it because that’s also you diversify the ebbs and flows, but that — but those 20, 25 centers really need special attention.
We’ve got a great team that’s dedicated to them. And in many cases, we’re the preferred or certainly a meaningful landlord to the best retailers in the world and we want to — we definitely want to stay in that spot. So a big push for us to step up our game when it’s dealing with the very high-end consumer on all sorts of levels. And so I think what happens at Sawgrass with the oasis and the colonnade and what already happens at Woodbury, but we’re just stepping up our game, will happen at Houston and King of Prussia, and if you saw what we did at Phipps in Atlanta, and what’s going on at Boca Raton in Florida, just to name a few that jump out at me is really, really a high priority for the company.
Operator: And our next question comes from the line of Floris van Dijkum with Compass Point. Please proceed with your question.
Floris van Dijkum: Hey, thanks. David, I was going to ask you about luxury, but I was pipped, so instead I’m going to ask you about — I’m going to ask you about capital recycling. Presumably your guidance, I mean, you just — you cleared $1.2 billion on the ABG sale, sitting there in cash, and obviously, you do have some ongoing developments, but those are essentially funded from your retained cash flow, if you will. So the guidance assumes is that cash sits there uninvested essentially for the rest of the year or is there further upside, I guess, is what I’m getting at if you were to do something else with that cash to redeploy that into higher-yielding investments?
David Simon: Yeah, good — very good question. It’s actually — we cleared in two months, $1.450 billion as you know, Floris, so I just wanted to mention that. But yeah, right now, our guidance just assumes, it sits in the bank and/or pays down debt, but that’s basically it. So, no really — no real redeployment is contemplated in our numbers at this point. Brian, if you want to add anything?
Brian McDade: Yeah, no, that’s right. We’ve just assumed that we would hold the cash for the time being and we have debt maturities coming due here in September and October, and so we could use the cash on hand to fund that. We also are carrying cash from our activities — My Capital Markets activities last year. So as a combination of it, we’ll address our upcoming maturities.
Floris van Dijkum: Thanks.
David Simon: Thank you.
Operator: Our next question comes from the line of Vince Tibone with Green Street. Please proceed with your question.
Vince Tibone: Hi, good evening. Could you elaborate on the charges taken in the first quarter related to SPARC and J.C. Penney? And then possibly related to that, kind of what is your near-term outlook in terms of J.C. Penney store closures just given foot traffic trends in recent years have not been great, so just curious how long you think the current store count and fleet is sustainable.
David Simon: Yeah. The charges pre-tax were $33 million, so, not — most — it’s kind of funny, Vince, because most charges are in the hundreds of millions of dollars. So yeah, I think you have to put it in perspective. But with that said, it really dealt with personnel and inventory. So that were the two primary factors and more really on the inventory side because we had some clearance inventory that — in SPARC, it was really focused on F21 and Penney just on basically clearing out some inventory. So, Penney, we’re pleased with Penney. I’ll just talk a moment about the store closings. They’re very interesting. They don’t — Penney is able to produce positive EBITDA even if there’s not high sales. I think they do out of the box.
