The nation's biggest mall landlord reported occupancy is up with strong leasing at its properties, but it conceded that some of the retailers it owns stakes in are seeing sales soften as consumers cut down on discretionary spending to buy necessities such as gasoline and groceries.

Simon Property Group, based in Indianapolis, offered details Monday about its leasing pipeline, deals that were already closed, and increases in sales per square foot at its properties during a second-quarter earnings call. It even raised its guidance for the rest of the year.

"We have refuted e-commerce taking the malls down," David Simon, the real estate investment trust's chairman and CEO, told Wall Street analysts. "The enclosed mall business is strong, but we have naysayers who don't believe it."

But Simon acknowledged that inflationary pressure and soaring prices for goods such as food are influencing the buying habits of lower-income, more cost-conscious consumers, something that retailers Walmart and Target have reported.

In the case of Simon Property, its CEO said inflation was starting to affect J.C. Penney, which the mall landlord co-owns with Brookfield Asset Management, as well as some of the retail brands the company has a stake in as part of a joint venture with Authentic Brands Group.

"We did see some softness in the more value-oriented brands," Simon said.

Through the joint venture, called Sparc, Simon has a portfolio of retail holdings that includes Brooks Brothers, Lucky Brand, Eddie Bauer, Aéropostale and Forever 21. The retailers that cater to younger teen consumers, namely Aéropostale and Forever 21, in particular have experienced softness in sales, according to Simon, with J.C. Penney seeing "a little bit of that."

"There's no question the consumer is pressed on discretionary income, is dealing with a very difficult situation, with food, obviously gas and dwelling," Simon said. "So they're reining in their spend. There's really no question about that. But we really haven't seen that at all in kind of the better brands. ... The Luckys and the Brooks Brothers of the world are doing very well. ... The high-income consumer is still spending money."

Simon cautioned analysts that his REIT's retail holdings represent just 10% of its business, and Wall Street should "have a big-picture view" of the company.

At Simon's U.S. malls and outlet centers, occupancy rose to 93.9% at June 30 from 91.8% at that time last year.

"Leasing momentum accelerated across our portfolio," Simon said. "We signed nearly 1,300 leases for more than 4 million square feet in the quarter, and signed over 2,200 leases for more than 7 million square feet through the first half of the year. And we have a significant number of leases in our pipeline. Nearly 40% of our total leasing activity in the first six months of the year has been new deal volume."

Reported retailer sales per square foot reached another record in the second quarter, at $747 a square foot for the malls and outlets combined, according to Simon.

In a note to investors Monday night, BMO Capital Markets lauded Simon Property for its "continued solid leasing," but was also cautionary.

"Guidance was bumped modestly above the Street, but our sense was the buy-side was expecting this," the report stated. "We continue to see longer-term value in shares ... but see few visible catalysts amidst significant macro uncertainty focused on the U.S. consumer, particularly discretionary spending. Although brick-and-mortar has undoubtedly proved its importance for retailers and consumers, we favor more necessity focused shopping centers within retail."

In another note late Monday, Truist Securities said, "On the conference call, management did try to provide a more optimistic picture of mall fundamentals, highlighting strong leasing progress and strong tenant sales trends (+26% for malls/outlets)."

Simon Property posted net income of $496.7 million for the second quarter, compared with $617.3 million at the same time last year. Revenue increased to $1.28 billion from $1.25 billion a year earlier.

The REIT is now forecasting comparable funds from operations, or FFO, the measure used by REITs to define the cash flow from operations, to range from $11.70 to $11.77 per share for the year, up from original guidance of $11.60 to $11.75, according to Simon.