Simon Reports Higher FFOPosted: Updated:
Indianapolis-based Simon Property Group Inc. (NYSE: SPG) is reporting second quarter funds from operations of $766 million, compared to $689 million during the same period a year earlier. The shopping mall operator also says it is increasing its full-year guidance. July 29, 2013
INDIANAPOLIS, Ind. - Simon Property Group, Inc. (NYSE:SPG) today reported results for the quarter and six months ended June 30, 2013.
Results for the Quarter
-Funds from Operations ("FFO") was $766.3 million, or $2.11 per diluted share, as compared to $688.8 million, or $1.89 per diluted share, in the prior year period. The FFO increase on a per diluted share basis was 11.6%.
-Net income attributable to common stockholders was $339.9 million, or $1.10 per diluted share, as compared to $215.4 million, or $0.71 per diluted share, in the prior year period.
Results for the Six Months
-Funds from Operations ("FFO") was $1.508 billion, or $4.16 per diluted share, as compared to $1.337 billion, or $3.71 per diluted share, in the prior year period. The FFO increase on a per diluted share basis was 12.1%.
-Net income attributable to common stockholders was $623.1 million, or $2.01 per diluted share, as compared to $860.9 million, or $2.87 per diluted share, in the prior year period. Results for 2012 include primarily non-cash net gains from acquisitions and dispositions of $1.37 per diluted share.
"This was an excellent quarter for Simon Property Group, with strong financial and operational performance, the opening of two new Premium Outlet Centers, the groundbreaking for our second Premium Outlet in Canada, and the acquisition of a highly productive center," said David Simon, Chairman and CEO. "Our portfolio continued to deliver strong results in the quarter, with 5.9 percent growth in comparable property net operating income for our U.S. Malls and Premium Outlets. Based upon our results to date and expectations for the remainder of 2013, we are again increasing our 2013 guidance."
Today the Company announced that the Board of Directors declared a quarterly common stock dividend of $1.15 per share. The dividend is payable on August 30, 2013 to stockholders of record on August 16, 2013.
The Company also declared the quarterly dividend on its 8 3/8 percent Series J Cumulative Redeemable Preferred Stock (NYSE:SPGPrJ) of $1.046875 per share, payable on September 30, 2013 to stockholders of record on September 16, 2013.
Acquisition and Disposition Activity
The Company completed several transactions during the quarter:
-May 7th - Sold Laguna Hills Mall in Laguna Hills, California for $110 million.
-May 30th - Acquired an existing outlet shopping center in Woodburn, Oregon for $147 million. The 390,000 square foot center serving the Portland metropolitan area is home to 110 leading designer and name brand outlet stores and has been rebranded Woodburn Premium Outlets. The center is 99 percent occupied and generates sales in excess of $600 per square foot.
-June - Announced the signing of a definitive agreement to form a joint venture to invest in certain assets of McArthurGlen, the leader in upscale, European designer outlet centers. The Company also became a partner in McArthurGlen's property management and development companies.
Two new Premium Outlets opened during the quarter:
-Phoenix Premium Outlets opened on April 4th. The center serves the greater Phoenix and Scottsdale areas and is located in Chandler, Arizona on Interstate 10. Phase I of the project is 100% leased and is comprised of 360,000 square feet with 90 outlet stores featuring high-quality designer and name brands. The Company owns 100% of Phoenix Premium Outlets.
-Shisui Premium Outlets opened on April 19th. The property is located approximately 40 miles from the center of Tokyo, near Narita International Airport. Phase I of the project is 100% leased and is comprised of 235,000 square feet with 120 stores featuring a mix of international brands, Japanese brands and restaurants. The Company owns a 40% interest in this project, its ninth Premium Outlet Center in Japan.
Three new Premium Outlets are scheduled to open next month:
-August 1st - Toronto Premium Outlets in Halton Hills (Toronto), Canada is a 360,000 square foot center that will house over 100 high quality outlet stores. The center will be the Canadian entry point for many upscale, U.S. retailers and designer brands and is 98% leased. The Company owns a 50% interest in this project.
-August 22nd - St. Louis Premium Outlets in Chesterfield (St. Louis), Missouri is located on the south side of I-64/US Highway 40 east of the Daniel Boone Bridge. The center's first phase of 350,000 square feet with 85 stores is 100% leased. St. Louis Premium Outlets is a part of Chesterfield Blue Valley, a mixed-use development to include office space, hotel, restaurant and entertainment venues. The Company owns a 60% interest in the project.
-August 29th - Busan Premium Outlets in Busan, Korea is a 340,000 square foot center that will serve southeastern Korea, including the cities of Busan, Ulsan and Daegu, as well as local and overseas visitors. The center is 99% leased. The Company owns a 50% interest in this project, which will be its third Premium Outlet Center in Korea.
Construction commenced during the second quarter at Premium Outlets Montreal, located in the town of Mirabel, Quebec, 24 miles northwest of Montreal. The first phase of the planned 360,000 square foot center will open in October of 2014. The Company owns a 50% interest in this project, a joint venture with Calloway Real Estate Investment Trust and SmartCentres.
Redevelopment and expansion projects, including the addition of anchors and big box tenants, are underway at more than 40 properties in the U.S. and Asia. The Company's share of the cost of these projects is approximately $1 billion. During the second quarter of 2013, significant projects were completed at Dadeland Mall, Paju Premium Outlets, Seattle Premium Outlets and Sawgrass Mills.
On May 16th, Standard & Poor's Ratings Services raised its corporate credit ratings on Simon Property Group, Inc. and Simon Property Group, L.P. (the Company's majority-owned operating partnership subsidiary) to 'A' from 'A-'. Senior unsecured debt ratings were increased to 'A' from 'A-' and preferred stock ratings were increased to 'BBB+' from 'BBB'. The outlook is stable.
The Company has been active in the debt markets in 2013, closing or locking rates on 17 new loans totaling approximately $2.4 billion, of which SPG's share is $1.7 billion. The weighted average interest rate on these new loans is 2.96% and the weighted average term is 8.1 years.
Today the Company updated and raised its guidance for 2013, estimating that FFO will be within a range of $8.60 to $8.70 per diluted share for the year ending December 31, 2013, and net income will be within a range of $3.98 to $4.08 per diluted share. This represents an increase of $0.10 per diluted share for both the low and high end of the ranges provided on April 26, 2013.
The following table provides the reconciliation of the ranges of estimated diluted net income available to common stockholders per share to estimated diluted FFO per share.
The Company will provide streaming audio of its quarterly conference call at www.simon.com (Investors tab), www.earnings.com, and www.streetevents.com. To listen to the live call, please go to any of these websites at least fifteen minutes prior to the call to register, download and install any necessary audio software. The call will begin at 11:00 a.m. Eastern Time (New York time) today, July 29, 2013. An online replay will be available for approximately 90 days at www.simon.com, www.earnings.com, and www.streetevents.com. A fully searchable podcast of the conference call will also be availab