Commercial Real Estate and Shopping Centers and Simon Property Group and Retail and Real Estate & Retail

Simon posts strong quarter as mall occupancy strengthens

January 31, 2014

Simon Property Group Inc., the largest U.S. shopping-mall owner, reported an 8.1-percent increase in fourth-quarter funds from operations as retailer demand for space in outlet centers climbed.

FFO, which gauges a property company’s ability to generate cash, rose to $894.8 million, or $2.47 a share, from $827.4 million, or $2.29, a year earlier, the Indianapolis-based real estate investment trust said Friday morning.

The average of 22 analyst estimates was $2.43 a share, according to data compiled by Bloomberg. Simon declared a $1.25 per share dividend, up from $1.20 for the previous three months and 8.7 percent more than a year earlier.

Simon is benefiting as retailers seek space in outlet centers, where brand-name items are sold at a discount.

Overall, occupancy in its malls climbed to 96.1 percent in December from 95.3 percent at the end of 2012 as total sales per square foot increased from $568 to $582. Rents also grew, to $42.34 per square foot in the fourth quarter from $40.73 in the year-ago period.

Profit increased 21 percent, to $381.6 million, or $1.23 per share, compared with $315.4 million, or $1.01 per share, in the fourth quarter of 2012.

Quarterly revenue rose 5 percent, to $1.4 billion.

“This was an excellent quarter and year for Simon Property Group, capped off by our 20th anniversary as a public company in December,” Simon CEO David Simon said in a prepared statement. “We produced strong financial and operating results in the fourth quarter, led by 5.5-percent growth in comparable property net operating income for our U.S. malls and premium outlets."

For the entire year, Simon reported FFO of $3.2 billion, or $8.85 per share, compared with $2.9 billion, or $7.98 per share, in 2012. The company forecast 2014 FFO per share in the range of $9.50 to $9.60.

Net income in 2013 fell slightly, to $1.3 billion, or $4.24 per share, compared with $1.4 billion,  or $4.72, in the prior year. Results for 2012 include non-cash net gains from acquisitions and dispositions of $1.41 per share.

Revenue in 2013 grew 5.9 percent, to $5.2 billion.

In December, Simon announced that it will spin off all of its strip centers and 44 smaller malls into a separate public company. The transaction should be completed in the second quarter, Simon said.

Simon shares rose 2.9 percent in premarket trading, to $155 each.
 

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