Press Release

Simon Property Group Reports Second Quarter 2021 Results And Increases Full Year 2021 Guidance And Raises Quarterly Dividend

INDIANAPOLIS, Aug. 2, 2021 /PRNewswire/ -- Simon, a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations, today reported results for the quarter ended June 30, 2021.

"I am pleased with the profitability and substantial improvement in cash flow that were generated in the second quarter," said David Simon, Chairman, Chief Executive Officer and President.  "We are encouraged by the increase in our shopper traffic, retailer sales and leasing activity. Based upon our results to date and expectations for the remainder of 2021, we are again increasing our full-year 2021 guidance and again raising our quarterly dividend."

Results for the Quarter

  • Net income attributable to common stockholders was $617.3 million, or $1.88 per diluted share, as compared to $254.2 million, or $0.83 per diluted share in 2020. Results for the second quarter of 2021 include a non-cash gain of $118.4 million, or $0.32 per diluted share, because of the reversal of a deferred tax liability associated with an international investment.
  • Funds From Operations ("FFO") was $1.217 billion, or $3.24 per diluted share, as compared to $746.5 million, or $2.12 per diluted share, in the prior year period, a 52.8% increase. FFO for the second quarter 2021 includes the $0.32 per diluted share non-cash gain related to the deferred tax liability reversal, mentioned above.
  • Net operating income ("NOI") from domestic and international properties, combined, increased 16.6% compared to the prior year period. Portfolio NOI, which includes NOI from domestic properties, international properties and NOI from the Company's investment in Taubman Realty Group ("TRG"), increased 32.5% compared to the prior year period.

Results for the Six Months

  • Net income attributable to common stockholders was $1.063 billion, or $3.24 per diluted share, as compared to $691.8 million, or $2.26 per diluted share in 2020. Results for the six months ended 2021 include the aforementioned non-cash gain related to the deferred tax liability reversal.
  • FFO was $2.151 billion, or $5.72 per diluted share, as compared to $1.727 billion, or $4.90 per diluted share, in the prior year period, a 16.7% increase. FFO for the six months ended 2021 includes the aforementioned non-cash gain related to the deferred tax liability reversal.
  • NOI from domestic and international properties, combined, increased 2.8% compared to the prior year period. Portfolio NOI increased 16.7% compared to the prior year period.

U.S. Malls and Premium Outlets Operating Statistics

  • Occupancy was 91.8% at June 30, 2021.
  • Base minimum rent per square foot was $55.03 at June 30, 2021.

Development Activity

West Midlands Designer Outlet in England opened on April 12, 2021.  The center includes 197,000 square feet of high-quality, name brand stores.  Simon owns a 23% interest in this center. 

During the quarter, construction restarted on Paris-Giverny Designer Outlet, a new 222,000 square foot upscale outlet center located in Normandie, France, projected to open in the first quarter of 2023.  Simon owns 74% of this project. 

Construction continues on redevelopments including Burlington Mall (Boston, MA) and Tacoma Mall (Tacoma, WA).  These redevelopments, scheduled to be completed in 2021, will significantly benefit the communities in which they operate. 

Progress continues on transformative mixed-use redevelopments of Northgate Station (Seattle, WA) and Phipps Plaza (Atlanta, GA).  The dynamic redevelopment at Phipps Plaza is headlined by a Nobu Hotel and Nobu Restaurant, Citizens food hall, Life Time Athletic and Life Time Work and One Phipps Plaza, a LEED certified, 13-story Class A office building designed for the workplace of the future.  These additions are scheduled to open in 2022.  The transformation of Northgate Station will feature the National Hockey League's Seattle Kraken corporate offices and the Kraken Community Iceplex.  This first phase of the Northgate Station transformation is scheduled to be completed in the fall of 2021.    

Capital Markets and Balance Sheet Liquidity

The Company was active in both the unsecured and secured credit markets through the first six months of the year. 

During the first six months, the Company closed on 13 non-recourse mortgage loans totaling approximately $2.2 billion (U.S. dollar equivalent), of which Simon's share is $1.3 billion.  The weighted average interest rate on these loans is 2.90%. 

As of June 30, 2021, Simon had more than $8.8 billion of liquidity consisting of $1.9 billion of cash on hand, including its share of joint venture cash, and $6.9 billion of available capacity under its revolving credit facilities, net of $500 million outstanding under its U.S. commercial paper program.

Dividends

The Company paid its second quarter 2021 common stock dividend of $1.40 per share, in cash, on July 23, 2021, a 7.7% increase sequentially and year-over-year. 

Simon's Board of Directors declared a quarterly common stock cash dividend of $1.50 for the third quarter of 2021.  This is a 15.4% increase year-over-year and a 7.1% increase compared to the second quarter 2021 dividend.  The dividend will be payable on September 30, 2021 to shareholders of record on September 9, 2021

Simon's Board of Directors declared the quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred Stock (NYSE: SPGPrJ) of $1.046875 per share, payable on September 30, 2021 to shareholders of record on September 16, 2021

2021 Guidance

The Company currently estimates net income to be within a range of $5.47 to $5.57 per diluted share and FFO will be within a range of $10.70 to $10.80 per diluted share for the year ending December 31, 2021.  The net income per diluted share and FFO per diluted share ranges include the $0.32 per diluted share non-cash gain related to the deferred tax liability reversal.  The FFO per diluted share range is an increase from the $9.70 to $9.80 per diluted share range provided on May 10, 2021, or an increase of $1.00 per diluted share at the mid-point.                                

The following table provides the GAAP to non-GAAP reconciliation for the expected range of estimated net income attributable to common stockholders per diluted share to estimated FFO per diluted share:

For the year ending December 31, 2021



Low


High


End


End

Estimated net income attributable to common stockholders

     per diluted share

$5.47


$5.57

Depreciation and amortization including Simon's share




     of unconsolidated entities

5.47


5.47

Unrealized losses in fair value of equity instruments

0.01


0.01

Gain on acquisition of controlling interest, sale or

     disposal of, or recovery on, assets and interests in

     unconsolidated entities and impairment, net

(0.25)


(0.25)





Estimated FFO per diluted share 

$10.70


$10.80

Conference Call

Simon will hold a conference call to discuss the quarterly financial results today at 5:00 p.m. Eastern Daylight Time, Monday, August 2, 2021.  A live webcast of the conference call will be accessible in listen-only mode at investors.simon.com.  An audio replay of the conference call will be available until August 9, 2021.  To access the audio replay, dial 1-855-859-2056 (international 404-537-3406) passcode 7455849. 

Supplemental Materials and Website

Supplemental information on our second quarter 2021 performance is available at investors.simon.com. This information has also been furnished to the SEC in a current report on Form 8-K.

We routinely post important information online on our investor relations website, investors.simon.com. We use this website, press releases, SEC filings, quarterly conference calls, presentations and webcasts to disclose material, non-public information in accordance with Regulation FD. We encourage members of the investment community to monitor these distribution channels for material disclosures.  Any information accessed through our website is not incorporated by reference into, and is not a part of, this document.

Non-GAAP Financial Measures

This press release includes FFO, FFO per share and portfolio Net Operating Income growth which are financial performance measures not defined by generally accepted accounting principles in the United States ("GAAP"). Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release and in Simon's supplemental information for the quarter.  FFO and Net Operating Income growth are financial performance measures widely used in the REIT industry. Our definitions of these non-GAAP measures may not be the same as similar measures reported by other REITs.

Forward-Looking Statements

Certain statements made in this press release may be deemed "forward–looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward–looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained, and it is possible that the Company's actual results may differ materially from those indicated by these forward–looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to: uncertainties regarding the impact of the COVID-19 pandemic and governmental restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flow and liquidity and our ability to access the capital markets, satisfy our debt service obligations and make distributions to our stockholders; changes in economic and market conditions that may adversely affect the general retail environment; the potential loss of anchor stores or major tenants; the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; the intensely competitive market environment in the retail industry, including e-commerce; an increase in vacant space at our properties; the inability to lease newly developed properties and renew leases and relet space at existing properties on favorable terms; our international activities subjecting us to risks that are different from or greater than those associated with our domestic operations, including changes in foreign exchange rates; risks associated with the acquisition, development, redevelopment, expansion, leasing and management of properties; general risks related to real estate investments, including the illiquidity of real estate investments; the impact of our substantial indebtedness on our future operations, including covenants in the governing agreements that impose restrictions on us that may affect our ability to operate freely; any disruption in the financial markets that may adversely affect our ability to access capital for growth and satisfy our ongoing debt service requirements; any change in our credit rating; changes in market rates of interest; the transition of LIBOR to an alternative reference rate; our continued ability to maintain our status as a REIT; changes in tax laws or regulations that result in adverse tax consequences; risks relating to our joint venture properties, including guarantees of certain joint venture indebtedness; environmental liabilities; natural disasters; the availability of comprehensive insurance coverage; the potential for terrorist activities;  security breaches that could compromise our information technology or infrastructure; and the loss of key management personnel. 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 subsequent other periodic reports, but except as required by law, the Company undertakes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

About Simon

Simon is a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company (Simon Property Group, NYSE: SPG). Our properties across North America, Europe and Asia provide community gathering places for millions of people every day and generate billions in annual sales.

 

Simon Property Group, Inc.
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)



For the Three Months


For the Six Months


Ended June 30,


Ended June 30,


2021

2020


2021

2020







REVENUE:






Lease income

$ 1,158,825

$ 1,013,510


$ 2,303,883

$ 2,275,742

Management fees and other revenues

26,061

21,035


51,358

50,201

Other income

69,260

27,496


138,856

89,458

Total revenue

1,254,146

1,062,041


2,494,097

2,415,401







EXPENSES:






Property operating

96,073

70,620


182,692

176,243

Depreciation and amortization

315,732

324,140


631,470

652,402

Real estate taxes

114,695

117,221


230,706

234,764

Repairs and maintenance

19,036

14,080


40,391

38,511

Advertising and promotion

19,565

12,689


49,050

46,216

Home and regional office costs

47,699

36,090


83,698

90,460

General and administrative

7,254

7,296


13,830

14,190

Other

29,369

29,037


52,926

56,878

Total operating expenses

649,423

611,173


1,284,763

1,309,664







OPERATING INCOME BEFORE OTHER ITEMS

604,723

450,868


1,209,334

1,105,737







Interest expense

(200,419)

(197,061)


(402,435)

(384,688)

Loss on extinguishment of debt

-

-


(2,959)

-

Income and other tax (expense) benefit

(47,003)

62


(41,105)

5,845

Income from unconsolidated entities

348,545

44,322


363,614

94,787

Unrealized gains (losses) in fair value of equity instruments

23

202


(3,177)

(18,846)

Gain (loss) on acquisition of controlling interest, sale or disposal of, or recovery on, 






    assets and interests in unconsolidated entities and impairment, net

-

(7,845)


93,057

(6,883)







CONSOLIDATED NET INCOME

705,869

290,548


1,216,329

795,952







Net income attributable to noncontrolling interests 

87,778

35,501


151,543

102,465

Preferred dividends

834

834


1,669

1,669







NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

$ 617,257

$ 254,213


$ 1,063,117

$ 691,818













BASIC AND DILUTED EARNINGS PER COMMON SHARE:






Net income attributable to common stockholders

$ 1.88

$ 0.83


$ 3.24

$ 2.26







 

Simon Property Group, Inc.
Unaudited Consolidated Balance Sheets
(Dollars in thousands, except share amounts)





June 30,

December 31,


2021

2020

ASSETS:



Investment properties, at cost

$ 37,938,181

$ 38,050,196

Less - accumulated depreciation

15,176,790

14,891,937


22,761,391

23,158,259

Cash and cash equivalents

1,290,799

1,011,613

Tenant receivables and accrued revenue, net

952,731

1,236,734

Investment in TRG, at equity

3,415,996

3,451,897

Investment in Klépierre, at equity

1,706,661

1,729,690

Investment in other unconsolidated entities, at equity

2,746,162

2,603,571

Right-of-use assets, net

508,371

512,914

Investments held in trust - special purpose acquisition company

345,000

-

Deferred costs and other assets

1,100,745

1,082,168

Total assets

$ 34,827,856

$ 34,786,846




LIABILITIES:



Mortgages and unsecured indebtedness

$ 26,231,704

$ 26,723,361

Accounts payable, accrued expenses, intangibles, and deferred revenues

1,230,595

1,311,925

Cash distributions and losses in unconsolidated entities, at equity

1,565,366

1,577,393

Dividend payable

527,508

486,922

Lease liabilities

511,211

515,492

Other liabilities

546,619

513,515

Total liabilities

30,613,003

31,128,608




Commitments and contingencies



Limited partners' preferred interest in the Operating Partnership and noncontrolling



redeemable interests

507,414

185,892




EQUITY:



Stockholders' Equity



Capital stock (850,000,000 total shares authorized,  $0.0001 par value, 238,000,000



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

41,927

42,091




Common stock, $0.0001 par value, 511,990,000 shares authorized, 342,907,608 and



342,849,037 issued and outstanding, respectively

34

34




Class B common stock, $0.0001 par value, 10,000 shares authorized, 8,000



issued and outstanding

-

-




Capital in excess of par value

11,193,774

11,179,688

Accumulated deficit

(5,931,119)

(6,102,314)

Accumulated other comprehensive loss

(188,307)

(188,675)

Common stock held in treasury, at cost, 14,296,445 and 14,355,621 shares, respectively

(1,884,511)

(1,891,352)

Total stockholders' equity

3,231,798

3,039,472

Noncontrolling interests

475,641

432,874

Total equity

3,707,439

3,472,346

Total liabilities and equity

$ 34,827,856

$ 34,786,846




 

Simon Property Group, Inc.

Unaudited Joint Venture Combined Statements of Operations

(Dollars in thousands)
















For the Three Months Ended June 30,


For the Six Months Ended June 30,


2021

2020


2021

2020







REVENUE:






Lease income

$ 681,349

$ 574,246


$ 1,334,103

$ 1,318,096

Other income

64,694

46,205


137,293

120,718

Total revenue

746,043

620,451


1,471,396

1,438,814







OPERATING EXPENSES:






Property operating

136,129

107,309


269,166

254,339

Depreciation and amortization

170,443

165,511


341,597

336,989

Real estate taxes

68,123

60,634


137,021

129,023

Repairs and maintenance

16,304

13,589


35,350

33,204

Advertising and promotion

14,797

10,016


34,241

32,768

Other

37,657

15,734


69,643

65,964

Total operating expenses

443,453

372,793


887,018

852,287







OPERATING INCOME BEFORE OTHER ITEMS

302,590

247,658


584,378

586,527







Interest expense

(152,447)

(152,409)


(298,644)

(309,050)

Gain on sale or disposal of, or recovery on, assets and interests in

   unconsolidated entities, net

33,371

-


33,371

-







NET INCOME

$ 183,514

$ 95,249


$ 319,105

$ 277,477







Third-Party Investors' Share of Net Income

$ 92,745

$ 53,989


$ 160,886

$ 146,848







Our Share of Net Income

90,769

41,260


158,219

130,629

Amortization of Excess Investment (A)

(15,268)

(20,761)


(34,595)

(41,601)

Our Share of Gain on Sale or Disposal of Assets and Interests in






Other Income in the Consolidated Financial Statements

(14,941)

-


(14,941)

-







Income from Unconsolidated Entities (B)

$ 60,560

$ 20,499


$ 108,683

$ 89,028







Note: The above financial presentation does not include any information related to our investments in Klépierre S.A.

          ("Klépierre") and The Taubman Realty Group ("TRG"). For additional information, see footnote B.

 

Simon Property Group, Inc.

Unaudited Joint Venture Combined Balance Sheets

(Dollars in thousands)











June 30,

December 31,



2021

2020


Assets:




Investment properties, at cost

$ 19,885,109

$ 20,079,476


Less - accumulated depreciation

8,157,942

8,003,863



11,727,167

12,075,613


Cash and cash equivalents

1,356,266

1,169,422


Tenant receivables and accrued revenue, net

571,652

749,231


Right-of-use assets, net

168,752

185,598


Deferred costs and other assets

387,285

380,087


Total assets

$ 14,211,122

$ 14,559,951






Liabilities and Partners' Deficit:




Mortgages

$ 15,430,065

$ 15,569,485


Accounts payable, accrued expenses, intangibles, and deferred revenue

840,432

969,242


Lease liabilities

172,281

188,863


Other liabilities

395,463

426,321


Total liabilities

16,838,241

17,153,911






Preferred units

67,450

67,450


Partners' deficit

(2,694,569)

(2,661,410)


Total liabilities and partners' deficit

$ 14,211,122

$ 14,559,951






Our Share of:




Partners' deficit

$ (1,150,296)

$ (1,130,713)


Add: Excess Investment (A)

1,317,383

1,399,757


Our net Investment in unconsolidated entities, at equity

$ 167,087

$ 269,044



Note: The above financial presentation does not include any information related to our investments in Klépierre


           and TRG. For additional information, see footnote B.


 

 

 














Simon Property Group, Inc.

Unaudited Reconciliation of Non-GAAP Financial Measures (C)

(Amounts in thousands, except per share amounts)



















Reconciliation of Consolidated Net Income to FFO 














For the Three Months Ended


For the Six Months Ended






June 30,


June 30,






2021


2020


2021


2020















Consolidated Net Income (D)


$    705,869


$  290,548


$  1,216,329


$    795,952



Adjustments to Arrive at FFO:
























Depreciation and amortization from consolidated 












     properties 


313,572


321,707


627,147


647,745




Our share of depreciation and amortization from












     unconsolidated entities, including Klépierre, TRG and other corporate investments


202,515


129,309


406,752


266,017




(Gain) loss on acquisition of controlling interest, sale or disposal of, or recovery on,












     assets and interests in unconsolidated entities and impairment, net


-


7,845


(93,057)


6,883




Unrealized (gains) losses in fair value of equity instruments


(23)


(202)


3,177


18,846




Net loss attributable to noncontrolling interest holders in












     properties


1,531


3,628


2,469


3,799




Noncontrolling interests portion of depreciation and amortization and gain on consolidation of properties


(5,259)


(5,048)


(9,348)


(9,511)




Preferred distributions and dividends


(1,313)


(1,313)


(2,626)


(2,626)



FFO of the Operating Partnership


$  1,216,892


$  746,474


$  2,150,843


$  1,727,105



























Diluted net income per share to diluted FFO per share reconciliation:











Diluted net income per share


$          1.88


$       0.83


$          3.24


$          2.26




Depreciation and amortization from consolidated properties












     and our share of depreciation and amortization from unconsolidated 












     entities, including Klépierre, TRG and other corporate investments, net of noncontrolling 












     interests portion of depreciation and amortization


1.36


1.27


2.72


2.57




(Gain) loss on acquisition of controlling interest, sale or disposal of, or recovery on,












assets and interests in unconsolidated entities and impairment, net


-


0.02


(0.25)


0.02




Unrealized (gains) losses in fair value of equity instruments


-


-


0.01


0.05



Diluted FFO per share 


$          3.24


$       2.12


$          5.72


$          4.90















Details for per share calculations:























FFO of the Operating Partnership


$  1,216,892


$  746,474


$  2,150,843


$  1,727,105



Diluted FFO allocable to unitholders


(153,089)


(98,537)


(270,684)


(228,166)



Diluted FFO allocable to common stockholders


$  1,063,803


$  647,937


$  1,880,159


$  1,498,939















Basic and Diluted weighted average shares outstanding


328,594


305,882


328,555


306,193



Weighted average limited partnership units outstanding


47,281


46,528


47,301


46,608















Basic and Diluted weighted average shares and units outstanding


375,875


352,410


375,856


352,801















Basic and Diluted FFO per Share


$          3.24


$       2.12


$          5.72


$          4.90



    Percent Change


52.8%




16.7%




























 

Simon Property Group, Inc.

Footnotes to Unaudited Financial Information














Notes:  

























(A)

Excess investment represents the unamortized difference of our investment over equity in the underlying net assets of the related partnerships and joint ventures shown therein.  The Company generally amortizes excess investment over the life of the related assets.














(B)

The Unaudited Joint Venture Combined Statements of Operations do not include any operations or our share of net income or excess investment amortization related to our investments in Klépierre and TRG.  Amounts included in Footnote D below exclude our share of related activity for our investments in Klépierre and TRG.  For further information on Klépierre, reference should be made to financial information in Klépierre's public filings and additional discussion and analysis in our Form 10-K.














(C)

This report contains measures of financial or operating performance that are not specifically defined by GAAP, including FFO and FFO per share.  FFO is a performance measure that is standard in the REIT business.  We believe FFO provides investors with additional information concerning our operating performance and a basis to compare our performance with those of other REITs.  We also use these measures internally to monitor the operating performance of our portfolio. Our computation of these non-GAAP measures may not be the same as similar measures reported by other REITs.















We determine FFO based upon the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT") Funds From Operations White Paper - 2018 Restatement. Our main business includes acquiring, owning, operating, developing, and redeveloping real estate in conjunction with the rental of real estate.  Gains and losses of assets incidental to our main business are included in FFO.  We determine 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 sale, disposal or property insurance recoveries of, or any impairment related to, depreciable retail 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. However, you should understand that FFO does not represent cash flow from operations 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.














(D)

Includes our share of: 


















-

Gains on land sales of $0.9 million and $1.1 million for the three months ended June 30, 2021 and 2020, respectively, and $1.6 million and $6.3 million for the six months ended June 30, 2021 and 2020, respectively.














-

Straight-line adjustments (decreased) increased income by ($5.9) million and ($2.6) million for the three months ended June 30, 2021 and 2020, respectively, and ($15.0) million and $9.4 million for the six months ended June 30, 2021 and 2020, respectively.














-

Amortization of fair market value of leases from acquisitions (decreased) increased income by ($0.2) million and $1.1 million for the three months ended June 30, 2021 and 2020, respectively, and ($0.4) million and $2.4 million for the six months ended June 30, 2021 and 2020, respectively.














 

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SOURCE Simon

Tom Ward, 317-685-7330, Investors; Ali Slocum, 317-264-3079, Media