Simon Property Beats Marginally - Analyst Blog
February 03 2012 - 8:45AM
Zacks
Simon Property Group
Inc. (SPG), a leading real estate investment trust (REIT),
reported fourth quarter 2011 FFO (funds from operations) of $678.9
million or $1.91 per share, compared to $638.7 million or $1.80 in
the year-earlier quarter. Fund from operations, a widely used
metric to gauge the performance of REITs, is obtained after adding
depreciation and amortization and other non-cash expenses to net
income.
The reported quarterly FFO
marginally exceeded the Zacks Consensus Estimate by a penny. Total
revenue during the reported quarter was $1,171.3 million compared
to $1,119.7 million in the year-ago period. The revenue figure
surpassed the Zacks Consensus Estimate of $1,128 million.
For full year 2011, Simon Property
reported FFO of $2,438.8 million or $6.89 per share, compared to
$1,770.5 million or $5.03 in 2010. The reported fiscal FFO exceeded
the Zacks Consensus Estimate by 2 cents. Total revenue during
fiscal 2011 increased to $4,306.4 million from $3,957.6 billion in
2010. The full year revenue exceeded the Zacks Consensus Estimate
of $4,183 million.
Occupancy in the regional malls and
premium outlet centers combined portfolio was 94.8% at quarter-end,
compared to 94.5% in the year-ago period. Comparable sales in the
combined portfolio increased to $536 per square foot, compared to
$484 in the prior-year quarter. Average rent per square foot in the
combined portfolio increased to $39.42 during fourth quarter 2011
from $37.77 in the year-ago period.
The company continued its active
development and redevelopment programs. Simon Property presently
has two new development projects under construction – Merrimack
Premium Outlets in Merrimack, New Hampshire – a 409,000 square foot
upscale outlet center scheduled to open on June 14, 2012; and
Tanger Outlets - Texas City – a 350,000 square foot upscale outlet
center in Texas City, Texas, scheduled to open in October 2012.
At the same time, Simon Property
continued renovation and expansion projects at 23 centers in
addition to the restoration of Opry Mills in Nashville, Tennessee,
which is scheduled to reopen on March 29, 2012. During the reported
quarter, Simon Property completed the 90,000 square foot expansion
of Ami Premium Outlets in Ibaraki Prefecture, Japan. The company
had a 40% stake in the project, which was 100% leased at the
opening.
During the quarter, Simon Property
also opened Johor Premium Outlets – the first Premium Outlet Center
of the company in Southeast Asia. Spanning 190,000 square feet of
gross leasable area featuring 80 stores, the property is
strategically located in Johor, Malaysia, in close proximity to
Senai Airport and the city center of Singapore. The project was
100% leased at opening.
Subsequent to the quarter-end,
Simon Property had the groundbreaking for Busan Premium Outlets – a
240,000 square foot upscale outlet center serving Southeastern
Korea. The company has a 50% ownership interest in the project,
which will be its third Premium Outlet Center in Korea.
During the quarter, Simon Property
exchanged its 50% ownership interests in six malls and one
community center with Macerich Co. (MAC) for its
50% ownership interests in five malls and one community center. The
transaction did not involve any cash exchange, other than the
customary net working capital adjustments. As a result of the
transaction, Simon owns 100% of Empire Mall, Lindale Mall, Mesa
Mall, Rushmore Mall, Southern Hills Mall and Empire East, while
Macerich fully owns Eastland Mall, Lake Square Mall, Northpark
Mall, South Ridge Mall, Southpark Mall, Valley Mall and Eastland
Convenience Center.
Simon Property also sold three
properties during the quarter, including Gwinnett Place, Factory
Merchants Branson, and Crystal River Mall. Simultaneously, the
company acquired an additional 25% ownership interest in Del Amo
Fashion Center, increasing its ownership stake to 50%.
During the reported quarter, Simon
Property entered into a new unsecured revolving credit facility
that increased its borrowing capacity to $4.0 billion. The new
credit facility is scheduled to mature on October 30, 2015, and has
a one-year extension option. The company also sold $1.2 billion
worth of senior unsecured notes during the quarter. Net proceeds
from the offering were used to partially repay the outstanding
debt.
At year-end 2011, the company had
approximately $798.7 million of cash on hand, compared to $796.7
billion in the year-earlier period. The company increased its
quarterly dividend by 5.6% to 95 cents per share. With strong
quarterly and fiscal results, Simon Property expects 2012 FFO in
the range of $7.20–$7.30 per share.
We maintain our ‘Neutral’
recommendation on the stock, which presently has a Zacks #3 Rank
translating into a short-term ‘Hold’ rating.
MACERICH CO (MAC): Free Stock Analysis Report
SIMON PROPERTY (SPG): Free Stock Analysis Report
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