Simon Property Boosts Forecast, Dividend, as FFO Climbs

Simon Property Group Inc., the largest U.S. shopping-mall owner, raised its quarterly dividend and full-year profit forecast after funds from operations increased more than analysts estimated.

The payout was raised to $1 a share from 95 cents, Simon said today in a statement. FFO, a measure of a property company’s ability to generate cash, will total $7.50 to $7.60 a share in 2012, the company predicted. That’s up from an estimate last month of $7.35 to $7.50.

Simon has increased rents as tenant revenue rises at the company’s outlet centers and regional malls. U.S. same-store sales excluding Wal-Mart Stores Inc. rose 4.1 percent in March from a year earlier, according to the International Council of Shopping Centers. Simon, an Indianapolis-based real estate investment trust, is also expanding overseas to increase growth. It bought a 28.7 percent stake in European shopping-center operator Klepierre SA for about $2 billion last month.

“This quarter, the clear kind of take-away is its international ambitions,” Craig Guttenplan, an analyst at New York-based CreditSights Inc., said in a telephone interview before earnings were announced. “The company is largely saturated in the U.S.”

First-quarter FFO climbed to $648.7 million, or $1.82 a share, from $570.6 million, or $1.61, a year earlier. That exceeds $1.68 a share, the average of 20 analyst estimates compiled by Bloomberg. Revenue climbed 9.7 percent to $1.12 billion.

Brazil, China

Simon and BR Malls Participacoes SA, based in Rio de Janeiro, said on April 9 that they formed a joint venture to develop outlet centers in Brazil. In March, the company agreed to develop an outlet mall in the Pudong area of Shanghai with Bailian Group, a retail-property operator in China. The Bailian partnership also allows the companies to build more projects in the country.

U.S. occupancy increased to 93.6 percent in the first quarter from 93 percent a year ago. Average rent per square foot rose 4.4 percent to $39.87 from $38.18. Tenant sales per square foot in the quarter rose 11 percent to $546 from $491.

The results were released before the start of regular U.S. trading. Simon fell 0.3 percent to $152.19 yesterday in New York trading. Its shares have advanced 36 percent in the past year, compared with a 6.2 percent gain in the Bloomberg REIT Index.

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