Simon Property Group Announces First Quarter Results
-- Funds from operations ("FFO") for the quarter increased 13.5% to
$476.8 million from $420.1 million in the first quarter of 2008. On a
diluted per share basis the increase was 10.3% to $1.61 from $1.46 in
2008.
-- Net income available to common stockholders for the quarter increased
21.5% to $106.8 million from $87.9 million in the first quarter of
2008. On a diluted per share basis the increase was 15.4% to $0.45
from $0.39 in 2008.
U.S. Portfolio Statistics(1)
As of As of
March 31, 2009 March 31, 2008
-------------- --------------
Occupancy
---------
Regional Malls(2) 90.8% 91.7%
Premium Outlet Centers(R)(3) 96.9% 97.9%
Comparable Sales per Sq. Ft.
----------------------------
Regional Malls(4) $455 $491
Premium Outlet Centers(3) $507 $511
Average Rent per Sq. Ft.
------------------------
Regional Malls(2) $40.29 $37.73
Premium Outlet Centers(3) $29.21 $26.32
(1) Statistics do not include the community/lifestyle center properties
or the Mills portfolio of assets.
(2) For mall stores.
(3) For all owned gross leasable area (GLA).
(4) For mall stores less than 10,000 square feet.
"The first quarter of 2009 was very positive for our Company. We delivered excellent growth in profits, a testament to the stable performance of franchise retail assets within our regional mall, Premium Outlet and Mills platforms," said
Dividends
After a thorough review, the Company's Board of Directors has decided that the annual common stock dividend will be reduced to the minimum amount required to distribute 100% of its taxable income. This amount is currently estimated to be approximately
Accordingly, the Company announced today that the Board of Directors approved the declaration of a quarterly common stock dividend of
In accordance with the provisions of
The Company expects the dividend to be a taxable dividend to its stockholders, without regard to whether a particular stockholder receives the dividend in the form of cash or shares, and reserves the right to pay the dividend entirely in cash.
The number of shares issued as a result of the dividend will be calculated based on the volume weighted average trading prices of the Company's common stock on
An information letter and election form will be mailed to stockholders of record promptly after
Today the Company also declared dividends on its two outstanding public issues of preferred stock:
-- 6% Series I Convertible Perpetual Preferred (NYSE:SPGPrI) dividend of
$0.75 per share is payable on May 29, 2009 to stockholders of record
on May 15, 2009 .
-- 8 3/8% Series J Cumulative Redeemable Preferred (NYSE:SPGPrJ) dividend
of $1.046875 per share is payable on June 30, 2009 to stockholders of
record on June 16, 2009 .
Financing Update
During the first quarter of 2009, the following transactions were completed:
-- On March 25th , the Company and its majority-owned operating
partnership subsidiary, Simon Property Group, L.P. , announced the
completion of the sale of 17,250,000 shares of common stock and the
issuance of $650 million aggregate principal amount of 10.35% senior
notes due 2019. Total proceeds of $1.2 billion were used to reduce
borrowings on the Company's corporate credit facility.
-- On March 20th , the Company completed a $97.5 million mortgage
financing for Woodland Hills Mall in Tulsa, Oklahoma . The interest
rate on the 10-year loan is 7.79%. The previous loan on this property
was a $78.6 million , 7% mortgage.
-- On March 31st , the Company completed a $100 million mortgage financing
for Penn Square Mall in Oklahoma City, Oklahoma . The interest rate on
the 7-year loan is 7.75%. The previous loan on this property was a
$65.8 million , 7.03% mortgage.
As of
U.S. New Development and Redevelopment Activity
On
The Company continues construction on the following development projects:
-- Cincinnati Premium Outlets, a 400,000 square foot upscale
manufacturers' outlet center serving the greater Cincinnati and Dayton
markets. The center is 100% owned by Simon and is scheduled to open in
August of 2009.
-- A 600,000 square foot Phase II expansion of The Domain in Austin,
Texas . The expansion will include Dillard's , a Village Road Show
theater, Dick's Sporting Goods (scheduled to open in October of 2009),
136,000 square feet of small shops and restaurants, and 78,000 square
feet of office space. The Company owns 100% of this project, slated
for an opening in February of 2010.
-- Addition of Nordstrom and 146,000 square feet of small shops at South
Shore Plaza in Braintree (Boston ), Massachusetts . This expansion is
scheduled to open in March of 2010. The center is 100% owned by
Simon.
International Activity
Construction continues on the following international development projects:
-- Ami Premium Outlets - an upscale manufacturers' outlet center located
approximately 34 miles northeast of central Tokyo . Phase I, comprising
227,000 square feet, is scheduled to open in July of 2009 with
approximately 100 stores, including global brands, domestic brands and
restaurants. The center is expandable to approximately 360,000 square
feet. Simon owns 40% of this project.
-- Argine (Naples, Italy ) - a 300,000 square foot shopping center
scheduled to open in March of 2010. Simon owns a 24% interest in this
project.
-- Catania (Sicily, Italy ) - a 642,000 square foot shopping center
scheduled to open in June of 2010. Simon owns a 24% interest in this
project.
-- Three projects in China located in Hangzhou, Suzhou, and Zhengzhou.
The centers range in size from 310,000 to 750,000 square feet, will be
anchored by Wal-Mart , and are scheduled to open in 2009. Simon owns a
32.5% interest in each of these projects.
2009 Guidance
The Company adjusted its guidance for 2009 today, estimating that diluted FFO will be within a range of
This guidance is a forward-looking statement and is subject to the risks and other factors described elsewhere in this release.
The following table provides the reconciliation of the range of estimated diluted net income available to common stockholders per share to estimated diluted FFO per share.
For the year ending December 31, 2009 Low High
------------------------------------- End End
--- ---
Estimated diluted net income available to common
stockholders per share $1.45 $1.60
Depreciation and amortization including our share of
joint ventures 4.69 4.69
Impact of additional dilutive securities (0.09) (0.09)
---- ----
Estimated diluted FFO per share $6.05 $6.20
==== ====
Conference Call
The Company will provide an online simulcast of its quarterly conference call at www.simon.com (Investor Relations tab), www.earnings.com, and www.streetevents.com. To listen to the live call, please go to any of these websites at least fifteen minutes prior to the call to register, download and install any necessary audio software. The call will begin at
Supplemental Materials and Financial Statements
The Company will publish a supplemental information package which will be available at www.simon.com in the Investor Relations section, Financial Information tab. It will also be furnished to the SEC as part of a current report on Form 8-K. If you wish to receive a copy via mail or email, please call 800-461-3439.
The Company's financial statements have been adjusted to reflect the retrospective adoption of Statement of Financial Accounting Standard No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment to ARB 51 ("FAS 160") which became effective for us on
Forward-Looking Statements
Certain statements made in this press release may be deemed "forwardlooking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forwardlooking statements are based on reasonable assumptions, the Company can give no assurance that our expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forwardlooking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to: the Company's ability to meet debt service requirements, the availability and terms of financing, changes in the Company's credit rating, changes in market rates of interest and foreign exchange rates for foreign currencies, the ability to hedge interest rate risk, risks associated with the acquisition, development, expansion, leasing and management of properties, general risks related to retail real estate, the liquidity of real estate investments, environmental liabilities, international, national, regional and local economic climates, changes in market rental rates, trends in the retail industry, relationships with anchor tenants, the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, risks relating to joint venture properties, costs of common area maintenance, competitive market forces, risks related to international activities, insurance costs and coverage, terrorist activities, changes in economic and market conditions and maintenance of our status as a real estate investment trust. The Company discusses these and other risks and uncertainties under the heading "Risk Factors" in its annual and quarterly periodic reports filed with the SEC. The Company may update that discussion in its periodic reports, but otherwise the Company undertakes no duty or obligation to update or revise these forwardlooking statements, whether as a result of new information, future developments, or otherwise.
Funds from Operations ("FFO")
The Company considers FFO a key measure of its operating performance that is not specifically defined by accounting principles generally accepted in the
About
SIMON
Consolidated Statements of Operations
Unaudited
(In thousands)
--------------
For the Three Months Ended
March 31,
2009 2008
---- ----
REVENUE:
Minimum rent $571,414 $550,682
Overage rent 12,500 16,651
Tenant reimbursements 258,762 250,248
Management fees and other revenues 30,651 33,020
Other income 45,165 44,697
------ ------
Total revenue 918,492 895,298
EXPENSES:
Property operating 106,147 112,761
Depreciation and amortization 256,337 228,043
Real estate taxes 88,243 84,520
Repairs and maintenance 22,588 29,021
Advertising and promotion 18,506 19,373
Provision for credit losses 13,015 6,582
Home and regional office costs 26,163 39,600
General and administrative 4,048 5,302
Other 19,229 18,321
------ ------
Total operating expenses 554,276 543,523
------- -------
OPERATING INCOME 364,216 351,775
Interest expense (226,036) (229,917)
Income tax benefit of taxable REIT
subsidiaries 2,523 23
Income from unconsolidated entities 5,545 7,141
----- -----
CONSOLIDATED NET INCOME 146,248 129,022
Net income attributable to noncontrolling
interests 32,951 29,738
Preferred dividends 6,529 11,351
----- ------
NET INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS $106,768 $87,933
======== =======
Basic Earnings Per Common Share:
Net income attributable to common
stockholders $0.45 $0.39
===== =====
Percentage Change 15.4%
Diluted Earnings Per Common Share:
Net income attributable to common
stockholders $0.45 $0.39
===== =====
Percentage Change 15.4%
SIMON
Consolidated Balance Sheets
Unaudited
(In thousands, except as noted)
-------------------------------
March 31, December 31,
2009 2008
---- ----
ASSETS:
Investment properties, at cost $25,250,451 $25,205,715
Less - accumulated depreciation 6,374,145 6,184,285
--------- ---------
18,876,306 19,021,430
Cash and cash equivalents 898,328 773,544
Tenant receivables and accrued
revenue, net 364,095 414,856
Investment in unconsolidated
entities, at equity 1,573,350 1,663,886
Deferred costs and other assets 1,039,409 1,028,333
Note receivable from related party 536,000 520,700
------- -------
Total assets $23,287,488 $23,422,749
=========== ===========
LIABILITIES:
Mortgages and other indebtedness $17,385,047 $18,042,532
Accounts payable, accrued expenses,
intangibles, and deferred revenues 981,905 1,086,248
Cash distributions and losses in
partnerships and joint ventures, at
equity 406,155 380,730
Other liabilities and accrued dividends 183,720 155,151
------- -------
Total liabilities 18,956,827 19,664,661
---------- ----------
Commitments and contingencies
Limited partners' preferred interest in
the Operating Partnership and
noncontrolling redeemable interests in
properties 276,441 276,608
Series I 6% convertible perpetual
preferred stock, 19,000,000 shares
authorized, 7,593,604 and 7,590,264
issued and outstanding, respectively, at
liquidation value 379,680 379,513
EQUITY:
Stockholders' equity:
Capital stock (750,000,000 total
shares authorized, $.0001 par value,
237,996,000 shares of excess common
stock 100,000,000 authorized shares
of preferred stock):
Series J 8 3/8% cumulative
redeemable preferred stock,
1,000,000 shares authorized,
796,948 issued and outstanding,
with a liquidation value of
$39,847 45,950 46,032
Common stock, $.0001 par value,
400,004,000 shares authorized,
259,339,963 and 235,691,040 issued
and outstanding, respectively 46 24
Class B common stock, $.0001 par
value, 12,000,000 shares authorized,
8,000 issued and outstanding - -
Capital in excess of par value 6,106,116 5,410,147
Accumulated deficit (2,602,752) (2,491,929)
Accumulated other comprehensive loss (218,479) (165,066)
Common stock held in treasury at cost,
4,129,890 and 4,379,396 shares,
respectively (177,615) (186,210)
-------- --------
Total stockholders' equity 3,153,266 2,612,998
Noncontrolling interests 521,274 488,969
------- -------
Total equity 3,674,540 3,101,967
----------- -----------
Total liabilities and equity $23,287,488 $23,422,749
=========== ===========
SIMON
Joint Venture Statements of Operations
Unaudited
(In thousands)
--------------
For the Three Months Ended
March 31,
2009 2008
---- ----
Revenue:
Minimum rent $466,677 $470,063
Overage rent 20,579 18,716
Tenant reimbursements 237,442 228,745
Other income 38,244 46,091
------ ------
Total revenue 762,942 763,615
Operating Expenses:
Property operating 148,940 152,924
Depreciation and amortization 187,463 171,699
Real estate taxes 69,389 65,744
Repairs and maintenance 25,723 30,338
Advertising and promotion 14,295 14,296
Provision for credit losses 10,427 5,033
Other 36,315 37,977
------ ------
Total operating expenses 492,552 478,011
------- -------
Operating Income 270,390 285,604
Interest expense (219,151) (248,873)
(Loss) income from unconsolidated entities (768) 21
---- ----
Income from Continuing
Operations 50,471 36,752
Income from discontinued joint
venture interests (A) - 47
Net Income $50,471 $36,799
======= =======
Third-Party Investors' Share of Net Income $31,179 $18,651
------- -------
Our Share of Net Income 19,292 18,148
Amortization of Excess Investment (13,747) (11,007)
Income from Unconsolidated Entities, Net $5,545 $7,141
====== ======
SIMON
Joint Venture Balance Sheets
Unaudited
(In thousands)
--------------
March 31, December 31,
2009 2008
---- ----
Assets:
Investment properties, at cost $21,393,130 $21,472,490
Less - accumulated depreciation 4,001,364 3,892,956
--------- ---------
17,391,766 17,579,534
Cash and cash equivalents 671,179 805,411
Tenant receivables and accrued revenue,
net 381,513 428,322
Investment in unconsolidated entities, at
equity 227,461 230,497
Deferred costs and other assets 571,131 594,578
------- -------
Total assets $19,243,050 $19,638,342
=========== ===========
Liabilities and Partners' Equity:
Mortgages and other indebtedness $16,514,708 $16,686,701
Accounts payable, accrued expenses,
intangibles and deferred revenue 970,523 1,070,958
Other liabilities 990,809 982,254
------- -------
Total liabilities 18,476,040 18,739,913
Preferred units 67,450 67,450
Partners' equity 699,560 830,979
------- -------
Total liabilities and partners' equity $19,243,050 $19,638,342
=========== ===========
Our Share of:
Total assets $7,888,005 $8,056,873
========== ==========
Partners' equity $474,933 $533,929
Add: Excess Investment (B) 692,262 749,227
------- -------
Our net Investment in Joint Ventures 1,167,195 1,283,156
--------- ---------
Mortgages and other indebtedness $6,464,913 $6,632,419
========== ==========
SIMON
Footnotes to Financial Statements
Unaudited
---------
Notes:
(A) Discontinued joint venture interests represent assets and partnership
interests that have been sold.
(B) Excess investment represents the unamortized difference of the
Company's investment over equity in the underlying net assets of the
partnerships and joint ventures. The Company generally amortizes
excess investment over the life of the related properties, typically
no greater than 40 years, and the amortization is included in income
from unconsolidated entities.
SIMON
Reconciliation of Consolidated Net Income to
FFO (1)
Unaudited
(In thousands, except as noted)
-------------------------------
For the Three Months Ended
March 31,
2009 2008
---- ----
Consolidated Net Income(2)(3)(4)(5) $146,248 $129,022
Adjustments to Consolidated Net Income to
Arrive at FFO:
Depreciation and amortization from
consolidated properties and
discontinued operations 252,913 225,056
Simon's share of depreciation and
amortization from unconsolidated entities 93,378 86,628
Net income attributable to noncontrolling
interest holders in properties (3,039) (2,101)
Depreciation and amortization attributable
to noncontrolling interest holders in
properties (1,962) (2,298)
Preferred distributions and dividends (10,706) (16,255)
------- -------
FFO of the Operating Partnership $476,832 $420,052
======== ========
Per Share Reconciliation:
--------------------------
Diluted net income attributable to common
stockholders per share $0.45 $0.39
Adjustments to arrive at FFO:
Depreciation and amortization from
consolidated properties and Simon's share
of depreciation and amortization from
unconsolidated entities, net of noncontrolling
interests portion of depreciation and
amortization 1.18 1.10
Impact of additional dilutive securities
for FFO per share (0.02) (0.03)
----- -----
Diluted FFO per share $1.61 $1.46
===== =====
Details for per share calculations:
-----------------------------------
FFO of the Operating Partnership $476,832 $420,052
Adjustments for dilution calculation:
Impact of preferred stock and preferred unit
conversions and option exercises (6) 6,878 12,389
----- ------
Diluted FFO of the Operating Partnership 483,710 432,441
Diluted FFO allocable to unitholders (91,561) (84,600)
------- -------
Diluted FFO allocable to common stockholders $392,149 $347,841
======== ========
Basic weighted average shares outstanding 235,909 223,455
Adjustments for dilution calculation:
Effect of stock options 220 617
Impact of Series C preferred unit conversion 71 76
Impact of Series I preferred unit conversion 1,223 2,246
Impact of Series I preferred stock conversion 6,119 11,126
----- ------
Diluted weighted average shares outstanding 243,542 237,520
Weighted average limited partnership units
outstanding 56,863 57,769
------- -------
Diluted weighted average shares and units
outstanding 300,405 295,289
======= =======
Basic FFO per share $1.63 $1.49
Percent Increase 9.4%
Diluted FFO per share $1.61 $1.46
Percent Increase 10.3%
SIMON
Footnotes to Reconciliation of Net Income to FFO
Unaudited
---------
Notes:
(1) The Company considers FFO a key measure of its operating performance
that is not specifically defined by GAAP and believes that FFO is
helpful to investors because it is a widely recognized measure of the
performance of REITs and provides a relevant basis for comparison
among REITs. The Company also uses this measure internally to measure
the operating performance of the portfolio. The Company's computation
of FFO may not be comparable to FFO reported by other REITs.
The Company determines FFO based upon the definition set forth by the
National Association of Real Estate Investment Trusts ("NAREIT"). The
Company determines FFO to be our share of consolidated net income
computed in accordance with GAAP, excluding real estate related
depreciation and amortization, excluding gains and losses from
extraordinary items, excluding gains and losses from the sales of
previously depreciated operating properties, plus the allocable
portion of FFO of unconsolidated joint ventures based upon economic
ownership interest, and all determined on a consistent basis in
accordance with GAAP.
The Company has adopted NAREIT's clarification of the definition of
FFO that requires it to include the effects of nonrecurring items not
classified as extraordinary, cumulative effect of accounting changes,
or a gain or loss resulting from the sale of previously depreciated
operating properties. We include in FFO gains and losses realized from
the sale of land, outlot buildings, marketable and non-marketable
securities, and investment holdings of non-retail real estate.
However, you should understand that FFO does not represent cash flow
from operation as defined by GAAP, should not be considered as an
alternative to net income determined in accordance with GAAP as a
measure of operating performance, and is not an alternative to cash
flows as a measure of liquidity.
(2) Includes the Company's share of gains on land sales of $0.2 million
and $1.2 million for the three months ended March 31, 2009 and 2008,
respectively.
(3) Includes the Company's share of straight-line adjustments to minimum
rent of $10.5 million and $8.2 million for the three months
ended March 31, 2009 and 2008, respectively.
(4) Includes the Company's share of the fair market value of leases from
acquisitions of $6.9 million and $13.7 million for the three
months ended March 31, 2009 and 2008, respectively.
(5) Includes the Company's share of debt premium amortization of $3.8
million and $4.9 million for the three months ended March 31, 2009 and
2008, respectively.
(6) Includes dividends and distributions of Series I preferred stock and
Series C and Series I preferred units.
SOURCE
CONTACT: Investors:
/Web Site: http://www.simon.com
