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Simon beats expectations, boosts dividend, outlook

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Simon Property Group Inc., the largest U.S. shopping-mall owner, raised its quarterly dividend and its forecast for full-year funds from operations as its tenants benefit from an increase in consumer spending.

FFO, which gauges a property company’s ability to generate cash, climbed in the third quarter to $720.1 million, or $1.99 a share, from $606.2 million, or $1.71, a year earlier, the real estate investment trust said Thursday in a statement. The average estimate of 21 analysts in a Bloomberg survey was $1.92 a share.

Demand for space at regional malls is rising, helping to boost revenue for Indianapolis-based Simon. U.S. retail sales advanced 1.1 percent in September following a revised 1.2 percent increase in August, according to data from the Commerce Department. The company also is benefiting from its outlet centers, said Craig Guttenplan, a REIT analyst at CreditSights Inc. in London. Those properties are a top area of expansion.

“Outlet malls continue to do well,” Guttenplan said in a telephone interview before Simon announced its earnings. “Regional malls are slightly positive and outlets are more positive.”

The company boosted its quarterly dividend to $1.10 a share from $1.05. It estimates FFO for the full year of $7.80 to $7.85 a share, up from its previous forecast of $7.60 to $7.70.

Simon also said it sold its investment this week in U.K. property companies Capital Shopping Centres Group Plc and Capital & Counties Properties Plc for proceeds of $327 million.

Revenue for the third quarter increased 14 percent to $1.23 billion. U.S. occupancy climbed to 94.6 percent from 93.8 percent. The base minimum rent in the quarter was $40.33 a square foot, up from $38.84 a year earlier. Tenant sales per square foot rose 9.3 percent to $562.

The results were released before the start of regular U.S. trading. Simon rose 0.1 percent to $151.17 yesterday. Its shares have advanced 17 percent this year, compared with a 12 percent gain in the Bloomberg REIT Index.
 

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  • Good point, Bill.
    In addition to those tax abatements, Simon Property Group receives a $10 million check annually to convince it to keep the Pacers here, it get its choice of DT for where they wish to build their HQ, and the management is allowed to take its sweet precious time in finding a replacement tenant for the Nordstrom at Circle Centre. Gosh, it must be wonderful for Simon to have a host city as willing as Indianapolis is to grab its ankles for them!
  • Great Timing
    That's wonderful news coming on the heals of special tax abatements just announced for Simon 's malls here in Indianapolis. They'll decline those abatements now, right?
  • Good news, but what's next?
    That's great news, but what's going on with the Nordstrom vacancy at Circle Centre?

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  1. I'm sure Indiana is paradise for the wealthy and affluent, but what about the rest of us? Over the last 40 years, conservatives and the business elite have run this country (and state)into the ground. The pendulum will swing back as more moderate voters get tired of Reaganomics and regressive social policies. Add to that the wave of minority voters coming up in the next 10 to 15 years and things will get better. unfortunately we have to suffer through 10 more years of gerrymandered districts and dispropionate representation.

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