Simon Property (SPG) Up on Q1 FFO Beat, Outlook & Dividend Raise

Shares of Simon Property Group, Inc. SPG have been up more than 2% during today’s pre-market session on the NYSE today after this retail REIT behemoth came up with better-than-expected first-quarter funds from operations (FFO) per share yesterday. SPG also increased its 2024 FFO per share outlook and raised its dividend.

Simon Property's first-quarter 2024 FFO per share of $3.56 surpassed the Zacks Consensus Estimate of $2.80. Also, the figure increased from $2.74 reported in the year-ago period.

Results reflected better-than-anticipated revenues, backed by a rise in the base rent per square foot and occupancy levels. However, higher interest expenses partly offset the upsides. Simon Property experienced a gain of 81 cents per share from the sale of its remaining ownership stake in Authentic Brands Group.

Simon Property generated revenues of $1.44 billion in the quarter, which surpassed the Zacks Consensus Estimate of $1.41 billion. The reported figure increased 6.8% year over year.

According to David Simon, the chairman, chief executive officer and president of Simon Property Group, "Leasing momentum and cash flow growth continued. We successfully sold our remaining investment in Authentic Brands Group, generating total gross proceeds of $1.45 billion, including the sale of a portion of our interest in the fourth quarter of 2023.”

Behind the Headlines

SPG reported revenues from lease income of nearly $1.30 billion, 4.4% higher than the prior-year period’s figure. Our estimate was pegged at $1.28 billion.

As of Mar 31, 2024, the occupancy for the U.S. Malls and Premium Outlets portfolio came in at 95.5%, up 110 basis points from 94.4% as of Mar 31, 2023. We projected the metric to be 95.4%.

The base minimum rent per square foot for the U.S. Malls and Premium Outlets portfolio was $57.53 as of Mar 31, 2024, rising from $55.84 as of Mar 31, 2023, reflecting an increase of 3%. Our estimate was pegged at $56.56.

The domestic property net operating income (NOI) increased 3.7% year over year, and the portfolio NOI ascended 3.9%.

Moreover, quarterly interest expenses of $230.6 million marked an increase of 15.6% year over year. Our estimate was pegged at $213.7 billion.

Balance Sheet Position

Simon Property exited the first quarter of 2024 with $11.2 billion of liquidity. This comprised $3.1 billion of cash in hand, including its share of joint-venture cash and $8.1 billion of available capacity under the company’s revolving credit facilities.

Outlook

For 2024, Simon Property now projects FFO per share in the range of $12.75- $12.90, up from the $11.85-$12.10 range guided earlier. This is ahead of the Zacks Consensus Estimate of $12.06.

Dividend Update

Concurrent with its first-quarter earnings release, Simon Property announced a quarterly common stock dividend of $2.00 for the second quarter of 2024, marking a 2.6% hike from the prior quarter and 8.1% year over year. The dividend will be paid out on Jun 28 to shareholders of record as of Jun 7.

Currently, SPG carries a Zacks Rank #4 (Sell).

Simon Property Group, Inc. Price, Consensus and EPS Surprise

Simon Property Group, Inc. Price, Consensus and EPS Surprise

Simon Property Group, Inc. price-consensus-eps-surprise-chart | Simon Property Group, Inc. Quote

Performance of Other Retail REITs

Kimco Realty Corp. KIM reported a first-quarter 2024 FFO per share of 39 cents, which beat the Zacks Consensus Estimate of 38 cents. The figure was in line with the year-ago quarter’s tally.

Though Kimco reported growth in revenues, a rise in interest expenses acted as a dampener. This retail REIT clocked in revenues of $503.8 million, which topped the consensus mark of $468.8 million. Moreover, the figure improved 13.7% year over year. Kimco presently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Regency Centers Corporation REG reported first-quarter 2024 NAREIT FFO per share of $1.08, which outpaced the Zacks Consensus Estimate of $1.04. The figure remained unchanged from the prior-year quarter. Total revenues of $363.9 million increased 14.4% from the year-ago period. However, the figure lagged the Zacks Consensus Estimate of $370 million.

The results of Regency Centers reflect healthy leasing activity and a year-over-year improvement in the base rent. However, high interest expenses during the quarter acted as a dampener. The company also revised its 2024 outlook. Regency Centers currently has a Zacks Rank #3.

The Macerich Company MAC reported an FFO per share, excluding financing expenses in relation to Chandler Freehold, of 31 cents, which missed the Zacks Consensus Estimate of 39 cents. Moreover, the figure declined 22.5% from the year-ago quarter’s 40 cents.

The results reflected a year-over-year fall in quarterly revenues. Macerich also experienced a decline in same-center net operating income, including lease termination income, from the prior-year period. Kimco presently has a Zacks Rank of 3.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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

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