Simon Property Group Reports Second Quarter Results, Announces Increase In Quarterly Dividend And Raises 2012 Guidance
Results for the Quarter
- Funds from Operations ("FFO") was
$688.8 million , or$1.89 per diluted share, as compared to$583.0 million , or$1.65 per diluted share, in the prior year period. The increase on a per share basis was 14.5%. - Net income attributable to common stockholders was
$215.4 million , or$0.71 per diluted share, as compared to$205.1 million , or$0.70 per diluted share, in the prior year period.
Results for the Six Months
- Funds from Operations ("FFO") was
$1.337 billion , or$3.71 per diluted share, as compared to$1.154 billion , or$3.26 per diluted share, in the prior year period. The increase on a per share basis was 13.8%. - Net income attributable to common stockholders was
$860.9 million , or$2.87 per diluted share, as compared to$384.5 million , or$1.31 per diluted share, in the prior year period.
"We continue to deliver strong results as demonstrated by 5.1% growth in Mall and Premium Outlets® comparable property net operating income," said
U.S. Operational Statistics(1)
As of |
As of |
% |
|||||
June 30, 2012 |
June 30, 2011 |
Increase |
|||||
Occupancy(2) |
94.2% |
93.6% |
+ 60 basis points |
||||
Total Sales per Sq. Ft. (3) |
$554 |
$504 |
9.9% |
||||
Base Minimum Rent per Sq. Ft. (2) |
$39.99 |
$38.57 |
3.7% |
||||
(1) Combined information for
(2) Represents mall stores in Malls and all owned square footage in
(3) Rolling 12 month sales per square foot for mall stores less than 10,000 square feet in Malls and all owned square footage in
Dividends
Today the Company announced that the Board of Directors declared a quarterly common stock dividend of
The Company also declared the quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred Stock (NYSE:SPGPrJ) of
Development Activity
The grand opening of
Construction continues on several new
- In
Texas City (Houston ),Texas - a 350,000 square foot upscale outlet center located approximately 30 miles south ofHouston and 20 miles north ofGalveston and scheduled to open in October of 2012. The Company owns a 50% interest in this project. - In Shisui (
Chiba ),Japan – a 234,000 square foot upscale outlet center located one hour from centralTokyo and 15 minutes fromNarita International Airport . The center is scheduled to open in April of 2013 with approximately 110 stores, including international brands, Japanese brands and restaurants. The Company owns a 40% interest in this project, its ninth Premium Outlet Center inJapan . - In
Chandler (Phoenix) ,Arizona – an upscale outlet center adjacent to theWild Horse Pass Hotel & Casino located onInterstate 10 . Phase I of the project will be comprised of 360,000 square feet housing approximately 90 outlet stores featuring high-quality designer and name brands. The Company owns 100% of this project which is scheduled to open in May of 2013. - In
Halton Hills (Toronto ),Canada – a 358,000 square foot upscale outlet center that will house over 100 high quality outlet stores.Toronto Premium Outlets is expected to be the Canadian entry point for selected upscale, U.S. retailers and designer brands. The Company owns a 50% interest in this project which is scheduled to open in August of 2013. - In
Busan, Korea – a 343,000 square foot upscale outlet center that will serve southeasternKorea , including the cities ofBusan , Ulsan and Daegu, as well as local and overseas visitors. The center is scheduled to open in September of 2013. The Company owns a 50% interest in this project, which will be its third Premium Outlet Center inKorea .
The Company started construction on
On
Redevelopment and expansion projects are underway at 25 properties in the U.S. and two properties in Japan. Approximately 70 new anchor and big box tenants are currently scheduled to open in 2012 and 2013 in the Company's U.S. portfolio.
Capital Markets
On
On
2012 Guidance
Today the Company updated and raised its guidance for 2012, estimating that FFO will be within a range of
The following table provides a 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, 2012 |
||
Low |
High |
|
End |
End |
|
Estimated diluted net income available to common stockholders per share |
$4.34 |
$4.44 |
Gain upon acquisition of controlling interests, sale or disposal of assets and interests in |
(1.39) |
(1.39) |
Depreciation and amortization including the Company's share of joint ventures |
4.65 |
4.65 |
Estimated diluted FFO per share |
$7.60 |
$7.70 |
Conference Call
The Company will provide an online simulcast of its quarterly conference call at www.simon.com (Investors 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 Website
The Company has prepared a supplemental information package which is available at www.simon.com in the Investors section, Financial Information tab. It has also been furnished to the
We routinely post important information for investors on our website, www.simon.com, in the "Investors" section. We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases,
Non-GAAP Financial Measures
This press release includes FFO and comparable property net operating income growth, which are adjusted from financial performance measures defined by accounting principles generally accepted in
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 our expectations will be attained, and it is possible that 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: 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, changes in value of investments in foreign entities, the ability to hedge interest rate and currency 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, environ-mental 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, intensely competitive market environment in the retail industry, 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 forward‑looking statements, whether as a result of new information, future developments, or otherwise.
Simon Property Group, Inc. and Subsidiaries |
|||||||
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, |
||||||
2012 |
2011 |
2012 |
2011 |
||||
REVENUE: |
|||||||
Minimum rent |
$ 746,198 |
$ 649,570 |
$1,448,295 |
$1,293,902 |
|||
Overage rent |
31,427 |
21,980 |
59,107 |
39,121 |
|||
Tenant reimbursements |
330,470 |
285,623 |
636,857 |
567,048 |
|||
Management fees and other revenues |
28,347 |
31,259 |
60,634 |
61,751 |
|||
Other income |
51,624 |
52,429 |
102,142 |
98,913 |
|||
Total revenue |
1,188,066 |
1,040,861 |
2,307,035 |
2,060,735 |
|||
EXPENSES: |
|||||||
Property operating |
116,018 |
109,025 |
220,758 |
208,567 |
|||
Depreciation and amortization |
311,863 |
261,298 |
596,972 |
527,608 |
|||
Real estate taxes |
106,777 |
93,424 |
205,479 |
186,688 |
|||
Repairs and maintenance |
26,665 |
24,657 |
52,307 |
55,492 |
|||
Advertising and promotion |
28,549 |
24,958 |
49,648 |
46,846 |
|||
Provision for credit losses |
2,906 |
274 |
6,451 |
1,679 |
|||
Home and regional office costs |
35,104 |
31,453 |
67,962 |
60,509 |
|||
General and administrative |
14,733 |
8,974 |
28,622 |
16,640 |
|||
Other |
24,096 |
19,226 |
41,873 |
38,244 |
|||
Total operating expenses |
666,711 |
573,289 |
1,270,072 |
1,142,273 |
|||
OPERATING INCOME |
521,355 |
467,572 |
1,036,963 |
918,462 |
|||
Interest expense |
(288,560) |
(244,517) |
(546,636) |
(492,634) |
|||
Income tax expense of taxable REIT subsidiaries |
(991) |
(703) |
(1,883) |
(1,846) |
|||
Income from unconsolidated entities |
29,132 |
13,821 |
59,484 |
32,441 |
|||
Gain upon acquisition of controlling |
|||||||
- |
14,349 |
494,837 |
13,765 |
||||
CONSOLIDATED NET INCOME |
260,936 |
250,522 |
1,042,765 |
470,188 |
|||
Net income attributable to noncontrolling interests |
44,657 |
44,567 |
180,241 |
83,987 |
|||
Preferred dividends |
834 |
834 |
1,669 |
1,669 |
|||
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS |
$ 215,445 |
$ 205,121 |
$ 860,855 |
$ 384,532 |
|||
BASIC EARNINGS PER COMMON SHARE: |
|||||||
Net income attributable to common stockholders |
$ 0.71 |
$ 0.70 |
$ 2.87 |
$ 1.31 |
|||
DILUTED EARNINGS PER COMMON SHARE: |
|||||||
Net income attributable to common stockholders |
$ 0.71 |
$ 0.70 |
$ 2.87 |
$ 1.31 |
|||
Simon Property Group, Inc. and Subsidiaries |
|||
Unaudited Consolidated Balance Sheets |
|||
(Dollars in thousands, except share amounts) |
|||
June 30, |
December 31, |
||
2012 |
2011 |
||
ASSETS: |
|||
Investment properties at cost |
$ 34,063,214 |
$ 29,657,046 |
|
Less - accumulated depreciation |
8,827,205 |
8,388,130 |
|
25,236,009 |
21,268,916 |
||
Cash and cash equivalents |
638,499 |
798,650 |
|
Tenant receivables and accrued revenue, net |
423,917 |
486,731 |
|
Investment in unconsolidated entities, at equity |
2,000,509 |
1,378,084 |
|
Investment in Klépierre, at equity |
1,942,153 |
- |
|
Deferred costs and other assets |
1,745,496 |
1,633,544 |
|
Notes receivable from related party |
- |
651,000 |
|
Total assets |
$ 31,986,583 |
$ 26,216,925 |
|
LIABILITIES: |
|||
Mortgages and other indebtedness |
$ 22,466,558 |
$ 18,446,440 |
|
Accounts payable, accrued expenses, intangibles, and deferred |
1,168,636 |
1,091,712 |
|
Cash distributions and losses in partnerships and joint ventures, |
730,636 |
695,569 |
|
Other liabilities and accrued dividends |
226,675 |
170,971 |
|
Total liabilities |
24,592,505 |
20,404,692 |
|
Commitments and contingencies |
|||
Limited partners' preferred interest in the Operating Partnership and |
|||
263,479 |
267,945 |
||
EQUITY: |
|||
Stockholders' Equity |
|||
Capital stock (850,000,000 total shares authorized, $ 0.0001 |
|||
Series J 8 3/8% cumulative redeemable preferred stock, |
|||
44,883 |
45,047 |
||
Common stock, $ 0.0001 par value, 511,990,000 shares |
|||
31 |
30 |
||
Class B common stock, $ 0.0001 par value, 10,000 |
|||
- |
- |
||
Capital in excess of par value |
9,091,935 |
8,103,133 |
|
Accumulated deficit |
(2,974,231) |
(3,251,740) |
|
Accumulated other comprehensive loss |
(81,656) |
(94,263) |
|
Common stock held in treasury at cost, 3,762,595 and |
(135,781) |
(152,541) |
|
Total stockholder's equity |
5,945,181 |
4,649,666 |
|
Noncontrolling interests |
1,185,418 |
894,622 |
|
Total equity |
7,130,599 |
5,544,288 |
|
Total liabilities and equity |
$ 31,986,583 |
$ 26,216,925 |
|
Simon Property Group, Inc. and Subsidiaries |
|||||||
Unaudited Joint Venture Statements of Operations |
|||||||
(Dollars in thousands) |
|||||||
For the Three Months |
For the Six Months |
||||||
Ended June 30, |
Ended June 30, |
||||||
2012 |
2011 |
2012 |
2011 |
||||
Revenue: |
|||||||
Minimum rent |
$ 371,664 |
$ 360,466 |
$ 738,019 |
$ 710,027 |
|||
Overage rent |
36,143 |
27,126 |
84,837 |
57,354 |
|||
Tenant reimbursements |
170,478 |
166,726 |
342,571 |
332,346 |
|||
Other income |
37,488 |
40,546 |
88,435 |
71,898 |
|||
Total revenue |
615,773 |
594,864 |
1,253,862 |
1,171,625 |
|||
Operating Expenses: |
|||||||
Property operating |
115,615 |
112,918 |
233,520 |
224,266 |
|||
Depreciation and amortization |
126,783 |
123,032 |
258,174 |
245,092 |
|||
Real estate taxes |
45,164 |
47,103 |
93,216 |
92,690 |
|||
Repairs and maintenance |
15,919 |
15,595 |
30,807 |
32,311 |
|||
Advertising and promotion |
12,917 |
11,559 |
28,344 |
25,000 |
|||
(Recovery of) provision for credit losses |
(1,102) |
1,113 |
(114) |
1,917 |
|||
Other |
38,793 |
44,158 |
92,356 |
73,289 |
|||
Total operating expenses |
354,089 |
355,478 |
736,303 |
694,565 |
|||
Operating Income |
261,684 |
239,386 |
517,559 |
477,060 |
|||
Interest expense |
(155,393) |
(153,970) |
(315,554) |
(305,002) |
|||
Loss from unconsolidated entities |
(316) |
(631) |
(631) |
(459) |
|||
Income from Continuing Operations |
105,975 |
84,785 |
201,374 |
171,599 |
|||
Loss from operations of discontinued joint venture interests |
(1,173) |
(9,559) |
(11,623) |
(15,661) |
|||
Gain on disposal of discontinued operations, net |
- |
15,506 |
- |
15,506 |
|||
Net Income |
$ 104,802 |
$ 90,732 |
$ 189,751 |
$ 171,444 |
|||
Third-Party Investors' Share of Net Income |
$ 56,787 |
$ 56,455 |
$ 96,800 |
$ 106,470 |
|||
Our Share of Net Income |
48,015 |
34,277 |
92,951 |
64,974 |
|||
Amortization of Excess Investment (B) |
(18,749) |
(12,703) |
(33,333) |
(24,780) |
|||
Our Share of Gain on Sale or Disposal of Assets and |
|||||||
Interests in Unconsolidated Entities, net |
- |
(7,753) |
- |
(7,753) |
|||
Income from Unconsolidated Entities (C) |
$ 29,266 |
$ 13,821 |
$ 59,618 |
$ 32,441 |
|||
Note: The above financial presentation does not include any information related to our investment in Klépierre. |
|||||||
For additional information, see footnote C attached hereto. |
|||||||
Simon Property Group, Inc. and Subsidiaries |
|||
Unaudited Joint Venture Balance Sheets |
|||
(Dollars in thousands) |
|||
June 30, |
December 31, |
||
2012 |
2011 |
||
Assets: |
|||
Investment properties, at cost |
$ 14,491,236 |
$ 20,481,657 |
|
Less - accumulated depreciation |
4,725,920 |
5,264,565 |
|
9,765,316 |
15,217,092 |
||
Cash and cash equivalents |
483,433 |
806,895 |
|
Tenant receivables and accrued revenue, net |
198,773 |
359,208 |
|
Investment in unconsolidated entities, at equity |
39,855 |
133,576 |
|
Deferred costs and other assets |
366,900 |
526,101 |
|
Total Assets |
$ 10,854,277 |
$ 17,042,872 |
|
Liabilities and Partners' Deficit: |
|||
Mortgages and other indebtedness |
$ 11,499,568 |
$ 15,582,321 |
|
Accounts payable, accrued expenses, intangibles, and deferred revenue |
527,701 |
775,733 |
|
Other liabilities |
308,912 |
981,711 |
|
Total liabilities |
12,336,181 |
17,339,765 |
|
Preferred units |
67,450 |
67,450 |
|
Partners' deficit |
(1,549,354) |
(364,343) |
|
Total liabilities and partners' deficit |
$ 10,854,277 |
$ 17,042,872 |
|
Our Share of: |
|||
Partners' deficit |
$ (708,641) |
$ (32,000) |
|
Add: Excess Investment (B) |
1,978,514 |
714,515 |
|
Our net Investment in unconsolidated entities |
$ 1,269,873 |
$ 682,515 |
|
Note: The above financial presentation does not include any information related to our investment in Klépierre. |
|||
For additional information, see footnote C attached hereto. |
|||
Simon Property Group, Inc. and Subsidiaries |
|||||||||||
Unaudited Reconciliation of Non-GAAP Financial Measures (D) |
|||||||||||
(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, |
||||||||||
2012 |
2011 |
2012 |
2011 |
||||||||
Consolidated Net Income (E) (F) (G) (H) |
$260,936 |
$250,522 |
$1,042,765 |
$ 470,188 |
|||||||
Adjustments to Consolidated Net Income to Arrive at FFO: |
|||||||||||
Depreciation and amortization from |
|||||||||||
308,186 |
257,770 |
589,536 |
520,316 |
||||||||
Simon's share of depreciation and |
|||||||||||
124,989 |
94,376 |
211,130 |
187,757 |
||||||||
Gain upon acquisition of controlling |
|||||||||||
- |
(14,349) |
(494,837) |
(13,765) |
||||||||
Net income attributable to |
|||||||||||
(1,855) |
(1,939) |
(3,963) |
(4,050) |
||||||||
Noncontrolling interests portion of |
(2,174) |
(2,100) |
(4,582) |
(4,210) |
|||||||
Preferred distributions and |
(1,313) |
(1,313) |
(2,627) |
(2,626) |
|||||||
FFO of the Operating Partnership |
$688,769 |
$582,967 |
$1,337,422 |
$1,153,610 |
|||||||
Diluted net income per share to diluted FFO per share reconciliation: |
|||||||||||
Diluted net income per share |
$ 0.71 |
$ 0.70 |
$ 2.87 |
$ 1.31 |
|||||||
Depreciation and amortization from |
|||||||||||
1.18 |
0.99 |
2.21 |
1.99 |
||||||||
Gain upon acquisition of controlling impairment charge on investment |
|||||||||||
- |
(0.04) |
(1.37) |
(0.04) |
||||||||
Diluted FFO per share |
$ 1.89 |
$ 1.65 |
$ 3.71 |
$ 3.26 |
|||||||
Details for per share calculations: |
|||||||||||
FFO of the Operating Partnership |
$688,769 |
$582,967 |
$1,337,422 |
$1,153,610 |
|||||||
Adjustments for dilution calculation: |
|||||||||||
Diluted FFO of the Operating Partnership |
$688,769 |
$582,967 |
$1,337,422 |
$1,153,610 |
|||||||
Diluted FFO allocable to unitholders |
(115,421) |
(99,251) |
(226,290) |
(196,498) |
|||||||
Diluted FFO allocable to common stockholders |
$573,348 |
$483,716 |
$1,111,132 |
$ 957,112 |
|||||||
Basic weighted average shares outstanding |
303,252 |
293,368 |
299,473 |
293,225 |
|||||||
Adjustments for dilution calculation: |
|||||||||||
Effect of stock options |
1 |
35 |
1 |
128 |
|||||||
Diluted weighted average shares outstanding |
303,253 |
293,403 |
299,474 |
293,353 |
|||||||
Weighted average limited partnership units outstanding |
61,048 |
60,202 |
60,990 |
60,226 |
|||||||
Diluted weighted average shares and units outstanding |
364,301 |
353,605 |
360,464 |
353,579 |
|||||||
Basic FFO per Share |
$ 1.89 |
$ 1.65 |
$ 3.71 |
$ 3.26 |
|||||||
Percent Change |
14.5% |
13.8% |
|||||||||
Diluted FFO per Share |
$ 1.89 |
$ 1.65 |
$ 3.71 |
$ 3.26 |
|||||||
Percent Change |
14.5% |
13.8% |
|||||||||
Footnotes to Unaudited Reconciliation of Non-GAAP Financial Measures
Notes:
(A) Primarily consists of 2012 non-cash gains resulting from our acquisition activity and the remeasurement of our previously held interest to fair value for those properties in which we now have a controlling interest.
(B) Excess investment represents the unamortized difference of the Company's 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 properties.
(C) The Unaudited Joint Venture Statements of Operations do not include any operations or our share of net income or excess investment amortization related to our investment in Klépierre. Amounts included in Footnotes E - H below exclude our share of related activity for our investment in Klepierre. For further information, reference should be made to financial information in Klépierre's public filings and additional discussion and analysis in our Form 10-Q.
(D) 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.
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, or any impairment charges related to, 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, or any impairment charges relating to, 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 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.
(E) Includes the Company's share of gains on land sales of $6.6 million and $1.7 million for the three months ended June 30, 2012 and 2011, respectively, and $9.8 million and $4.4 million for the six months ended June 30, 2012 and 2011, respectively.
(F) Includes the Company's share of straight-line adjustments to minimum rent of $11.4 million and $8.1 million for the three months ended June 30, 2012 and 2011, respectively, and $20.2 million and $15.4 million for the six months ended June 30, 2012 and 2011, respectively.
(G) Includes the Company's share of the amortization of fair market value of leases from acquisitions of $5.6 million and $5.9 million for the three months ended June 30, 2012 and 2011, respectively, and $10.7 million and $11.7 million for the six months ended June 30, 2012 and 2011, respectively.
(H) Includes the Company's share of debt premium amortization of $13.4 million and $2.1 million for the three months ended June 30, 2012 and 2011, respectively, and $20.1 million and $4.7 million for the six months ended June 30, 2012 and 2011, respectively.
SOURCE
Shelly Doran, +1-317-685-7330 - Investors, or Les Morris, +1-317-263-7711 - Media