Simon's biggest challenge: A litany of retailers either have failed or are on the brink of financial collapse, creating more empty spaces in malls at a time demand is slack to fill it.
But it isn't just the sick retailers that are throwing a wrench in Simon's business plan these days. It's relatively healthy tenantslike locally based Finish Line Inc.which are deter mined to come out of the recession with better rent deals.
Finish Line executives told analysts on a conference call this month that occupancy costs ticked down in the third quarter, compared with a year earlier, and they're just getting started.
The company says that, in the next 15 months, leases for nearly 40 percent of its 800 stores either will expire or have provisions kick in giving it the right to walk away because of lower-than-expected sales.
The goal "is not how many we can close. It's how many we can renegotiate to turn some of the losers into gainers," President Steve Schneider said on the call.
"And we've had a lot of success in the last six, nine months doing just that. We think the mall operators certainly want to keep the lights on and not see any more people go dark in their malls."
Retailers big and small are thinking the same way, and not just in their dealings with Simon.
"It's the best of times [because] landlords are trying to hold on to people like us," Gap Inc. CEO Glenn Murphy said in a November conference call.
Mark Lemond, CEO of Evansville-based Shoe Carnival Inc., said in a call the same month "that we have seen movement on the part of landlords ... to allow us to negotiate very nicely to get some concessions."
Comments like that have helped unnerve investors in Simon and other shopping center owners.
The Indianapolis company's stock tumbled 38 percent in 2008 and has shed another 23 percent this year, leaving it at around $41.
But for their part, Simon executives say the sky is not falling.
In the third quarter, occupancy in its regional malls was a robust 92.5 percent, down just a hair from the 92.7 percent reported a year earlier.
And Chief Financial Officer Stephen Sterrett said at a December investor conference in New York that the company generally negotiates leases nine to 12 months ahead of expirations, meaning leases going into effect in 2009 generally were negotiated "when the world was a happier place."
Simon historically has bumped up rates on new leases from 15 percent to 25 percent, and through the first nine months of 2008 rose 23
The company won't report fourth-quarter results until Jan. 30.
"Could our leasing spreads skew to the lower end of the historical range now that the world is feeling a little less happy? For sure," Sterrett said at the conference.
"But I would still expect it to be in the historical range."
He added that "we're not putting our space on sale in our better-quality" mallsthe properties responsible for the vast majority of the company's profit.
Yet any shift in the negotiating dynamics between Simon and its tenants is significant.
Simon is the largest landlord to virtually every major mall chain. That clout is an important part of its strategy.
Company executives have said as much in rare moments of candor.
Thirteen years ago, when Simon bought Ohio-based DeBartolo Realty Corp. for $3 billioncreating a mall colossus of unparalleled scaleDeBartolo CEO Richard Sokolov suggested the combined company would use its new leverage for all it was worth.
"[Mall tenants] realize that what happened today has fundamentally changed the rules of their game," Sokolov, who is now Simon's president, said at the time.
"We have such an outstanding collection of properties of a highly desirable nature that it's going to give us a substantially better position to extract more rent."
Now, with the nation mired in the worst recession in a generation, retailers are ready to turn the tablesalbeit in a less in-your-face way.
As Finish Line's Schneider said in this month's conference call, "We intend to negotiate terms that work for both us and our landlords."