Simon Property Group, Inc (
a real estate investment trust (REIT), reported third quarter
2012 FFO (funds from operations) of $720.1 million or $1.99 per
share, compared to $606.2 million or $1.71 in the year-earlier
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The reported quarterly FFO well exceeded the Zacks Consensus
Estimate of $1.92. Total revenues during the reported quarter
increased to $1,228.6 million from $1,074.4 million in the
year-ago period. Total revenues during the reported quarter beat
the Zacks Consensus Estimate of $1,223 million.
Occupancy in the regional malls and premium outlet centers'
combined portfolio was 94.6% at quarter-end, compared to 93.8% in
the year-ago period. Comparable sales in the combined portfolio
increased to $562 per square foot, compared to $514 in the
prior-year quarter - an increase of 9.3%. Average rent per square
foot in the combined portfolio increased during third quarter
2012 to $40.33 from $38.84 in the year-ago period.
The company continued its active development and redevelopment
programs during the quarter. Simon Property expects construction
to begin shortly on the first outlet center in Brazil which is a
joint venture with BR Malls Participacoes S.A. Both parties hold
equal share in the joint venture project spanning 310,000 square
In addition, the company started construction work on the 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 September 2013.
Simon Property currently has an aggregate of 24 redevelopment and
expansion projects in the U.S. and one property in Japan .
Additionally, 40 new anchor and big box tenants are scheduled to
open in the fourth quarter of 2012 and 2013.
The company is also continuing its construction work on several
premium outlet centers across the globe. These included Shisui
Premium Outlets - a 230,000 square foot upscale outlet center in
Shisui (Chiba), Japan; Phoenix Premium Outlets - an upscale
outlet center in Chandler (Phoenix), Arizona; Toronto Premium
Outlets - a 360,000 square foot upscale outlet center in Halton
Hills, Canada; and Busan Premium Outlets - a 340,000 square foot
upscale outlet center in Busan, Korea.
Subsequent to the end of the quarter, Simon Property opened an
upscale outlet center in collaboration with
Tanger Factory Outlet Centers, Inc. (
spanning 350,000 square feet in Texas City, Texas. Both parties
hold equal ownership stake in the property.
Subsequent to the quarter-end, Simon Property completed the sale
of its marketable securities of 35.4 million shares of Capital
Shopping Centres Group PLC and 38.9 million shares of Capital
& Counties Properties PLC, generating proceeds of
approximately $327 million.
At quarter-end, the company had approximately $452.7 million in
cash and cash equivalents. The company increased its quarterly
dividend by 22.2% from the year-ago period to $1.10 per share.
With strong quarterly results, Simon Property also increased its
2012 FFO guidance to $7.80-$7.85 per share from its earlier
projections of $7.60-$7.70.
Simon Property currently retains a Zacks #1 Rank, which
translates into a short-term Strong Buy rating. We are also
maintaining our long-term Outperform recommendation on the stock.
One of its competitors,
The Macerich Company (
holds a Zacks #2 Rank, which translates into a short-term 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.