Simon Property Group Reports First Quarter 2015 Results And Raises Quarterly Dividend And Full Year 2015 Guidance
INDIANAPOLIS,
Results for the Quarter
- Funds from Operations ("FFO") was
$830.7 million , or$2.28 per diluted share, as compared to$865.3 million , or$2.38 per diluted share, in the prior year period. Results for the three months endedMarch 31, 2014 included FFO per diluted share of$0.24 from theWashington Prime Group Inc. ("WPG") properties that were spun-off effectiveMay 28 , 2014. On a comparable basis, FFO per diluted share was$2.28 in the first quarter of 2015 as compared to$2.14 in the first quarter of 2014. - Net income attributable to common stockholders was
$362.2 million , or$1.16 per diluted share, as compared to$341.6 million , or$1.10 per diluted share, in the prior year period. On a comparable basis, net income per diluted share was$1.16 in the first quarter of 2015 as compared to $0.99 in the first quarter of 2014. - Growth in FFO per diluted share for the three months ended
March 31, 2015 was 6.5%, excluding the FFO from the WPG properties as detailed in the table below.
Three Months Ended March 31, |
||||||
2015 |
2014 |
|||||
Reported FFO per share |
$2.28 |
$2.38 |
||||
Less: FFO from WPG properties |
-- |
(0.24) |
||||
Comparable FFO per share |
$2.28 |
$2.14 |
||||
Comparable FFO per share growth |
6.5% |
|||||
Reported earnings per share |
$1.16 |
$1.10 |
||||
Comparable earnings per share |
$1.16 |
$0.99 |
||||
Comparable earnings per share growth(1) |
17.2% |
(1) |
For a reconciliation of Reported EPS to Comparable EPS, please see Footnote H of the Footnotes to Unaudited Reconciliation of Non-GAAP Financial Measures. |
"We are off to a strong start in 2015 with the acquisition of two significant properties and the reporting of strong financial and operational results," said
U.S. Malls and Premium Outlets Operating Statistics
As of |
|||||
March 31, |
Year-over-Year |
||||
2015(1) |
2014 |
Change |
|||
Occupancy(2) |
95.8% |
95.5% |
+30 bps |
||
Base Minimum Rent |
|||||
per sq. ft. (2) |
$47.59 |
$42.77 |
+11.3% |
||
Releasing Spread |
|||||
per sq. ft. (2)(3) |
$11.19 |
$9.90 |
+$1.29 |
||
Releasing Spread |
|||||
(percentage change)(2)(3) |
18.9% |
19.5% |
-60 bps |
||
Total Sales per sq. ft.(4) |
$621 |
$576 |
+7.8% |
(1) |
Excludes WPG properties. |
(2) |
Represents mall stores in Malls and all owned square footage in Premium Outlets. |
(3) |
Same space measure that compares opening and closing rates on individual spaces leased during trailing 12-month period. |
(4) |
Trailing 12-month sales per square foot for mall stores less than 10,000 square feet in Malls and all owned square footage in Premium Outlets. |
Comparable Property Net Operating Income
Comparable property NOI growth for the three months ended
Dividends
Today Simon's Board of Directors declared a quarterly common stock dividend of
Simon's Board of Directors also declared the quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred Stock (NYSE: SPGPrJ) of
Development Activity
During the quarter, we completed a 265,000 square foot expansion of
Construction continues on other significant expansion projects including Roosevelt Field, Del Amo Fashion Center,
At quarter-end, redevelopment and expansion projects, including the addition of new anchors, were underway at 24 properties in the U.S. and Asia.
Construction continues on three new
Vancouver Designer Outlet inVancouver, British Columbia , Canada is a 242,000 square foot center scheduled to open in July of 2015. Simon owns a 45% interest in this project.Gloucester Premium Outlets inGloucester, New Jersey , serving the greaterPhiladelphia metropolitan area, is a 375,000 square foot center scheduled to open in August of 2015. Simon owns a 50% interest in this project.Tucson Premium Outlets is a 366,000 square foot center scheduled to open in September of 2015. Simon owns 100% of this project.Tampa Premium Outlets is a 441,000 square foot center scheduled to open in October of 2015. Simon owns 100% of this project.
Simon's share of the costs of all development and redevelopment projects under construction at quarter-end was approximately
Acquisitions
In
Joint Venture Transactions
In
Subsequent to the quarter end, we created a joint venture with
Financing Activity
The Company was active in both the unsecured and secured debt markets in the first quarter continuing to lower our effective borrowing costs.
During the quarter, the Company extended and expanded its
In addition, the Company also increased the maximum aggregate program size of its global commercial paper note program from
With regard to secured debt activity, we closed or locked rate on three new loans totaling approximately
As of
Common Stock Repurchase Program
Subsequent to the quarter end, the Company announced that its Board of Directors authorized a common stock repurchase program. Under the program, the Company may purchase up to
2015 Guidance
Today, the Company is raising both the low and high ends of its previously provided full year 2015 FFO range by
The following table provides the reconciliation for the expected range of estimated net income available to common stockholders per diluted share to estimated FFO per diluted share:
For the year ending December 31, 2015 |
||
Low |
High |
|
End |
End |
|
Estimated net income available to common stockholders |
||
per diluted share |
$5.10 |
$5.20 |
Depreciation and amortization including Simon's share |
||
of unconsolidated entities |
4.55 |
4.55 |
Estimated FFO per diluted share |
$9.65 |
$9.75 |
Conference Call
Simon will hold a conference call to discuss the quarterly financial results today at
Supplemental Materials and Website
Supplemental information on our first quarter 2015 performance is available at investors.simon.com. This information has also been furnished to the
We routinely post important information online at our investor relations website, investors.simon.com. We use this website, press releases,
Non-GAAP Financial Measures
This press release includes FFO, FFO per share, comparable FFO per share, comparable earnings per share and comparable property net operating income growth, which are financial performance measures not defined by generally accepted accounting principles 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 its 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, environmental liabilities, international, national, regional and local economic conditions, changes in market rental rates, security breaches that could compromise our information technology or infrastructure or personally identifiable data of customers of our retail properties, 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, the intensely competitive market environment in the retail industry, costs of common area maintenance, risks related to international activities, insurance costs and coverage, the loss of key management personnel, 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 our annual and quarterly reports filed with the SEC. 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 unless required by law.
About Simon
Simon is a global leader in retail real estate ownership, management and development and a S&P100 company (
Simon Property Group, Inc. and Subsidiaries |
||
For the Three Months |
||
Ended March 31, |
||
2015 |
2014 |
|
REVENUE: |
||
Minimum rent |
$ 753,445 |
$ 722,283 |
Overage rent |
38,957 |
31,674 |
Tenant reimbursements |
340,170 |
325,471 |
Management fees and other revenues |
35,078 |
30,607 |
Other income |
48,585 |
46,987 |
Total revenue |
1,216,235 |
1,157,022 |
EXPENSES: |
||
Property operating |
99,757 |
94,947 |
Depreciation and amortization |
288,106 |
280,493 |
Real estate taxes |
106,888 |
94,305 |
Repairs and maintenance |
29,734 |
29,766 |
Advertising and promotion |
18,756 |
22,619 |
Provision for credit losses |
3,847 |
4,423 |
Home and regional office costs |
35,903 |
35,288 |
General and administrative |
14,999 |
14,855 |
Other |
19,074 |
19,361 |
Total operating expenses |
617,064 |
596,057 |
OPERATING INCOME |
599,171 |
560,965 |
Interest expense |
(232,173) |
(254,234) |
Income and other taxes |
(6,362) |
(6,863) |
Income from unconsolidated entities |
64,872 |
57,078 |
Gain upon acquisition of controlling interests and sale or disposal of assets |
||
and interests in unconsolidated entities, net |
- |
2,655 |
Consolidated income from continuing operations |
425,508 |
359,601 |
Discontinued operations and gain on disposal |
- |
41,502 |
CONSOLIDATED NET INCOME |
425,508 |
401,103 |
Net income attributable to noncontrolling interests |
62,500 |
58,621 |
Preferred dividends |
834 |
834 |
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS |
$ 362,174 |
$ 341,648 |
BASIC AND DILUTED EARNINGS PER COMMON SHARE: |
||
Income from continuing operations |
$ 1.16 |
$ 0.99 |
Discontinued operations |
- |
0.11 |
Net income attributable to common stockholders |
$ 1.16 |
$ 1.10 |
Simon Property Group, Inc. and Subsidiaries |
||
March 31, |
December 31, |
|
2015 |
2014 |
|
ASSETS: |
||
Investment properties at cost |
$ 32,537,403 |
$ 31,318,532 |
Less - accumulated depreciation |
9,146,094 |
8,950,747 |
23,391,309 |
22,367,785 |
|
Cash and cash equivalents |
833,732 |
612,282 |
Tenant receivables and accrued revenue, net |
523,734 |
580,197 |
Investment in unconsolidated entities, at equity |
2,158,205 |
2,378,800 |
Investment in Klepierre, at equity |
1,516,749 |
1,786,477 |
Deferred costs and other assets |
1,851,798 |
1,806,789 |
Total assets |
$ 30,275,527 |
$ 29,532,330 |
LIABILITIES: |
||
Mortgages and unsecured indebtedness |
$ 21,694,055 |
$ 20,852,993 |
Accounts payable, accrued expenses, intangibles, and deferred revenues |
1,122,444 |
1,259,681 |
Cash distributions and losses in partnerships and joint ventures, at equity |
1,372,575 |
1,167,163 |
Other liabilities |
295,853 |
275,451 |
Total liabilities |
24,484,927 |
23,555,288 |
Commitments and contingencies |
||
Limited partners' preferred interest in the Operating Partnership |
25,537 |
25,537 |
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 |
43,980 |
44,062 |
Common stock, $ 0.0001 par value, 511,990,000 shares authorized, 314,803,818 and |
||
314,320,664 issued and outstanding, respectively |
31 |
31 |
Class B common stock, $ 0.0001 par value, 10,000 shares authorized, 8,000 |
||
issued and outstanding |
- |
- |
Capital in excess of par value |
9,437,338 |
9,422,237 |
Accumulated deficit |
(4,289,099) |
(4,208,183) |
Accumulated other comprehensive loss |
(151,831) |
(61,041) |
Common stock held in treasury at cost, 3,543,043 and 3,540,754 shares, respectively |
(103,974) |
(103,929) |
Total stockholders' equity |
4,936,445 |
5,093,177 |
Noncontrolling interests |
828,618 |
858,328 |
Total equity |
5,765,063 |
5,951,505 |
Total liabilities and equity |
$ 30,275,527 |
$ 29,532,330 |
Simon Property Group, Inc. and Subsidiaries |
||||
Unaudited Joint Venture Statements of Operations |
||||
(Dollars in thousands) |
||||
For the Three Months Ended March 31, |
||||
2015 |
2014 |
|||
Revenue: |
||||
Minimum rent |
$ 433,781 |
$ 424,785 |
||
Overage rent |
51,180 |
48,797 |
||
Tenant reimbursements |
194,487 |
192,793 |
||
Other income |
53,995 |
112,706 |
||
Total revenue |
733,443 |
779,081 |
||
Operating Expenses: |
||||
Property operating |
130,804 |
161,421 |
||
Depreciation and amortization |
141,659 |
152,148 |
||
Real estate taxes |
58,574 |
54,791 |
||
Repairs and maintenance |
20,361 |
19,641 |
||
Advertising and promotion |
16,702 |
18,810 |
||
Provision for credit losses |
1,853 |
3,108 |
||
Other |
44,428 |
52,929 |
||
Total operating expenses |
414,381 |
462,848 |
||
Operating Income |
319,062 |
316,233 |
||
Interest expense |
(147,020) |
(151,637) |
||
Income from Continuing Operations |
172,042 |
164,596 |
||
Income from operations of discontinued joint venture interests |
- |
2,985 |
||
Net Income |
$ 172,042 |
$ 167,581 |
||
Third-Party Investors' Share of Net Income |
$ 89,114 |
$ 89,313 |
||
Our Share of Net Income |
82,928 |
78,268 |
||
Amortization of Excess Investment (A) |
(24,154) |
(25,598) |
||
Our Share of Income from Unconsolidated Discontinued Operations |
- |
(345) |
||
Income from Unconsolidated Entities (B) |
$ 58,774 |
$ 52,325 |
||
Note: The above financial presentation does not include any information related to our investment in Klepierre S.A. |
||||
("Klepierre"). For additional information, see footnote B. |
Simon Property Group, Inc. and Subsidiaries |
|||
Unaudited Joint Venture Balance Sheets |
|||
(Dollars in thousands) |
|||
March 31, |
December 31, |
||
2015 |
2014 |
||
Assets: |
|||
Investment properties, at cost |
$ 16,010,766 |
$ 16,087,282 |
|
Less - accumulated depreciation |
5,525,606 |
5,457,899 |
|
10,485,160 |
10,629,383 |
||
Cash and cash equivalents |
763,917 |
993,178 |
|
Tenant receivables and accrued revenue, net |
308,358 |
362,201 |
|
Investment in unconsolidated entities, at equity |
- |
11,386 |
|
Deferred costs and other assets |
507,735 |
536,600 |
|
Total assets |
$ 12,065,170 |
$ 12,532,748 |
|
Liabilities and Partners' Deficit: |
|||
Mortgages |
$ 13,629,050 |
$ 13,272,557 |
|
Accounts payable, accrued expenses, intangibles, and deferred revenue |
861,041 |
1,015,334 |
|
Other liabilities |
440,651 |
493,718 |
|
Total liabilities |
14,930,742 |
14,781,609 |
|
Preferred units |
67,450 |
67,450 |
|
Partners' deficit |
(2,933,022) |
(2,316,311) |
|
Total liabilities and partners' deficit |
$ 12,065,170 |
$ 12,532,748 |
|
Our Share of: |
|||
Partners' deficit |
$ (1,064,025) |
$ (663,700) |
|
Add: Excess Investment (A) |
1,849,655 |
1,875,337 |
|
Our net Investment in unconsolidated entities, at equity |
$ 785,630 |
$ 1,211,637 |
|
Note: The above financial presentation does not include any information related to our investment in Klepierre. |
|||
For additional information, see footnote B attached hereto. |
Simon Property Group, Inc. and Subsidiaries |
|||||||
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 |
|||||||
March 31, |
|||||||
2015 |
2014 |
||||||
Consolidated Net Income (D) |
$ 425,508 |
$ 401,103 |
|||||
Adjustments to Arrive at FFO: |
|||||||
Depreciation and amortization from consolidated |
|||||||
properties |
284,227 |
322,604 |
|||||
Our share of depreciation and amortization from |
|||||||
unconsolidated entities, including Klepierre |
123,884 |
147,256 |
|||||
Gain upon acquisition of controlling interests and sale or disposal |
|||||||
of assets and interests in unconsolidated entities, net |
- |
(2,897) |
|||||
Net income attributable to noncontrolling interest holders in |
|||||||
properties |
(690) |
(523) |
|||||
Noncontrolling interests portion of depreciation and amortization |
(885) |
(897) |
|||||
Preferred distributions and dividends |
(1,313) |
(1,313) |
|||||
FFO of the Operating Partnership (E) |
$ 830,731 |
$ 865,333 |
|||||
Diluted net income per share to diluted FFO per share reconciliation: |
|||||||
Diluted net income per share |
$ 1.16 |
$ 1.10 |
|||||
Depreciation and amortization from consolidated properties |
|||||||
and our share of depreciation and amortization from |
|||||||
unconsolidated entities, including Klepierre, net of noncontrolling |
|||||||
interests portion of depreciation and amortization |
1.12 |
1.29 |
|||||
Gain upon acquisition of controlling interests and sale or disposal |
|||||||
of assets and interests in unconsolidated entities, net |
- |
(0.01) |
|||||
Diluted FFO per share (F) |
$ 2.28 |
$ 2.38 |
|||||
Details for per share calculations: |
|||||||
FFO of the Operating Partnership (E) |
$ 830,731 |
$ 865,333 |
|||||
Diluted FFO allocable to unitholders |
(120,305) |
(124,878) |
|||||
Diluted FFO allocable to common stockholders (G) |
$ 710,426 |
$ 740,455 |
|||||
Basic and Diluted weighted average shares outstanding |
311,101 |
310,623 |
|||||
Weighted average limited partnership units outstanding |
52,683 |
52,386 |
|||||
Basic and Diluted weighted average shares and units outstanding |
363,784 |
363,009 |
|||||
Basic and Diluted FFO per Share (F) |
$ 2.28 |
$ 2.38 |
Simon Property Group, Inc. and Subsidiaries |
||||||||||||
Footnotes to Unaudited Reconciliation of Non-GAAP Financial Measures |
||||||||||||
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 properties. |
|||||||||||
(B) |
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 Klepierre. Amounts included in Footnotes D below exclude our share of related activity for our investment in Klepierre. For further information, reference should be made to financial information in Klepierre's public filings and additional discussion and analysis in our Form 10-Q. |
|||||||||||
(C) |
This report contains measures of financial or operating performance that are not specifically defined by GAAP, including FFO, FFO per share, comparable FFO per share and comparable EPS. 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"). 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 sales or disposals of, or any impairment charges related to, previously depreciated 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. |
||||||||||||
We have 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 or disposal of, or any impairment charges relating to, previously depreciated retail 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. |
||||||||||||
(D) |
Includes our share of: |
|||||||||||
- |
Gains on land sales of $0.1 million and $6.8 million for the three months ended March 31, 2015 and 2014, respectively. |
|||||||||||
- |
Straight-line adjustments to minimum rent of $16.4 million and $14.0 million for the three months ended March 31, 2015 and 2014, respectively (including $0.1 million related to WPG in 2014). |
|||||||||||
- |
Amortization of fair market value of leases from acquisitions of $3.4 million and $5.4 million for the three months ended March 31, 2015 and 2014, respectively (including $0.2 million related to WPG in 2014). |
|||||||||||
- |
Debt premium amortization of $7.2 million and $16.1 million for the three months ended March 31, 2015 and 2014, respectively (including $0.1 related to WPG in 2014). |
|||||||||||
(E) |
Includes FFO of the operating partnership related to WPG of $88.4 million for the three months ended March 31, 2014. |
|||||||||||
(F) |
Includes Basic and Diluted FFO per share related to WPG operations of $0.24 for the three months ended March 31, 2014. |
|||||||||||
(G) |
Includes Diluted FFO allocable to common stockholders related to WPG of $75.6 million for the three months ended March 31, 2014. |
|||||||||||
(H) |
Reconciliation of reported earnings per share to comparable earnings per share. |
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THREE MONTHS |
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ENDED |
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MARCH 31, |
||||||||||||
2015 |
2014 |
|||||||||||
Reported earnings per share |
$ 1.16 |
$ 1.10 |
||||||||||
Less: Earnings per share from WPG properties |
- |
(0.11) |
||||||||||
Comparable earnings per share |
$ 1.16 |
$ 0.99 |
||||||||||
Comparable earnings per share growth |
17.2% |
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SOURCE Simon
Tom Ward, 317-685-7330, Investors; Les Morris, 317-263-7711, Media