IBJNews

Simon boosts dividend, outlook after strong second quarter

Back to TopCommentsE-mailPrintBookmark and Share

Simon Property Group Inc. raised its dividend and increased its forecast for the remainder of 2012 after posting strong second-quarter results.

The locally based shopping mall owner reported Tuesday morning that funds from operations, a key measure of performance for real estate companies, rose 18 percent in the second quarter.

The company said FFO will be $7.60 to $7.70 a share this year. That compares with a previous forecast of $7.50 to $7.60. Simon boosted its dividend to $1.05 a share from $1.

Simon's shares were up about 1 percent in late-morning trading, to about $158 each.

Demand for space from retailers at regional malls and outlet centers is rising, helping to lift Simon’s revenue. The company also is expanding overseas to increase growth. It bought a 29-percent stake in European shopping-center operator Klepierre SA for about $2 billion in March and formed a venture in April with Rio de Janeiro-based BR Malls Participacoes SA to develop outlet centers in Brazil.

“Their business is really, really good,” Rich Moore, an analyst at RBC Capital Markets in Solon, Ohio, said before the report. “They’re actively engaged on the international front.”

FFO rose to $689 million, or $1.89 a share, in the second quarter from $583 million, or $1.65, a year earlier. The average of 18 estimates in a Bloomberg survey was for FFO of $1.81 a share.

The company reported net income in the second quarter of $215.4 million, or 71 cents per share, on revenue of $1.2 billion. In the same period a year earlier, Simon posted net income of $205.1 million, or 70 cents per share, on revenue of $1.0 billion.

The results were released before the start of regular U.S. trading. Simon's shares have advanced 21 percent this year, compared with a 13 percent gain in the Bloomberg REIT Index.

In its earning report, the company also noted that it paid the retailer J.C. Penney about $248 million to redeem the chain's partnership stake in the mall giant.

The amount represents a large discount to the trading value of Simon's shares. Penney got $124 for each of the partnership units it cashed in, well below the per-share price of $158.

Analysts asked CEO David Simon about the discount on a conference call Tuesday morning. Simon noted J.C. Penney had the option of converting the partnership units into common shares, which it would then have to sell, or negotiate a buy-back from the company directly.

"I'm very convinced [the deal] is a great opportunity for the company, and I think it met Penney's strategic goals in terms of their focus," he said.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I took Bruce's comments to highlight a glaring issue when it comes to a state's image, and therefore its overall branding. An example is Michigan vs. Indiana. Michigan has done an excellent job of following through on its branding strategy around "Pure Michigan", even down to the detail of the rest stops. Since a state's branding is often targeted to visitors, it makes sense that rest stops, being that point of first impression, should be significant. It is clear that Indiana doesn't care as much about the impression it gives visitors even though our branding as the Crossroads of America does place importance on travel. Bruce's point is quite logical and accurate.

  2. I appreciated the article. I guess I have become so accustomed to making my "pit stops" at places where I can ALSO get gasoline and something hot to eat, that I hardly even notice public rest stops anymore. That said, I do concur with the rationale that our rest stops (if we are to have them at all) can and should be both fiscally-responsible AND designed to make a positive impression about our state.

  3. I don't know about the rest of you but I only stop at these places for one reason, and it's not to picnic. I move trucks for dealers and have been to rest areas in most all 48 lower states. Some of ours need upgrading no doubt. Many states rest areas are much worse than ours. In the rest area on I-70 just past Richmond truckers have to hike about a quarter of a mile. When I stop I;m generally in a bit of a hurry. Convenience,not beauty, is a primary concern.

  4. Community Hospital is the only system to not have layoffs? That is not true. Because I was one of the people who was laid off from East. And all of the LPN's have been laid off. Just because their layoffs were not announced or done all together does not mean people did not lose their jobs. They cherry-picked people from departments one by one. But you add them all up and it's several hundred. And East has had a dramatic drop I in patient beds from 800 to around 125. I know because I worked there for 30 years.

  5. I have obtained my 6 gallon badge for my donation of A Positive blood. I'm sorry to hear that my donation was nothing but a profit center for the Indiana Blood Center.

ADVERTISEMENT