SPG Beats Earnings, Guides Higher - Analyst Blog
26 April 2013 - 9:44PM
Zacks
Simon Property Group, Inc (SPG) – a real estate
investment trust (REIT) – reported first-quarter 2013 FFO (funds
from operations) per share of $2.05, beating the Zacks Consensus
Estimate by 4 cents. Moreover, this compared favorably with the
year-ago quarter’s FFO per share of $1.82. The 12.6% year over year
increase in quarterly FFO per share was primarily driven by an
increase in overage revenues and occupancy.
Inside the Headlines Number
Total revenue during the quarter came in at $1,215.1 million, up
8.6% from $1,119.0 million reported in the year-ago quarter. The
quarterly revenues also reached well above the Zacks Consensus
Estimate of $1,182 million. The increases in revenues were
attributable to substantial rises in minimum rental, overage rental
and tenant reimbursements revenues.
Minimum rental revenues climbed 10.8% to $777.9 million from
$702.1 million in the prior year quarter. On the other hand,
overage rental revenues for the quarter soared 36.2% to $37.7
million from $27.7 million in the prior year quarter. Revenues from
tenant reimbursements jumped 10.6% to $339.0 million from $306.4
million in the prior-year quarter.
Occupancy in the regional malls and premium outlet centers'
combined portfolio rose 110 bps (basis points) to 94.7% at the end
of the quarter from 93.6% in the prior year quarter. Comparable
sales in the combined portfolio increased 5.3% to $575 per square
foot from $546 recorded in the last year quarter. Moreover, average
rent per square foot in the combined portfolio rose 3.0% to $41.05
from $39.87 in prior year quarter.
Developments and Redevelopments
Simon Property has been active in capitalizing on growth
opportunities in top markets worldwide, with a focus on enhancing
its Premium Outlets portfolio. In the first quarter of 2013, Simon
Property opened 2 premium outlets, namely Phoenix Premium Outlets
in Ariz. and Shisui Premium Outlets in Japan, after completion of
their development.
Moreover, Simon property continued the construction of 3 new
Premium Outlet Centers that are scheduled to open in 2013. These
are Toronto Premium Outlets in Halton Hills; St. Louis Premium
Outlets in Chesterfield; and Busan Premium Outlets in Busan, Korea.
The company owns 50%, 60% and 50% interest in these centers,
respectively. All centers are slated to open by August this
year.
In the first quarter, Simon Property completed significant
redevelopment projects at 3 properties – Apple Blossom Mall,
Quaker Bridge Mall and South Hills Village. Currently, the company
has redevelopment and expansion projects in its pipeline for 44
properties in the U.S. and 2 in Asia.
Liquidity
As of Mar 31, 2013, Simon Property had cash and cash equivalents
worth $830 million, compared with $1.18 billion as of Dec 31,
2012.
Dividend
Concurrent with its earnings release, Simon Property declared
the first-quarter 2013 dividend of $1.15 per share. The dividend
will be paid on May 31 to shareholders of record as of May 17.
Revised 2013 Outlook
The strong first-quarter results raised management’s optimism
for the rest of 2013. Consequently, Simon Property increased its
2013 FFO guidance in the range of $8.50–8.60 per share, from the
previous range of $8.40–8.50.
Our Take
Consistent with its winning streak, Simon Property came up with
another robust quarterly result. The escalation in occupancy and
tenant sales per square foot along with increase in revenues aided
the growth. Moreover, the company’s portfolio restructuring
activity that is strengthening its presence globally, added to the
success. We expect these activities to provide Simon Property a
competitive advantage and also boost its top-line growth going
forward.
Simon Property currently carries a Zacks Rank #2 (Buy).
Other well performing REITs include – DDR Corp.
(DDR), Agree Realty Corp. (ADC) and
Regency Center Corp. (REG). All these stocks carry
the same rank as Simon Property.
Note: FFO, a widely used metric to gauge the performance of
REITs, are obtained after adding depreciation and amortization and
other non-cash expenses to net income.
AGREE RLTY CORP (ADC): Free Stock Analysis Report
DDR CORP (DDR): Free Stock Analysis Report
REGENCY CTRS CP (REG): Free Stock Analysis Report
SIMON PROPERTY (SPG): Free Stock Analysis Report
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