Simon Property Beats Estimates as Shopper Spending Rises

Simon Property Group Inc. (SPG), the largest U.S. mall owner, reported funds from operations that beat analysts’ estimates amid increased shopper spending at its regional retail centers and outlet malls.

FFO, which gauges a property company’s ability to generate cash, climbed in the fourth quarter to $827.4 million, or $2.29 a share, from $678.9 million, or $1.91, a year earlier, the real estate investment trust said today in a statement. The average estimate of 19 analysts in a Bloomberg survey was $2.17 a share.

Demand for space at regional malls is rising, helping to boost revenue at Indianapolis-based Simon. U.S. retail sales excluding autos advanced 4.1 percent in December from a year earlier, according to data from the Commerce Department. Simon is the U.S.’s biggest owner of both regional malls and outlet centers, where retailers sell at a discount.

“They’re doing very well,” Rich Moore, an analyst at RBC Capital Markets in Solon, Ohio, said in a telephone interview before earnings were announced. “The notion that there are bargains to be had at the outlet center is enticing to people.”

Simon raised its quarterly dividend to $1.15 a share from $1.10, the sixth straight increase.

Fourth-quarter revenue rose 15 percent from a year earlier to $1.34 billion. Occupancies at Simon’s U.S. properties climbed to 95.3 percent from 94.6 percent. The base minimum rent in the quarter was $40.73 a square foot, up from $39.40 a year earlier. Tenant sales increased 6.6 percent to $568 a square foot.

The company estimates that FFO for the year will be $8.40 to $8.50 a share. The 19 estimates of analysts in a Bloomberg survey is $8.42. For 2012, FFO was $7.98 a share.

Fourth-quarter results were announced before the start of regular U.S. trading. Simon rose 1.1 percent to $161.97 on Feb. 1. Its shares have advanced 19 percent in the past 12 months, compared with an 11 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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