Financial Results and Commercial Real Estate and Public Companies and Simon Property Group and Real Estate & Retail

Simon Property Group reports improved quarterly results

July 30, 2010

Simon Property Group Inc., the largest U.S. shopping-mall owner, said Friday morning that second-quarter earnings rose as national retail sales improved.

The Indianapolis-based real estate giant earned $152.5 million, or 52 cents per share, in the quarter ended June 30, compared to a loss of $20.8 million, or 8 cents per share, in the same period of 2009. The 2009 results included an impairment charge of $140.5 million, or 43 cents per share.

Funds from operations climbed to $487.7 million, or $1.38 a share, from $313.1 million, or 96 cents, a year earlier, the company said. The year-ago figure included a non-cash impairment expense of 42 cents a share. The company also affirmed its adjusted FFO forecast for the year of $5.77 to $5.87 a share.

Mall owners like Simon Property are starting to benefit from a pickup in consumer spending. June retail sales excluding automobiles, gas stations and restaurants gained 3.3 percent from a year earlier, according to the National Retail Federation, a Washington, D.C.-based trade group.

Simon was expected to have funds from operations of $1.34 a share, the average estimate of 19 analysts in a Bloomberg survey.

The charge in the second quarter of 2009, totaling $140.5 million, related to the decline in value of an investment in Liberty International Plc.

FFO is a cash-flow measure used by real estate investment trusts. It excludes depreciation and other items and doesn’t conform to generally accepted accounting principles.

Simon had $2.6 billion of cash on hand at June 30.

The company, which has stakes in almost 400 properties in North America, Europe and Asia, released results before the start of regular U.S. trading. The shares fell $1.20, or 1.4 percent, to $87.93 Thursday in New York Stock Exchange composite trading.

Simon dropped a bid this year to buy or invest in its largest competitor, Chicago-based General Growth Properties Inc., which filed for Chapter 11 bankruptcy protection in 2009.

"Our positive momentum from the first quarter continued," said Simon CEO David Simon in a prepared statement. “The improvement in business conditions extended into the second quarter as demonstrated by higher occupancy and sales. Sales for our malls and Premium Outlets during the second quarter of 2010 were 4.9 percent higher than in the second quarter of 2009, and occupancy grew 90 basis points from March 31, 2010.”

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