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Simon boosts forecast as quarterly results exceed expectations

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Indianapolis-based Simon Property Group Inc., the largest U.S. shopping-mall owner, reported funds from operations that beat analyst estimates and raised its full-year forecast as income from rents rose. The company also boosted its dividend.

FFO, which gauges a property company’s ability to generate cash, was $606.2 million, or $1.71 a share, in the third quarter, the real estate investment trust said Tuesday morning in a prepared statement. Analysts expected $1.67 a share, the average of 19 estimates in a Bloomberg survey. A year earlier, FFO was $318.5 million, or 90 cents, including an expense of $185 million to buy back debt.

Simon is increasing rents and boosting occupancies as tenant sales rise and retailer demand for space grows. Nordstrom Inc.’s same-store sales jumped 11 percent in September from a year earlier. Saks Inc.’s climbed 9.3 percent and Macy’s Inc.’s gained 4.9 percent.

“They have an incredibly healthy and strong regional-mall portfolio,” Rich Moore, an analyst for RBC Capital Markets in Solon, Ohio, said before the results were announced. “Not only is it big, it’s very high quality.”

Occupancy at Simon’s U.S. properties rose to 93.9 percent from 93.8 percent a year ago. The average rent increased 3.4 percent, to $38.87 a square foot.

Sales at outlet malls also are helping Simon increase revenue as retailers and apparel companies grow in that part of the industry. The company bought Prime Outlets Acquisition Co. last year for $2.3 billion to expand that business.

Simon raised its FFO forecast for the year to $6.80 to $6.85 a share. That compares to a July projection of $6.65 to $6.73.

The REIT boosted its quarterly dividend to 90 cents a share, a 12.5-percent increase. It also declared a special stock dividend of 20 cents a share payable Dec. 30.

Simon's overall quarterly revenue fell from $829.4 million a year ago to $813 million this year, and profit fell from $101.8 million to $75.5 million.

The results were released before the start of regular U.S. trading. Simon shares rose 1.8 percent, to $122.87 each Monday.

The shares have advanced 24 percent this year, the third best performance in the Bloomberg REIT Index. The 129-member gauge has increased 1.1 percent in 2011.

Simon, the largest U.S. REIT by market value, owns or has stakes in more than 390 retail properties in North America, Europe and Asia.

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  • still need that tax?
    It appears that simon is doing well. GREAT, now do you still need that sales tax on the internet because you do not sell enough? seriously if everyone purchased watches on the net why stock them. My intent is not to upset but, i cant get anyone local to make a saddle for me - you get my point some things are just going to be purchased out of the sears catalogue ooops i mean internet.

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  1. How much you wanna bet, that 70% of the jobs created there (after construction) are minimum wage? And Harvey is correct, the vast majority of residents in this project will drive to their jobs, and to think otherwise, is like Harvey says, a pipe dream. Someone working at a restaurant or retail store will not be able to afford living there. What ever happened to people who wanted to build buildings, paying for it themselves? Not a fan of these tax deals.

  2. Uh, no GeorgeP. The project is supposed to bring on 1,000 jobs and those people along with the people that will be living in the new residential will be driving to their jobs. The walkable stuff is a pipe dream. Besides, walkable is defined as having all daily necessities within 1/2 mile. That's not the case here. Never will be.

  3. Brad is on to something there. The merger of the Formula E and IndyCar Series would give IndyCar access to International markets and Formula E access the Indianapolis 500, not to mention some other events in the USA. Maybe after 2016 but before the new Dallara is rolled out for 2018. This give IndyCar two more seasons to run the DW12 and Formula E to get charged up, pun intended. Then shock the racing world, pun intended, but making the 101st Indianapolis 500 a stellar, groundbreaking event: The first all-electric Indy 500, and use that platform to promote the future of the sport.

  4. No, HarveyF, the exact opposite. Greater density and closeness to retail and everyday necessities reduces traffic. When one has to drive miles for necessities, all those cars are on the roads for many miles. When reasonable density is built, low rise in this case, in the middle of a thriving retail area, one has to drive far less, actually reducing the number of cars on the road.

  5. The Indy Star announced today the appointment of a new Beverage Reporter! So instead of insightful reports on Indy pro sports and Indiana college teams, you now get to read stories about the 432nd new brewery open or some obscure Hoosier winery winning a county fair blue ribbon. Yep, that's the coverage we Star readers crave. Not.

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