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Simon ups dividend after results top analysts' expectations

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Simon Property Group Inc.reported a 12-percent increase in third-quarter funds from operations as retailer demand for space in outlet centers climbed.

FFO, which gauges a company’s ability to generate cash, rose to $803 million, or $2.21 a share, from $720 million, or $1.99, a year earlier, the Indianapolis-based real estate investment trust said Friday in a prepared statement.

The average of 22 analyst estimates was $2.16 a share, according to data compiled by Bloomberg. Simon declared a $1.20 per share dividend, a 5-cent boost from the previous quarter and a 9.1 percent year-over-year increase..

Simon is benefiting as retailers seek space in outlet centers, where brand-name items are sold at a discount. Rents and occupancies also are increasing at regional malls, where tenants are competing for limited space.

Simon is renovating and expanding its properties and developing new outlet centers to boost growth, and has stakes in Paris-based Klepierre SA and McArthurGlen Group, Europe’s biggest outlet-center operator.

“The existing portfolio, whether it’s the malls or the outlet centers, will see strong rental growth because there’s so much demand for space of that quality,” Rich Moore, an analyst at RBC Capital Markets in Solon, Ohio, said before earnings were announced. “They have myriad ways to make money.”

Domestic and international retailers are adding locations and expanding new store concepts, providing a boost to their U.S. landlords, Nathan Isbee and Jennifer Hummert, analysts at Stifel Nicolaus & Co., wrote in a report Thursday.

Simon’s revenue increased about 6 percent from a year earlier to $1.3 billion. Occupancy at the company’s U.S. properties climbed to 95.5 percent from 94.6 percent.

Simon’s 12-month-trailing tenant sales per square foot rose 3 percent, to $579 a square foot. The base minimum rent climbed 3.5 percent, to $41.73, from $40.33 in the third quarter.

The company raised its estimate of FFO for the year to a range of $8.72 to $8.78 a share, up from a July forecast of $8.60 to $8.70 a share. The average of 24 analyst estimates is $8.75.

Earnings were announced before U.S. markets opened. Simon rose 1.1 percent to $160.50 Thursday. The shares have gained 1.5 percent this year, compared with a 6.6 percent advance for the Bloomberg Real Estate Investment Trust Index.
 

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  1. The east side does have potential...and I have always thought Washington Scare should become an outlet mall. Anyone remember how popular Eastgate was? Well, Indy has no outlet malls, we have to go to Edinburgh for the deep discounts and I don't understand why. Jim is right. We need a few good eastsiders interested in actually making some noise and trying to change the commerce, culture and stereotypes of the East side. Irvington is very progressive and making great strides, why can't the far east side ride on their coat tails to make some changes?

  2. Boston.com has an article from 2010 where they talk about how Interactions moved to Massachusetts in the year prior. http://www.boston.com/business/technology/innoeco/2010/07/interactions_banks_63_million.html The article includes a link back to that Inside Indiana Business press release I linked to earlier, snarkily noting, "Guess this 2006 plan to create 200-plus new jobs in Indiana didn't exactly work out."

  3. I live on the east side and I have read all your comments. a local paper just did an article on Washington square mall with just as many comments and concerns. I am not sure if they are still around, but there was an east side coalition with good intentions to do good things on the east side. And there is a facebook post that called my eastside indy with many old members of the eastside who voice concerns about the east side of the city. We need to come together and not just complain and moan, but come up with actual concrete solutions, because what Dal said is very very true- the eastside could be a goldmine in the right hands. But if anyone is going damn, and change things, it is us eastside residents

  4. Please go back re-read your economics text book and the fine print on the February 2014 CBO report. A minimum wage increase has never resulted in a net job loss...

  5. The GOP at the Statehouse is more interested in PR to keep their majority, than using it to get anything good actually done. The State continues its downward spiral.

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