So I don’t really — in fact I think Penney almost can be a beneficiary opening new stores as opposed to closing stores. I’m sure there’ll be a few here and there, but most of all of their stores are positive EBITDA, and so they have a very good way of having positive EBITDA out of what, I call, low-volume stores. And again, this is what’s interesting to us. Penney is not public. So you know what matters to me, Vince, cash flow, EBITDA and that obviously sales — comp sales are important, right. But as long as we’re profitable out of the stores, there’s no Wall Street pressure that we’ve got to narrow the store count. I don’t necessarily believe shrink to grow. It’s very — it’s very hard to achieve, maybe you can achieve it. My history, not overly long, but long enough.
It’s — I don’t care what industry, it’s very hard to do. Some have done it, but to me, if it’s got positive EBITDA, there’s nothing wrong with maintaining that store for the community. You certainly don’t want to lower standards of how you operate it, but if you can create cash flow, doesn’t necessarily mean you have to reinvest that much in it and you can use that cash flow to reinvest in other elements of your business. So I don’t anticipate long story short. I really don’t anticipate much portfolio real estate activity at the JCP level.
Vince Tibone: No, that’s really helpful color. Maybe just a quick follow-up on that. I’m just curious, given the ownership structure, I mean, are you guys able to pursue recapturing some of these boxes at your best properties to unlock mixed-use development opportunities, or how would that work given your foot ownership with Brookfield?
David Simon: Yeah, well, look, I think as part of the deal originally, first of all, our relationship with Brookfield is excellent and our — we both basically — and ABG is an investor in there as well, but we very much see eye-to-eye on J.C. Penney and how it operates — how we should operate it, and I would say, both of us — now my memory is a little bit cloudy, but when we did the restructuring we did get — both of us got the opportunity to reclaim or reclaim certain space from J.C. Penney that we could redevelop. So it’s a good question, and the fact is, we are about to embark upon one that you’ll see an announcement in the near future where we are going to ultimately redevelop a J.C. Penney at one of our centers. So I don’t remember the exact count.
I don’t remember exactly how much Brookfield, but as part of the part of the bankruptcy process and negotiation with each other, we did give each other the right to do that. And so what happens there is we get notice to the company. It’s already documented and we get the — and we can — in this case, it’s a lease, so there’s nothing to pay. We just cancel the lease. Now obviously, store is a little bit profitable, very profitable for J.C. Penney, so we’re going to have to find them some new opportunities to make up for it, but that’s all part of the deal. So I think there’ll be a handful like that, both from us and Brookfield that we’ll be able to do. But — and again, that was all pre-negotiated. To the extent that there is one that wasn’t part of that negotiation, that’s pretty — given our relationship with Brookfield pretty straightforward, we come up with a value or they come up with a value.
Obviously, the J.C. Penney management team would have to be part of that and they would get the appropriate value to redevelop that project.
Vince Tibone: Thank you. All great color.
David Simon: Thank you.
Operator: And our next question comes from the line of Juan Sanabria with BMO Capital Markets. Please proceed with your question.
Juan Sanabria: Hi. Good afternoon. Just hoping to ask about the watchlist of bad debt. I believe you said you had assumed 25 basis points last quarter. Has that changed now at all? And if so maybe if you could break out the Express impact? And in your prepared comments, you talked about sales on a per square feet basis being flat, stripping out two tenants, just curious on the color of why those two tenants were stripped out, if there’s any interesting.
David Simon: Yeah, let me answer that. I think the two tenants really — I mean even if we didn’t — I think it’s just color for you to know that generally, the portfolio was flat. We don’t like to name tenants, so we don’t focus on it. I’d also, I think, point out to you the most important thing we look is total volume and we were up quarter-over-quarter. What was the number again? 2.3%. That’s really the number we look at, and again, remember, these are reported sales. We can get into this whole diatribe about some of the retailers credit their sales with Internet returns. So it’s just information, okay? Do what you want with it, but it’s just information. But our sales, if you include the two retailers, the last 12 months was down 1.8% on a rolling 12 basis.
But total — because not all those are comp, total was up 2.3%, which is the more important number. Now we’d also just to — and Brian can add in here, now that I’m talking, I might as well just finish. We don’t — as part of our discussion, we’ll never get into a retailer-specific response, but obviously, bankruptcy for tenants has a lot of — a lot goes on, leases have to be rejected depending on where they were on that and what happened. So we — in our comp NOI, we have our bad debt expense. I think I gave you some color. We still feel like it’s achievable. So — but again, I don’t think, and then Brian can add — we’re not going to really give you color too much on Express, but we do put in, when we model our business for the year, we do put in unforeseen circumstances and we try to budget appropriately for retailers that are under pressure, and in this case, we kind of knew Express was in that spot, but a lot remains to be seen how Express comes out of bankruptcy and the ultimate financial impact.
Juan Sanabria: Thank you.
David Simon: Thank you.
Operator: And our next question comes from the line of Haendel St. Juste with Mizuho. Please proceed with your question.
Haendel St. Juste: Hey, good evening. Thanks for taking the question. A quick two-parter here. First, I wanted to follow-up on Floris’ question on the uses for the cash from the retail monetization. The stock is $35 or so higher than what you lost back, so I assume it’s fair — is that fair to assume that buying back stock is less likely here? And are there any special dividends that need to be paid on that gain? And then my second part of the question is, we noticed that the TRG property count dropped to 18 properties versus 20 last quarter, what happened there? Thanks.
