Simon Property Group Inc.
), a leading real estate investment trust (REIT), reported second
quarter 2012 FFO (funds from operations) of $688.8 million or $1.89
per share, compared to $583.0 million or $1.65 in the year-earlier
quarter. Funds from operations, 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.
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SIMON PROPERTY (SPG): Free Stock Analysis
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The reported quarterly FFO per share well exceeded the Zacks
Consensus Estimate of $1.80. Total revenue during the reported
quarter increased to $1,188.1 million from $1,040.9 million in the
year-ago period. Total revenue during the reported quarter beat the
Zacks Consensus Estimate of $1,128 million.
Occupancy in the regional malls and premium outlet centers combined
portfolio was 94.2% at quarter-end, compared to 93.6% in the
year-ago period. Comparable sales in the combined portfolio
increased to $554 per square foot, compared to $504 in the
prior-year quarter - an increase of 9.9%. Average rent per square
foot in the combined portfolio increased during second quarter 2012
to $39.99 from $38.57 in the year-ago period.
The company continued its active development and redevelopment
programs during the quarter. Simon Property opened Phase I of the
'Merrimack Premium Outlets' spanning 410,000 square feet of retail
space in Merrimack, New Hampshire, during second quarter 2012.
In addition, the company started construction work on 'St. Louis
Premium Outlet' in Chesterfield, Missouri. Simon Property owns a
60% ownership stake in this joint venture project. The first phase
of the project would include 85 stores totaling 350,000 square feet
and is expected to open in the fall of 2013. Simon Property
currently has an aggregate of 25 redevelopment and expansion
projects in the U.S. and two properties in Japan.
The company is also continuing its construction work on several
premium outlet centers across the globe. These included 'Shisui
Premium Outlets' - a 234,000 square foot upscale outlet center in
Shisui (Chiba), Japan; 'Phoenix Premium Outlets' - an upscale
outlet center in Chandler (Phoenix), Arizona; 'Toronto Premium
Outlets' - a 358,000 square foot upscale outlet center in Halton
Hills, Canada; and 'Busan Premium Outlets' - a 244,000 square foot
upscale outlet center in Busan, Korea.
During the reported quarter, Simon Property obtained a new $2.0
billion unsecured revolving credit facility that complemented its
existing $4.0 billion revolving credit facility. The borrowing
capacity of the new facility could be further increased to $2.5
billion and is scheduled to mature on June 30, 2016 with a one-year
extension option. The new facility bears an interest rate of LIBOR
plus 100 basis points.
At quarter-end, the company had approximately $638.5 million in
cash and cash equivalents. The company increased its quarterly
dividend by 31.3% from the year-ago period to $1.05 per share. With
strong quarterly results, Simon Property also increased its 2012
FFO guidance to $7.60 - $7.70 per share from its earlier
projections of $7.50 - $7.60.
We currently maintain our Neutral recommendation on the stock,
which presently has a Zacks #2 Rank translating into a short-term
Buy rating. We also have a Neutral recommendation and a Zacks #2
), one of the competitors of Simon Property.