Simon Property Group Reports Fourth Quarter Results And Raises Quarterly Dividend PR Newswire INDIANAPOLIS, Jan. 31, 2014 INDIANAPOLIS, Jan.31, 2014 /PRNewswire/ --Simon Property Group, Inc. (NYSE: SPG) today reported results for the quarter and twelve months ended December 31, 2013. Results for the Quarter oFunds from Operations ("FFO") was $894.8 million, or $2.47 per diluted share, as compared to $827.4 million, or $2.29 per diluted share, in the prior year period. The FFO increase on a per diluted share basis was 7.9%. oNet income attributable to common stockholders was $381.6 million, or $1.23 per diluted share, as compared to $315.4 million, or $1.01 per diluted share, in the prior year period. Results for the Year oFunds from Operations ("FFO") was $3.206 billion, or $8.85 per diluted share, as compared to $2.885 billion, or $7.98 per diluted share, in the prior year period. The FFO increase on a per diluted share basis was 10.9%. oNet income attributable to common stockholders was $1.316 billion, or $4.24 per diluted share, as compared to $1.431 billion, or $4.72 per diluted share, in the prior year period. Results for 2012 include primarily non-cash net gains from acquisitions and dispositions of $1.41 per diluted share. "This was an excellent quarter and year for Simon Property Group, capped off by our twentieth anniversary as a public company in December. Over that 20-year period, we delivered a total return to shareholders of 1,915%," said David Simon, Chairman and CEO. "We produced strong financial and operating results in the fourth quarter, led by 5.5% growth in comparable property net operating income for our U.S. Malls and Premium Outlets. We also completed our acquisition of ownership interests in the European designer outlet business of McArthurGlen and opened significant redevelopments and expansions at several of our properties." U.S. Malls and Premium Outlets Operating Statistics As of December 31, % 2013 2012 Increase Occupancy^(1) 96.1% 95.3% + 80 basis points Total Sales per sq. ft. ^(2) $582 $568 2.5% Base Minimum Rent per sq. ft. ^(1) $42.34 $40.73 4.0% Releasing Spread per sq. ft. ^(1)(3) $8.94 $5.21 + $3.73 Releasing Spread (percentage change) ^(1)(3) 16.8% 10.8% + 600 basis points (1) Represents mall stores in Malls and all owned square footage in Premium Outlets. (2) Trailing 12-month sales per square foot for mall stores less than 10,000 square feet in Malls and all owned square footage in Premium Outlets. (3) Same space measure that compares opening and closing rates on individual spaces leased during trailing 12-month period. Dividends Today the Company announced that the Board of Directors declared a quarterly common stock dividend of $1.25 per share. This is an increase of $0.05 from the previous quarter, and a year over year increase of 8.7%. The dividend will be payable on February 28, 2014 to stockholders of record on February 14, 2014. The Company also declared the quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred Stock (NYSE:SPGPrJ) of $1.046875 per share, payable on March 31, 2014 to stockholders of record on March 17, 2014. Development Activity In early October, we opened The Shops at Nanuet, a 750,000 square foot open-air, state-of-the-art center located in Rockland County, New York. This project, which was 98% leased at opening, transformed the property from an enclosed mall to a main-street outdoor shopping destination providing customers with a wide variety of fashion and specialty retail, dining and entertainment opportunities. During the fourth quarter, the Company completed expansions at the following properties: oOrlando Premium Outlets – Vineland Ave (Orlando, Florida) – 105,000 square feet, 100% leased at opening oJohor Premium Outlets (Johor, Malaysia) – 90,000 square feet, 100% leased at opening oWalt Whitman Shops (Huntington Station, New York) – 74,000 square feet, 100% leased at opening We started construction on the transformational redevelopment and expansion of Roosevelt Field in Garden City, New York, during the fourth quarter, which will include the addition of Neiman Marcus. Redevelopment and expansion projects, including the addition of new anchors, are underway at 25 properties in the U.S., Asia and Mexico. The Company's share of the cost of these projects is approximately $1.1 billion. The Company's outlet business continues its robust expansion with four new Premium Outlets under construction: oCharlotte Premium Outlets in Charlotte, North Carolina is a 400,000 square foot center scheduled to open in July of 2014. The Company owns a 50% interest in this project. oTwin Cities Premium Outlets in Eagan, Minnesota is a 410,000 square foot center scheduled to open in August of 2014. The Company owns a 35% interest in this project. oMontreal Premium Outlets in Mirabel, Quebec, Canada is a 360,000 square foot center scheduled to open in October of 2014. The Company owns a 50% interest in this project. oVancouver Designer Outlet in Vancouver, British Columbia, Canada is a 242,000 square foot center scheduled to open in April of 2015. The Company owns a 45% interest in this project. Acquisitions and Dispositions As previously announced, the Company completed the closing of its acquisition of ownership interests in four existingMcArthurGlen Designer Outlets: Parndorf (Vienna, Austria), La Reggia (Naples, Italy), Noventa di Piave (Venice, Italy) and Roermond (Roermond, the Netherlands) during the fourth quarter. The Company also owns an interest in the existingAshford Designer Outlet in Kent, UK, Vancouver Designer Outlet (currentlyunder construction),and a 50% ownership in McArthurGlen's management and development company. McArthurGlen is a leader in upscale, European designer outlet centers. During the fourth quarter, the Company completed the sale of four assets – two community/lifestyle centers and two outlets. In January, 2014, we acquired our joint venture partners' remaining interest in Kravco Simon Investments, a portfolio of10 assets. This transaction included the remaining interest in King of Prussia Mall, bringing our ownership to 100%. Financing Activity On October 2, 2013, Simon Property Group, L.P., the Company's majority-owned operating partnership subsidiary, issued €750 million 7-year senior unsecured notes at 2.375%. This was the Company's first offering in the euro-denominated debt market. Net proceeds from the public offering were used to repay euro-denominated borrowings under the Company's unsecured revolving credit facility and for general corporate purposes. The Company was also active in the secured debt markets in 2013. During the fourth quarter, we closed or locked rates on 10 new loans totaling approximately $2.2 billion, of which SPG's share is $1.0 billion. The weighted average interest rate on these new loans is 4.00% and the weighted average term is 7.4 years. For the year, we closed or locked rates on 30 new loans totaling approximately $5.1 billion, of which SPG's share is $3.0 billion. The weighted average interest rate on these new loans is 3.31% and the weighted average term is 7.5 years. In January, 2014, Simon Property Group, L.P., completed a $1.2 billion senior unsecured notes offering with a weighted average duration of 7.5 years and an average coupon rate of 2.975%. The offering was comprised of $600 million of 2.20% five-year senior notes and $600 million of 3.75% ten-year senior notes. Net proceeds from the public offering were used to repay debt and for general corporate purposes. Spin Off In December, 2013,Simon Property Group announced a plan to spin off all of its strip center business and 44 smaller enclosed malls into an independent, publicly traded REIT. In conjunction with this transaction, we filed a Form 10 on December 24, 2013. We continue to expect the transaction will be effective in the second quarter of 2014. 2014 Guidance The Company estimates that FFO will be within a range of $9.50 to $9.60 per diluted share for the year ending December 31, 2014, and net income will be within a range of $4.55 to $4.65 per diluted share. The following table provides the reconciliation for the expected range of estimated net income available to common stockholders per diluted share to estimated FFO per diluted share: For the year ending December 31, 2014 Low High End End Estimated net income available to common stockholders per diluted $4.55 $4.65 share Depreciation and amortization including the Company's share of 4.95 4.95 unconsolidatedentities Estimated FFO per diluted share $9.50 $9.60 This guidance does not take into consideration any impact from the previously mentioned spin-off transaction. Conference Call Simon Property Group will hold a conference call to discuss our financial results today at 10:00 a.m. Eastern Time, Friday, January 31, 2014. Live streaming audio of the conference call will be accessible at investors.simon.com. An online replay will be available until February 14, 2014 at investors.simon.com. Supplemental Materials and Website The Company has provided supplemental information on its fourth quarter performance at investors.simon.com. This information has also been furnished to the SEC in a current report on Form 8-K. We routinely post important information online at our investor relations website, investors.simon.com. We use this website, press releases, SEC filings, quarterly conference calls, presentations and webcasts to disclose material, non-public information in accordance with Regulation FD. We encourage members of the investment community to monitor these distribution channels for material disclosures. Any information accessed through our website is not incorporated by reference into, and is not a part of, this document. Non-GAAP Financial Measures This press release includes FFO and comparable property net operating income growth, which are financial performance measures not defined by generally accepted accounting principles in the United States ("GAAP"). Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release and in the Company's supplemental information for the quarter. FFO and comparable property net operating income growth are financial performance measures widely used in the REIT industry. Our definitions of these non-GAAP measures may not be the same as similar measures reported by other REITs. Forward-Looking Statements Certain statements made in this press release may be deemed "forward‑looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward‑looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward‑looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to: the Company's ability to meet debt service requirements, the availability and terms of financing, changes in the Company's credit rating, changes in market rates of interest and foreign exchange rates for foreign currencies, changes in value of investments in foreign entities, the ability to hedge interest rate and currency risk, risks associated with the acquisition, development, expansion, leasing and management of properties, general risks related to retail real estate, the liquidity of real estate investments, environmental liabilities, international, national, regional and local economic conditions, changes in market rental rates, trends in the retail industry, relationships with anchor tenants, the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, risks relating to joint venture properties, costs of common area maintenance, and the intensely competitive market environment in the retail industry, risks related to international activities, insurance costs and coverage, terrorist activities, changes in economic and market conditions and maintenance of our status as a real estate investment trust. The Company discusses these and other risks and uncertainties under the heading "Risk Factors" in our annual and quarterly reports filed with the SEC. The Company undertakes no duty or obligation to update or revise these forward‑looking statements, whether as a result of new information, future developments, or otherwise unless required by law. About Simon Property Group Simon Property Group, Inc. (NYSE:SPG) is an S&P 100 company and a global leader in the retail real estate industry. The Company currently owns or has an interest in more than 325 retail real estate properties in North America, Asia and Europe comprising approximately 243 million square feet. We are headquartered in Indianapolis, Indiana and employ approximately 5,500 people in the U.S. For more information, visit www.simon.com. Simon Property Group, Inc. and Subsidiaries Unaudited Consolidated Statements of Operations (Dollars in thousands, except per share amounts) For the Three Months For the Twelve Months Ended December 31, Ended December 31, 2013 2012 2013 2012 REVENUE: Minimum rent $ 850,082 $ 808,533 $ 3,201,958 $ 3,015,866 Overage rent 89,015 85,449 223,473 195,726 Tenant reimbursements 383,072 361,006 1,442,907 1,340,307 Management fees and other 31,816 35,438 126,972 128,366 revenues Other income 62,275 54,005 174,828 199,819 Total revenue 1,416,260 1,344,431 5,170,138 4,880,084 EXPENSES: Property operating 121,039 116,619 475,133 469,755 Depreciation and 329,183 350,353 1,290,528 1,257,569 amortization Real estate taxes 112,640 108,094 444,899 419,267 Repairs and maintenance 36,224 37,306 120,803 116,168 Advertising and promotion 44,866 41,028 126,210 118,790 Provision for credit 3,531 7,538 7,737 12,809 losses Home and regional office 34,911 28,907 140,931 123,926 costs General and administrative 15,327 14,358 59,803 57,144 Marketable and non-marketable securities charges and realized gains, net - (6,426) - (6,426) Other 25,993 32,056 88,405 90,482 Total operating expenses 723,714 729,833 2,754,449 2,659,484 OPERATING INCOME 692,546 614,598 2,415,689 2,220,600 Interest expense (287,657) (291,492) (1,137,139) (1,127,025) Income and other taxes (9,790) (6,008) (39,734) (15,880) Income from unconsolidated 46,596 35,294 205,259 131,907 entities Gain upon acquisition of controlling interests, sale or disposal of assets and interests in unconsolidated entities, and impairment charge on investment in unconsolidated entities, 7,609 18,104 107,515 510,030 ^(A) net CONSOLIDATED NET INCOME 449,304 370,496 1,551,590 1,719,632 Net income attributable to 66,915 54,279 231,949 285,136 noncontrolling interests Preferred dividends 834 834 3,337 3,337 NET INCOME ATTRIBUTABLE TO $ 381,555 $ 315,383 $ 1,316,304 $ 1,431,159 COMMON STOCKHOLDERS BASIC EARNINGS PER COMMON SHARE: Net income attributable to $ 1.23 $ 1.01 $ 4.24 $ 4.72 common stockholders DILUTED EARNINGS PER COMMON SHARE: Net income attributable to $ 1.23 $ 1.01 $ 4.24 $ 4.72 common stockholders Simon Property Group, Inc. and Subsidiaries Unaudited Consolidated Balance Sheets (Dollars in thousands, except share amounts) December 31, December 31, 2013 2012 ASSETS: Investment properties at cost $ 35,126,344 $ 34,252,521 Less - accumulated depreciation 10,067,743 9,068,388 25,058,601 25,184,133 Cash and cash equivalents 1,716,863 1,184,518 Tenant receivables and accrued revenue, net 581,482 521,301 Investment in unconsolidated entities, at equity 2,433,399 2,108,966 Investment in Klepierre, at equity 2,014,415 2,016,954 Deferred costs and other assets 1,519,814 1,570,734 Total assets $ 33,324,574 $ 32,586,606 LIABILITIES: Mortgages and unsecured indebtedness $ 23,588,531 $ 23,113,007 Accounts payable, accrued expenses, intangibles, and 1,374,113 1,374,172 deferred revenues Cash distributions and losses in partnerships and 1,091,591 724,744 joint ventures, at equity Other liabilities 257,222 303,588 Total liabilities 26,311,457 25,515,511 Commitments and contingencies Limited partners' preferred interest in the Operating Partnership and noncontrolling redeemable interests in properties 190,485 178,006 EQUITY: Stockholders' Equity Capital stock (850,000,000 total shares authorized, $ 0.0001 par value, 238,000,000 shares of excess common stock, 100,000,000 authorized shares of preferred stock): Series J 8 3/8% cumulative redeemable preferred stock, 1,000,000 shares authorized, 796,948 issued and outstanding with a liquidation 44,390 44,719 value of $ 39,847 Common stock, $ 0.0001 par value, 511,990,000 shares authorized, 314,251,245 and 313,658,419 issued and outstanding, respectively 31 31 Class B common stock, $ 0.0001 par value, 10,000 shares authorized, 8,000 issued and outstanding - - Capital in excess of par value 9,217,363 9,175,724 Accumulated deficit (3,218,686) (3,083,190) Accumulated other comprehensive loss (75,795) (90,900) Common stock held in treasury at cost, 3,650,680 and (117,897) (135,781) 3,762,595 shares, respectively Total stockholders' equity 5,849,406 5,910,603 Noncontrolling interests 973,226 982,486 Total equity 6,822,632 6,893,089 Total liabilities and equity $ 33,324,574 $ 32,586,606 Simon Property Group, Inc. and Subsidiaries Unaudited Joint Venture Statements of Operations (Dollars in thousands) For the Three Months For the Year Ended December 31, Ended December 31, 2013 2012 2013 2012 Revenue: Minimum rent $ 465,138 $ 395,853 $ 1,666,886 $ 1,487,554 Overage rent 52,207 47,987 180,772 176,609 Tenant reimbursements 196,313 182,866 765,357 691,564 Other income 77,599 50,012 200,104 171,698 Total revenue 791,257 676,718 2,813,119 2,527,425 Operating Expenses: Property operating 133,991 125,375 498,485 477,338 Depreciation and 138,474 132,803 528,317 508,083 amortization Real estate taxes 52,515 46,121 212,667 178,739 Repairs and maintenance 20,960 19,894 69,116 65,163 Advertising and 18,175 15,575 62,339 55,175 promotion (Recovery of) provision (485) 2,071 1,287 1,824 for credit losses Other 45,986 42,376 156,115 170,510 Total operating 409,616 384,215 1,528,326 1,456,832 expenses Operating Income 381,641 292,503 1,284,793 1,070,593 Interest expense (241,331) (147,818) (694,904) (599,400) Income from Continuing 140,310 144,685 589,889 471,193 Operations Gain (loss) from operations of discontinued 385 457 46 (20,311) joint venture interests Gain (loss) on disposal of discontinued operations, 26,228 (450) 51,164 (5,354) net Net Income $ 166,923 $ 144,692 $ 641,099 $ 445,528 Third-party investors' $ 89,782 $ 76,823 $ 353,708 $ 239,931 share of net income Our share of net income 77,141 67,869 287,391 205,597 Amortization of Excess (27,460) (28,341) (102,875) (83,400) Investment ^(B) Our share of loss on sale or disposal of assets and interests in unconsolidated entities, - - - 9,245 net Income from Unconsolidated $ 49,681 $ 39,528 $ 184,516 $ 131,442 Entities ^(C) Note: The above financial presentation does not include any information related to our investment in Klepierre S.A. ("Klepierre"). For additional information, see footnote C. Simon Property Group, Inc. and Subsidiaries Unaudited Joint Venture Balance Sheets (Dollars in thousands) BALANCE SHEETS December 31, December 31, 2013 2012 Assets: Investment properties, at cost $ 15,824,689 $ 14,607,291 Less - accumulated depreciation 5,294,578 4,926,511 10,530,111 9,680,780 Cash and cash equivalents 792,751 619,546 Tenant receivables and accrued revenue, net 310,320 252,774 Investment in unconsolidated entities, at equity 38,352 39,589 Deferred costs and other assets 586,622 438,399 Total assets $ 12,258,156 $ 11,031,088 Liabilities and Partners' Deficit: Mortgages $ 13,024,257 $ 11,584,863 Accounts payable, accrued expenses, intangibles, 849,107 672,483 and deferred revenues Other liabilities 514,822 447,132 Total liabilities 14,388,186 12,704,478 Preferred units 67,450 67,450 Partners' deficit (2,197,480) (1,740,840) Total liabilities and partners' deficit $ 12,258,156 $ 11,031,088 Our Share of: Partners' deficit $ (717,776) $ (799,911) Add: Excess Investment ^(B) 2,059,584 2,184,133 Our net Investment in Joint Ventures $ 1,341,808 $ 1,384,222 Note: The above financial presentation does not include any information related to our investment in Klepierre. For additional information, see footnote C attached hereto. Simon Property Group, Inc. and Subsidiaries Unaudited Reconciliation of Non-GAAP Financial Measures ^(D) (Amounts in thousands, except per share amounts) Reconciliation of Consolidated Net Income to FFO For the Three Months For the Twelve Months Ended December 31, Ended December 31, 2013 2012 2013 2012 Consolidated Net Income ^(E) $ 449,304 $ 370,496 $ $ 1,551,590 1,719,632 Adjustments to Arrive at FFO: Depreciation and amortization from consolidated properties 324,478 346,594 1,273,646 1,242,741 Our share of depreciation and amortization from unconsolidated entities, 134,768 134,692 511,200 456,011 including Klepierre Gain upon acquisition of controlling interests, sale or disposal of assets and interests in unconsolidated entities, and impairment charge on investment in unconsolidated (7,609) (18,104) (107,515) (510,030) entities, net Net income attributable to noncontrolling interest holders in properties (2,474) (2,092) (8,990) (8,520) Noncontrolling interests portion of depreciation and (2,391) (2,831) (8,986) (9,667) amortization Preferred distributions and (1,313) (1,313) (5,252) (5,252) dividends FFO of the Operating $ 894,763 $ 827,442 $ $ Partnership 3,205,693 2,884,915 Diluted Net Income Per Share to Diluted FFO Per Share Reconciliation: Diluted net income per share $ $ $ $ 1.23 1.01 4.24 4.72 Depreciation and amortization from consolidated properties and our share of depreciation and amortization from unconsolidated entities, including Klepierre, net of noncontrolling interests portion of 1.26 1.33 4.91 4.67 depreciation and amortization Gain upon acquisition of controlling interests, sale or disposal of assets and interests in unconsolidated entities, and impairment charge on investment in unconsolidated (0.02) (0.05) (0.30) (1.41) entities, net Diluted FFO per share $ $ $ $ 2.47 2.29 8.85 7.98 Details for per share calculations: FFO of the Operating $ 894,763 $ 827,442 $ $ Partnership 3,205,693 2,884,915 Diluted FFO allocable to (128,419) (119,633) (460,923) (464,567) unitholders Diluted FFO allocable to $ 766,344 $ 707,809 $ $ common stockholders 2,744,770 2,420,348 Basic weighted average shares 310,434 309,417 310,255 303,137 outstanding Adjustments for dilution calculation: Effect of stock options - 1 - 1 Diluted weighted average 310,434 309,418 310,255 303,138 shares outstanding Weighted average limited 52,021 52,297 52,101 58,186 partnership units outstanding Diluted weighted average 362,455 361,715 362,356 361,324 shares and units outstanding Basic and Diluted FFO per $ $ $ $ Share 2.47 2.29 8.85 7.98 Percent Change 7.9% 10.9% Simon Property Group, Inc. and Subsidiaries Footnotes to Unaudited Reconciliation of Non-GAAP Financial Measures Notes: 2012 primarily represents non-cash gains resulting from our (A) acquisition/disposition activity and the remeasurement of our previously held interest to fair value for those properties in which we now have a controlling interest. Excess investment represents the unamortized difference of our (B) investment over equity in the underlying net assets of the related partnerships and joint ventures shown therein. The Company generally amortizes excess investment over the life of the related properties. The Unaudited Joint Venture Statements of Operations do not include any operations or our share of net income or excess investment amortization related to our investment in Klepierre. Amounts included in Footnotes E (C) below exclude our share of related activity for our investment in Klepierre. For further information, reference should be made to financial information in Klepierre's public filings and additional discussion and analysis in our Form 10-K. This report contains measures of financial or operating performance that are not specifically defined by GAAP, including FFO and FFO per share. FFO is a performance measure that is standard in the REIT business. We believe FFO provides investors with additional information concerning (D) our operating performance and a basis to compare our performance with those of other REITs. We also use these measures internally to monitor the operating performance of our portfolio. Our computation of these non-GAAP measures may not be the same as similar measures reported by other REITs. We determine FFO based upon the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT"). We determine FFO to be our share of consolidated net income computed in accordance with GAAP, excluding real estate-related depreciation and amortization, excluding gains and losses from extraordinary items, excluding gains and losses from the sales or disposals of, or any impairment charges related to, previously depreciated retail operating properties, plus the allocable portion of FFO of unconsolidated joint ventures based upon economic ownership interest, and all determined on a consistent basis in accordance with GAAP. We have adopted NAREIT's clarification of the definition of FFO that requires it to include the effects of nonrecurring items not classified as extraordinary, cumulative effect of accounting changes, or a gain or loss resulting from the sale or disposal of, or any impairment charges relating to, previously depreciated retail operating properties. We include in FFO gains and losses realized from the sale of land, outlot buildings, marketable and non-marketable securities, and investment holdings of non-retail real estate. However, you should understand that FFO does not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income determined in accordance with GAAP as a measure of operating performance, and is not an alternative to cash flows as a measure of liquidity. (E) Includes our share of: Gains on land sales of $2.2 million and $7.9 million for the three - months ended December 31, 2013 and 2012, respectively, and $7.6 million and $19.6 million for the twelve months ended December 31, 2013 and 2012, respectively Straight-line adjustments to minimum rent of $18.1 million and $12.6 - million for the three months ended December 31, 2013 and 2012, respectively, and $57.8 million and $44.3 million for the twelve months ended December 31, 2013 and 2012, respectively Amortization of fair market value of leases from acquisitions of $5.8 - million and $4.8 million for the three months ended December 31, 2013 and 2012, and $27.7 million and $21.0 million for the twelve months ended December 31, 2013 and 2012, respectively Debt premium amortization of $9.6 million and $12.1 million for the - three months ended December 31, 2013 and 2012, respectively, and $41.9 million and $41.8 million for the twelve months ended December 31, 2013 and 2012, respectively SOURCE Simon Property Group, Inc. Website: http://www.simon.com Contact: Liz Zale, 212.745.9623, Investors, or Les Morris, 317.263.7711, Media
Simon Property Group Reports Fourth Quarter Results And Raises Quarterly Dividend
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