Financial Results and Commercial Real Estate and Shopping Centers and Simon Property Group and Retailers and Real Estate Investment Trust and Retail and Real Estate & Retail

Simon Property results improve as store rents climb

April 29, 2011
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Simon Property Group Inc., the largest U.S. shopping-mall owner, said funds from operations rose 75 percent in the first quarter as retail sales climbed and an expense to pay off debt wasn’t repeated.

Funds from operations, which gauges a property company’s ability to generate cash, increased to $570.6 million, or $1.61 a share, from $325.6 million, or 94 cents, a year earlier, the Indianapolis-based real estate investment trust said Friday.

Analysts projected Simon would have an FFO of $1.54 a share, the average of 17 estimates in a Bloomberg survey. The company raised its FFO per-share forecast for the year to a range of $6.55 to $6.65 from a previous range of $6.45 to $6.60 a share.

Retail sales rose in March for a ninth consecutive month, the Commerce Department said April 13. General Growth Properties Inc., the second-largest U.S. mall owner, said this week that occupancies at its malls increased to 92.4 percent, and tenant sales climbed 7.3 percent, to $457 a square foot.

“Retail sales have been pretty encouraging,” Craig Guttenplan, senior REIT analyst with CreditSights Inc. in London, said before the report. “It’s an overall positive” that means landlords can increase rents, he said.

Simon owns or has stakes in almost 400 properties in North America, Europe and Asia.

Occupancy at Simon’s U.S. malls increased to 92.9 percent from 92.2 percent and its average rent per square foot rose to $39.26 from $38.72, the company said.

The company recorded a $165.6 million loss on debt extinguishment in the first quarter of 2010 related to tender offers on debt.

The results were announced before the open of U.S. exchanges. Simon shares rose $1.49, or 1.3 percent, to $114.95 each Thursday. They have gained about 16 percent this year, compared with a 12-percent increase in the Bloomberg REIT Index.

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