Simon Property Cuts Outlook on Spin-off - Analyst Blog

By
A A A

Simon Property Group Inc. ( SPG ) has cut its outlook for full-year 2014 on the Washington Prime Group Inc. ( WPG ) spin-off. The company now expects its full-year 2014 FFO (Funds from Operations) to come in the range of $8.96 - $9.06, as against the prior range of $9.60 - $9.70 (as of Apr 22, 2014).

This revision incorporates the adverse impact of 54 cents per share from the spin-off of Washington Prime properties as well as 10 cents per share transaction costs associated with this spin-off. For the second quarter, the company expects FFO per share to be around $2.10-$2.12, reflecting the spin-off and it includes roughly 10 cents of spin-off related transaction expenses.     

While the spin-off move (effective May 28) comes with an upfront cost for Simon Property, we believe that the long-term benefits of this decision are quite solid. Simon Property can now increase utilization of resources for expanding its global portfolio of larger malls, mills and premium outlets and effectively leverage on the improving spending habits of wealthier customers with the economy showing signs of recovery.

Riding on the growth trajectory, this retail real estate invest trust came up with a solid operating performance during first-quarter 2014, with FFO of $2.38 per share, 14 cents ahead of the Zacks Consensus Estimate and 33 cents above the year-ago quarter figure.

The 16.1% year-over-year improvement in quarterly FFO per share was primarily driven by an increase in revenues and occupancy rate. The company also hiked its quarterly dividend by 4% to $1.30 per share from $1.25 paid in the prior quarter.

Simon currently holds a Zacks Rank #3 (Hold). Investors interested in the retail REIT industry may consider stocks like Acadia Realty Trust ( AKR ) and General Growth Properties, Inc ( GGP ). Both the stocks sport a Zacks Rank #2 (Buy).

Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation and amortization and other non-cash expenses to net income.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SIMON PROPERTY (SPG): Free Stock Analysis Report

GENL GRWTH PPTY (GGP): Free Stock Analysis Report

ACADIA RLTY TR (AKR): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: SPG , GGP , AKR , WPG

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

How to Save Money at Bars
How to Save Money at Bars           

Stocks

Referenced

Most Active by Volume

44,820,899
  • $75.19 ▲ 0.28%
43,744,171
  • $3.44 ▼ 0.29%
42,340,022
  • $97.671 ▲ 0.66%
34,178,145
  • $17.62 ▼ 1.23%
34,028,998
  • $15.59 ▼ 0.19%
32,055,708
  • $21.23 ▼ 2.41%
31,539,235
  • $3.76 ▲ 0.80%
30,434,619
    $34.25 unch
As of 7/25/2014, 04:03 PM