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

Simon boosts dividend after gains in sales, occupancy, rent

April 27, 2012

Simon Property Group Inc. raised its 2012 profit forecast and announced plans to raise its dividend for a third consecutive quarter as its portfolio of shopping malls continued to notch gains in rent, occupancy and sales.

The Indianapolis-based real estate investment trust on Friday said sales at its U.S. malls jumped 11.2 percent, to $546 per square foot. Simon's malls were 93.6-percent occupied, up from 93 percent. Stores in Simon malls generated per-square-foot rent of $39.87, an increase of 4.4 percent.

Simon reported a 13-percent rise in funds from operations for the quarter ended March 31. The company's FFO was $648.7 million, or $1.82 per share, compared to $570.6 million, or $1.61 per share, in the year-ago period. The company expects to report FFO between $7.50 and $7.60 per share for the year ended Dec. 31.

FFO gauges a real estate company's ability to generate cash in part by removing the effects of depreciation.

During the quarter, Simon became the only real estate company to join the S&P 100 index, which tracks the performance of the nation's largest blue-chip companies.

"We are off to an excellent start in 2012," CEO David Simon said in a prepared statement, "with the completion of two significant transactions, the execution of two international partnerships to build outlets in Brazil and China, the groundbreaking for four new outlet developments, the reporting of strong financial and operational results, and the raising of our dividend."

The company raised its quarterly dividend to $1 per share, from 95 cents.

Simon said it earned $645.4 million, or $2.18 per share, on revenue of $1.12 billion for the quarter. That doesn't compare directly to the same quarter last year, when Simon earned $179.4 million on revenue of $1.02 billion, since the most recent quarter included a large non-cash gain based on the company's acquisition activity.

During the quarter, Simon went on a $3.5 billion mall shopping spree. It become the largest shareholder of European shopping center operator Klepierre SA and bought stakes in 26 U.S. malls.

Simon agreed to buy 28.7 percent of Klepierre from BNP Paribas SA for $37.04 per share in a deal valued at about $2 billion in early March. Simon also agreed to buy out venture partner Farallon Capital Management LLC’s stakes in 26 malls across the U.S. for about $1.5 billion, including repayment of loans.

Simon will continue to manage the properties, which include a dozen sprawling “Mills” outlet malls.

The company reported it is renovating or expanding 23 shopping centers in the U.S. and two in Japan. During the quarter, it finished renovations to the flood-damaged Opry Mills mall in Nashville, Tenn., and began building new Premium Outlets centers in Phoenix, Toronto, Korea and Japan.

Simon released its results before Friday trading began. The company's shares closed Thursday at $152.19, just shy of the stock's 52-week high.

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