* Q1 FFO/shr $1.82 vs Street view $1.68
* Tenant sales up 11.2 pct
* Company raises full-year forecast, dividend
* Shares up
By Ilaina Jonas
April 27 Simon Property Group Inc raised
its full-year forecast after posting better-than-expected
quarterly earnings on Friday, thanks in part to higher occupancy
and rent at its outlet centers and malls.
"It was a blowout quarter," said Richard Imperiale,
president of Uniplan Investment Counsel Inc. "It's no one or two
things that really drove it. It was just solid improvement
across most of the numbers."
The results sent Simon shares up 1.7 percent in early trade
on the New York Stock Exchange.
The gap between good U.S. malls - in dense, high income or
vacation destinations - and the not-so good - which struggle to
lure shoppers - has widened since the recession. Retailers have
been fleeing the weaker malls and lining up to get into the more
productive ones. Simon Property is the largest owner of U.S.
malls and owner and developer of outlet centers which have done
During the quarter, sales at its U.S. core portfolio jumped
11.2 percent and occupancy and rent rose. The stronger the
sales, the more power a landlord has when it comes to
negotiating rent. Landlords also share in a part of the
increased sales at its tenant stores.
Indianapolis-based Simon said first-quarter funds from
operations were $648.7 million, or $1.82 per share, compared
with $570.6 million, or $1.61 per share, a year earlier. Revenue
grew 9.7 percent to $1.12 billion. The company again raised its
quarterly dividend, this time to $1.00 per share from 95 cents
Analysts on average had expected funds from operations of
$1.68 a share, on revenue of $1.05 billion, according to Thomson
Funds from operations, or FFO, is a real estate investment
trust performance measure that usually excludes gains or losses
from property sales and removes the effect depreciation has on
Simon again raised its forecast range for FFO for the year
to $7.50 - $7.60 per share, from $7.20 - $7.30 per share.
Analysts are expecting $7.48 per share. The company's forecasts
are conservative, and Simon more often than not raises them each
Occupancy at its core U.S. portfolio in the first quarter
rose to 93.6 percent, up 0.60 percentage points. Tenant sales
were an $546 per square foot on a trailing 12-month basis.
Average rent per square foot was up 4.4 percent to $39.87 per
Net operating income, a closely watched measure
indicating how well the properties are managed, rose 5.7
percent at properties the company has operated at least a year.
Simon, the world's largest real estate company and the only
one in the S&P 100, owns or has an interest in 337 retail real
estate properties in North America and Asia. Its portfolio
includes some of the most popular malls in the United States,
including Roosevelt Field Mall in New York; King of Prussia Mall
in Pennsylvania; The Forum Shops at Caesars Palace Las Vegas;
Lenox Square Mall in Atlanta, and Woodbury Common Premium
Outlets in New York.
It also is at the forefront of global expansion, with outlet
malls either in or planned for China, Brazil, Malaysia, Canada
and Europe. During the quarter, Simon also agreed to take a 28.7
stake in Klepierre, Europe's second-largest retail real estate
Simon shares rose $2.64 to $154.83 in early trade on the New
York Stock Exchange, outperforming the benchmark MSCI U.S. REIT
index which was up 0.2 percent.