Simon Reports Higher FFO, Raises Dividend as Rents Climb

Simon Property Group Inc. (SPG), the largest U.S. shopping-mall owner, raised its quarterly dividend and its forecast for full-year funds from operations as its tenants benefit from an increase in consumer spending.

FFO, which gauges a property company’s ability to generate cash, climbed in the third quarter to $720.1 million, or $1.99 a share, from $606.2 million, or $1.71, a year earlier, the real estate investment trust said today in a statement. The average estimate of 21 analysts in a Bloomberg survey was $1.92 a share.

Demand for space at regional malls is rising, helping to boost revenue for Indianapolis-based Simon. U.S. retail sales advanced 1.1 percent in September following a revised 1.2 percent increase in August, according to data from the Commerce Department. The company also is benefiting from its outlet centers, said Craig Guttenplan, a REIT analyst at CreditSights Inc. in London. Those properties are a top area of expansion.

“Outlet malls continue to do well,” Guttenplan said in a telephone interview before Simon announced its earnings. “Regional malls are slightly positive and outlets are more positive.”

The company boosted its quarterly dividend to $1.10 a share from $1.05. It estimates FFO for the full year of $7.80 to $7.85 a share, up from its previous forecast of $7.60 to $7.70.

Simon also said it sold its investment this week in U.K. property companies Capital Shopping Centres Group Plc and Capital & Counties Properties Plc (CAPC) for proceeds of $327 million.

Revenue for the third quarter increased 14 percent to $1.23 billion. U.S. occupancy climbed to 94.6 percent from 93.8 percent. The base minimum rent in the quarter was $40.33 a square foot, up from $38.84 a year earlier. Tenant sales per square foot rose 9.3 percent to $562.

The results were released before the start of regular U.S. trading. Simon rose 0.1 percent to $151.17 yesterday. Its shares have advanced 17 percent this year, compared with a 12 percent gain in the Bloomberg REIT (BBREIT) Index.

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net

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