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.”
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.
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