Simon Property Group Announces Third Quarter Results
INDIANAPOLIS, Oct. 30 /PRNewswire-FirstCall/ -- Simon Property Group, Inc. (the "Company" or "Simon") (NYSE: SPG) today announced results for the quarter ended September 30, 2009.
Funds from operations ("FFO") for the quarter increased 2.0% to $473.1 million, or $1.38 per share diluted. FFO for the third quarter of 2009 reflects dilution of $0.23 per share as a result of the issuance of 17.25 million shares of common stock by the Company in March and an additional 23 million shares in May of 2009, as well as approximately 10 million shares year-to-date that were issued as common stock dividends. FFO for the third quarter of 2008 was $463.9 million, or $1.61 per share diluted.
Net income attributable to common stockholders for the quarter ended September 30, 2009 was $105.5 million, or $0.38 per share diluted. Net income for the quarter reflects dilution of $0.08 per share as a result of the 2009 common stock issuances described above. Net income attributable to common stockholders for the quarter ended September 30, 2008 was $112.8 million, or $0.50 per share diluted.
"I was pleased with our third quarter financial and operational performance, which exceeded the First Call consensus FFO estimate by $0.05 per share," said David Simon, Chairman and Chief Executive Officer. "We are encouraged to see continued improvement in the capital markets and from our retailers. Accordingly, today we are increasing the low-end and maintaining the high-end of our 2009 FFO guidance range, even after the impact of our August $500 million unsecured notes issuance, which was not in our previous guidance."
U.S. Portfolio Statistics(1)
---------------------------
As of As of
September 30, 2009 September 30, 2008
------------------ --------------
Occupancy
---------
Regional Malls(2) 91.4% 92.5%
Premium Outlet Centers(R) (3) 97.5% 98.8%
Comparable Sales per Sq. Ft.
----------------------------
Regional Malls(4) $438 $493
Premium Outlet Centers(3) $492 $515
Average Rent per Sq. Ft.
------------------------
Regional Malls(2) $40.05 $39.26
Premium Outlet Centers(3) $32.95 $27.12
(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.
Dividends
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 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 November 30, 2009 to stockholders of
record on November 16, 2009 .
-- 8 3/8% Series J Cumulative Redeemable Preferred (NYSE:SPGPrJ) dividend
of $1.046875 per share is payable on December 31, 2009 to stockholders
of record on December 17, 2009 .
Financing Update
During the third quarter of 2009, the following transactions were completed:
-- On July 30th , the Company closed $400 million of mortgage financings for
three regional malls.
-- On August 11th , the Company's majority-owned partnership subsidiary,
Simon Property Group, L.P. ("SPGLP"), issued $500 million aggregate
principal amount of 6.75% senior unsecured notes due 2014 in an
underwritten public offering. The notes were priced at 105.029% of the
principal amount plus accrued interest to yield 5.46% to maturity.
-- On August 27th , SPGLP redeemed two issues of preferred units with a
total liquidation preference of $40 million . The weighted average rate
for the preferreds was 7.95%. The liquidation preference was paid in
common units of SPGLP, resulting in the issuance of approximately
645,000 units.
As of
On
The Company continues construction on the following development projects:
-- 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 (opened October 16, 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 , Target and 146,000 square feet of small shops at
South Shore Plaza in Braintree (Boston ), Massachusetts . Nordstrom and
the small shops are scheduled to open in March of 2010, with Target
scheduled to open in October of 2010. The center is 100% owned by Simon.
International Activity
Two projects opened in
-- INCITY Plaza opened on September 25th in the commercial center of
Zhengzhou , a city of 7 million people. INCITY Plaza Zhengzhou contains
468,000 square feet of GLA and over 92 international and domestic
retailers and restaurants, and is anchored by Wal-Mart .
-- INCITY Plaza opened on September 28th in the Commercial District
(Singapore Industrial Park ) of Suzhou, a city of over 6 million people.
INCITY Plaza Suzhou contains 769,000 square feet of GLA and over 130
international and domestic retailers and restaurants, and is anchored by
Wal-Mart .
Construction continues on the following international development projects:
-- Argine (Naples, Italy ) - a 300,000 square foot shopping center anchored
by Auchan which is 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 anchored
by Auchan which is scheduled to open in April of 2010. Simon owns a 24%
interest in this project.
-- Hangzhou (China ) - a 312,000 square foot shopping center anchored by
Wal-Mart which is scheduled to open in December of 2009. Simon owns a
32.5% interest in this project.
2009 Guidance
Today the Company increased the low-end of the guidance for 2009 provided on
FFO guidance is as follows:
For the year ending
December 31, 2009
Low High
End End
--- ---
August 4, 2009 guidance $5.35 $5.50
Dilution from August senior notes offering (0.03) (0.03)
Increase in guidance 0.08 0.03
October 30, 2009 guidance $5.40 $5.50
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 $1.17 $1.27
Depreciation and amortization including our
share of joint ventures 4.30 4.30
Impact of additional dilutive securities (0.07) (0.07)
Estimated diluted FFO per share $5.40 $5.50
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 Financial Statements
The Company will publish a supplemental information package which will be available at www.simon.com in the Investors section, Financial Information tab. It will also be furnished to the
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, changes in value of investments in foreign entities, 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
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
About
SIMON
Consolidated Statements of Operations
Unaudited
(In thousands)
--------------
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
---- ---- ---- ----
REVENUE:
Minimum rent $570,100 $567,938 $1,709,147 $1,684,819
Overage rent 19,806 26,295 45,799 60,782
Tenant
reimbursements 268,611 266,616 784,905 776,667
Management fees and
other revenues 29,988 33,350 90,694 101,249
Other income 36,427 41,395 116,491 130,322
------ ------ ------- -------
Total revenue 924,932 935,594 2,747,036 2,753,839
EXPENSES:
Property operating 113,815 127,515 326,798 352,187
Depreciation and
amortization 250,151 235,915 758,173 700,575
Real estate taxes 79,854 84,101 251,173 254,071
Repairs and
maintenance 19,151 20,392 61,925 75,258
Advertising and
promotion 23,226 22,942 61,555 64,054
(Recovery of)
provision
for credit losses (745) 4,004 19,336 17,367
Home and regional
office costs 26,899 34,322 79,732 108,766
General and
administrative 4,509 5,035 13,867 15,432
Impairment charge - - 140,478 -
Other 15,895 18,016 52,908 51,964
------ ------ ------ ------
Total operating
expenses 532,755 552,242 1,765,945 1,639,674
------- ------- ------- ---------
OPERATING INCOME 392,177 383,352 981,091 1,114,165
Interest expense (257,881) (239,955) (728,360) (702,207)
Loss on
extinguishment of
debt - - - (20,330)
Income tax benefit
(expense) of
taxable REIT
subsidiaries 238 (972) 2,904 (1,576)
Income from
unconsolidated
entities 4,655 17,312 15,694 13,060
----- ------ ------ ------
CONSOLIDATED NET
INCOME 139,189 159,737 271,329 403,112
Net income
attributable to
noncontrolling
interests 27,103 35,644 60,177 91,818
Preferred dividends 6,539 11,284 19,597 33,980
----- ------ ------ ------
NET INCOME
ATTRIBUTABLE
TO COMMON
STOCKHOLDERS $105,547 $112,809 $191,555 $277,314
======== ======== ======== ========
Basic Earnings Per
Common Share:
Net income
attributable
to common
stockholders $0.38 $0.50 $0.73 $1.23
===== ===== ===== =====
Percentage
Change -24.0% -40.7%
Diluted Earnings
Per Common Share:
Net income
attributable
to common
stockholders $0.38 $0.50 $0.73 $1.23
===== ===== ===== =====
Percentage
Change -24.0% -40.7%
SIMON
Consolidated Balance Sheets
Unaudited
(In thousands, except as noted)
-------------------------------
September 30, December 31,
2009 2008
---- ----
ASSETS:
Investment properties, at cost $25,405,801 $25,205,715
Less - accumulated depreciation 6,837,803 6,184,285
--------- ---------
18,567,998 19,021,430
Cash and cash equivalents 3,745,693 773,544
Tenant receivables and accrued
revenue, net 352,638 414,856
Investment in unconsolidated entities,
at equity 1,507,483 1,663,886
Deferred costs and other assets 1,166,792 1,028,333
Note receivable from related party 636,000 520,700
------- -------
Total assets $25,976,604 $23,422,749
=========== ===========
LIABILITIES:
Mortgages and other indebtedness $18,669,121 $18,042,532
Accounts payable, accrued expenses,
intangibles, and deferred revenues 1,050,269 1,086,248
Cash distributions and losses in
partnerships and joint ventures, at
equity 443,081 380,730
Other liabilities and accrued dividends 182,722 155,151
------- -------
Total liabilities 20,345,193 19,664,661
---------- ----------
Commitments and contingencies
Limited partners' preferred interest in the
Operating Partnership and noncontrolling
redeemable interests in properties 150,261 276,608
Series I 6% convertible perpetual preferred
stock, 19,000,000 shares authorized,
7,603,537 and 7,590,264 issued and
outstanding, respectively, at liquidation
value 380,177 379,513
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 45,786 46,032
Common stock, $.0001 par value,
400,004,000 shares authorized,
287,424,297 and 235,691,040 issued,
respectively 29 24
Class B common stock, $.0001 par value,
12,000,000 shares authorized, 8,000
issued and outstanding - -
Capital in excess of par value 7,391,338 5,410,147
Accumulated deficit (2,872,685) (2,491,929)
Accumulated other comprehensive loss (15,158) (165,066)
Common stock held in treasury at cost,
4,123,116 and 4,379,396 shares,
respectively (176,885) (186,210)
-------- --------
Total stockholders' equity 4,372,425 2,612,998
Noncontrolling interests 728,548 488,969
------- -------
Total equity 5,100,973 3,101,967
----------- -----------
Total liabilities and equity $25,976,604 $23,422,749
=========== ===========
SIMON
Joint Venture Statements of Operations
Unaudited
(In thousands)
--------------
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
---- ---- ---- ----
Revenue:
Minimum rent $488,052 $486,586 $1,445,618 $1,435,067
Overage rent 34,204 26,910 85,141 72,439
Tenant reimbursements 243,201 257,259 719,845 730,597
Other income 37,039 61,862 115,946 145,380
------ ------ ------- -------
Total revenue 802,496 832,617 2,366,550 2,383,483
Operating Expenses:
Property operating 178,291 177,761 489,616 494,498
Depreciation and
amortization 194,727 192,787 580,215 572,256
Real estate taxes 57,262 63,254 190,036 195,627
Repairs and maintenance 26,413 28,582 77,048 89,085
Advertising
and promotion 16,005 16,119 44,936 45,241
Provision for
credit losses 3,523 6,244 18,910 14,072
Other 43,487 37,640 131,680 123,245
------ ------ ------- -------
Total operating
expenses 519,708 522,387 1,532,441 1,534,024
------- ------- --------- ---------
Operating Income 282,788 310,230 834,109 849,459
Interest expense (221,166) (243,569) (661,586) (727,279)
Income (loss) from
unconsolidated entities (3,170) 346 (2,383) (3,783)
------ --- ------ ------
Income from Continuing
Operations 58,452 67,007 170,140 118,397
Income from discontinued
joint venture interests
(A) - - - 47
------- ------- -------- --------
Net Income $58,452 $67,007 $170,140 $118,444
======= ======= ======== ========
Third-Party Investors'
Share of Net Income $39,710 $37,846 $112,600 $71,403
------- ------- -------- -------
Our Share of Net Income 18,742 29,161 57,540 47,041
Amortization of
Excess Investment (14,087) (11,849) (41,846) (33,981)
------- ------- -------- -------
Income from Unconsolidated
Entities, Net $4,655 $17,312 $15,694 $13,060
====== ======= ======= =======
SIMON
Joint Venture Balance Sheets
Unaudited
(In thousands)
--------------
September 30, December 31,
2009 2008
---- ----
Assets:
Investment properties,
at cost $21,803,214 $21,472,490
Less - accumulated
depreciation 4,390,644 3,892,956
--------- ---------
17,412,570 17,579,534
Cash and cash equivalents 825,816 805,411
Tenant receivables and
accrued revenue, net 374,028 428,322
Investment in unconsolidated
entities, at equity 243,347 230,497
Deferred costs and
other assets 600,125 594,578
------- -------
Total assets $19,455,886 $19,638,342
=========== ===========
Liabilities and Partners'
Equity:
Mortgages and
other indebtedness $16,896,737 $16,686,701
Accounts payable, accrued
expenses, intangibles
and deferred revenue 926,516 1,070,958
Other liabilities 1,107,457 982,254
--------- -------
Total liabilities 18,930,710 18,739,913
Preferred units 67,450 67,450
Partners' equity 457,726 830,979
------- -------
Total liabilities and
partners' equity $19,455,886 $19,638,342
=========== ===========
Our Share of:
Total assets $7,994,929 $8,056,873
========== ==========
Partners' equity $369,166 $533,929
Add: Excess Investment (B) 695,236 749,227
------- -------
Our net Investment
in Joint Ventures 1,064,402 1,283,156
--------- ---------
Mortgages and
other indebtedness $6,649,168 $6,632,419
========== ==========
SIMON
Footnotes to Financial Statements
Unaudited
(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 For the Nine
Months Ended Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Consolidated Net
Income(2)(3)(4)(5) $139,189 $159,737 $271,329 $403,112
Adjustments to Consolidated
Net Income to Arrive at FFO:
Depreciation and
amortization from
consolidated
properties 247,236 232,524 748,191 690,029
Simon's share of
depreciation and
amortization from
unconsolidated
entities 100,027 91,924 287,901 280,039
Net income attributable to
noncontrolling interest
holders in properties (2,700) (2,758) (8,064) (7,551)
Noncontrolling
interests portion of
depreciation and
amortization (2,017) (1,980) (6,253) (6,447)
Preferred
distributions and
dividends (8,662) (15,550) (30,050) (47,378)
------ ------- ------- -------
FFO of the Operating
Partnership $473,073 $463,897 $1,263,054 $1,311,804
======== ======== ========== ==========
Per Share Reconciliation:
--------------------------
Diluted net income
attributable to common
stockholders per share $0.38 $0.50 $0.73 $1.23
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 1.02 1.14 3.24 3.42
Impact of additional
dilutive securities
for FFO per share (0.02) (0.03) (0.05) (0.09)
----- ----- ----- -----
Diluted FFO per share $1.38 $1.61 $3.92 $4.56
===== ===== ===== =====
Details for per share
calculations:
---------------------
FFO of the Operating
Partnership $473,073 $463,897 $1,263,054 $1,311,804
Adjustments for dilution
calculation:
Impact of preferred stock
and preferred unit
conversions and
option exercises (6) 6,857 11,722 20,612 35,837
----- ------ ------ ------
Diluted FFO of the
Operating Partnership 479,930 475,619 1,283,666 1,347,641
Diluted FFO allocable to
unitholders (79,349) (91,791) (223,818) (261,819)
------- ------- -------- --------
Diluted FFO allocable to
common stockholders $400,581 $383,828 $1,059,848 $1,085,822
======== ======== ========== ==========
Basic weighted average
shares outstanding 281,430 225,356 261,355 224,601
Adjustments for dilution
calculation:
Effect of stock
options 337 569 291 593
Effect of contingently
issuable shares
from stock dividends 707 - 1,261 -
Impact of Series C
preferred unit
conversion 40 75 61 76
Impact of Series I
preferred unit
conversion 1,269 1,302 1,253 1,624
Impact of Series I
preferred stock
conversion 6,394 11,161 6,287 11,147
----- ------ ----- ------
Diluted weighted average
shares outstanding 290,177 238,463 270,508 238,041
Weighted average limited
partnership units
outstanding 57,480 57,028 57,126 57,398
------- ------- ------- -------
Diluted weighted average
shares and units
outstanding 347,657 295,491 327,634 295,439
======= ======= ======= =======
Basic FFO per share $1.40 $1.64 $3.97 $4.65
Percent Change -14.6% -14.6%
Diluted FFO per share $1.38 $1.61 $3.92 $4.56
Percent Change -14.3% -14.0%
SIMON
Footnotes to Reconciliation of Consolidated 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
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.
(2) Includes the Company's share of gains on land sales. There were
no gains for the three months ended September 30, 2009 ,
$1.6 million for the three months ended September
30, 2008 , and $2.2 million and $9.2 million
for the nine months ended September 30, 2009 and 2008, respectively.
(3) Includes the Company's share of straight-line adjustments to
minimum rent of $7.8 million and $9.5 million for the three months ended
September 30, 2009 and 2008, respectively, and $25.3 million and
$31.0 million for the nine months ended September 30,
2009 and 2008, respectively.
(4) Includes the Company's share of the fair market value of leases
from acquisitions of $5.7 million and $9.1 million for the three
months ended September 30, 2009 and 2008, respectively, and $19.0
million and $36.5 million for the nine months ended September 30,
2009 and 2008, respectively.
(5) Includes the Company's share of debt premium amortization of $3.5
million and $4.5 million for the three months ended September 30, 2009
and 2008, respectively, and $10.8 million and $14.7 million for the nine
months ended September 30, 2009 and 2008, respectively.
(6) Includes dividends and distributions of Series I preferred stock
and Series C and Series I preferred units.
SOURCE
Investors, Shelly Doran, +1-317-685-7330, or Media, Les Morris, +1-317-263-7711, both of Simon Property Group, Inc.
