INDIANAPOLIS, Nov 8, 2001 /PRNewswire via COMTEX/ -- Simon Property Group, Inc.
(the "Company") (NYSE: SPG) today announced results for the quarter ended
September 30, 2001. Diluted funds from operations for the quarter increased
8.8%, to $0.87 per share from $0.80 per share in 2000. Diluted funds from
operations for the nine months increased 6.2%, to $2.39 per share from $2.25 per
share in 2000.
As was reported by the Company on October 19th, during the third quarter the
Company recorded a charge of $16.6 million related to the write-off of its
clixnmortar initiative and other miscellaneous technology investments. This
charge does not affect FFO.
Occupancy for mall and freestanding stores in the regional malls at September
30, 2001 was 90.6% as compared to 90.5% at September 30, 2000. Total retail
sales per square foot were $378 per square foot at September 30, 2001 as
compared to $375 one year earlier, while comparable retail sales per square foot
were $380 per square foot as compared to $385 one year earlier. Average base
rents for mall and freestanding stores in the regional mall portfolio were
$29.03 per square foot at September 30, 2001, an increase of $1.06 or 3.8%, from
September 30, 2000. The average initial base rent for new mall store leases
signed year-to-date was $35.29, an increase of $6.68 or 23% over the tenants who
closed or whose leases expired.
"We are pleased that in these most difficult economic times, SPG was able to
deliver solid operating performance and earnings growth for our shareholders,"
said David Simon, chief executive officer.
Acquisition Activities
On October 1st, the Company acquired a 50 percent ownership interest in San
Diego's Fashion Valley Mall from Lend Lease Real Estate Investments, on behalf
of its Prime Property Fund. Fashion Valley has dominated the San Diego-area
retail scene since it opened in 1969. Located in the Mission Valley area, this
1.7 million square foot open-air, super-regional mall is anchored by Neiman
Marcus, Nordstrom, Saks Fifth Avenue, Macy's, Robinsons-May and JCPenney. One of
the nation's most successful retail centers, Fashion Valley is 99% leased and
generates small shop sales in excess of $575 per square foot. Total sales
generated by the mall exceed $650 million annually.
Concurrent with the closing, the partnership secured a $200 million, 7-year
mortgage from Lehman Brothers that bears interest at a fixed rate of 6.50%. The
Company also assumed management responsibilities for the mall.
"Fashion Valley is one of the most productive centers in California, making this
acquisition a perfect fit within Simon's strategy to own and manage highly
productive, market-dominant malls," said Richard S. Sokolov, president and chief
operating officer. "The transaction will be immediately accretive to earnings
and expands Simon's presence in the California market."
In August, SPG also closed on the restructuring of ownership interests of The
Fashion Centre at Pentagon City. This transaction increased SPG's economic
ownership interest to 50%. Fashion Centre, built by Simon in 1990, is one of the
nation's most successful mixed-use projects. The mall portion of the project is
anchored by Nordstrom and Macy's and produces annual sales in excess of $700 per
square foot. CalPERS, the California Public Employees Retirement System, assumed
ownership of the remaining 50% of Fashion Centre.
New Development Activities
Bowie Town Center in Bowie, Maryland, an open-air regional shopping center
comprising 556,000 square feet, opened on October 18th. The center is anchored
by Hecht's (which opened August 8th) and Sears (which opened October 17th), and
features Barnes & Noble, Bed Bath & Beyond and Old Navy. This new development
also features a 101,000 square foot grocery retail component anchored by Safeway
that will open in early 2002.
Retailers have demonstrated exceptional sales at the property since opening. The
grand opening of Hecht's was one of the most successful launches of a Hecht's
branch in the store's 144-year history, significantly exceeding the retailer's
expectations. The Sears location at Bowie has substantially outperformed its
sales plan since opening.
Bowie Town Center is 100% leased. Small shop tenants at Bowie include American
Eagle, Lindt's Chocolate, Benetton, Gap, Gap Kids, Ann Taylor Loft, Victoria's
Secret, Bath & Body, Wet Seal and Wilson's Leather. The center also features a
restaurant lineup including Pizzeria Uno, Starbuck's, Olive Garden and Panera
Bread. Best Buy will also be located on a peripheral site at the property.
Grand opening events for Bowie Town Center will take place November 9th through
the 11th, commemorating the opening of the first major shopping center in Prince
George's County in over 20 years.
Financing Activities
During the third quarter, SPG retired the third and final tranche of the CPI
acquisition debt facility totaling $435 million. Funds used to retire this debt
were primarily generated from:
* $277 million 10 year financing of a four mall pool CMBS loan at a fixed
rate of 6.99%, and
* $110 million financing of Riverway Office complex at Libor + 115 bps.
Subsequent to September 30th, the Company's partnership subsidiary, Simon
Property Group, L.P., completed the sale of $750 million of 6.375% senior
unsecured notes due November 15, 2007. Net proceeds from the offering were
initially used to reduce the outstanding balance of the Company's $1.25 billion
unsecured credit facility. The transaction was priced on October 23, 2001.
"We were very pleased to complete this financing transaction at attractive, long
term fixed rates," said Stephen E. Sterrett, chief financial officer. "The
offering was increased from its original size of $500 million due to strong
investor demand, demonstrating the attractiveness of the Simon name in the
unsecured market."
Dividends
On November 7th, the Company declared a common stock dividend of $0.525 per
share. This dividend will be paid on November 30, 2001 to shareholders of record
on November 19, 2001. The Company also declared dividends on its three public
issues of preferred stock, all payable on December 31, 2001 to shareholders of
record on December 17, 2001:
* Simon Property Group, Inc. 6.50% Series B Convertible Preferred Stock
(NYSE: SPGPrB) - $1.625 per share
* Simon Property Group, Inc. 8.75% Series F Cumulative Redeemable
Preferred Stock (NYSE: SPGPrF) - $0.546875 per share
* Simon Property Group, Inc. 7.89% Series G Cumulative Preferred Stock
(NYSE: SPGPrG)- $0.98625 per share.
2001 Earnings Estimates
Based upon year-to-date results and its view of current market conditions, the
Company is comfortable with analyst consensus estimates for 2001 FFO of $3.52 on
a diluted per share basis.
Estimates of future FFO per share are, and certain other matters discussed in
this press release may be, deemed forward-looking statements within the meaning
of the federal securities laws. Although the Company believes the expectations
reflected in any forward-looking statements are based on reasonable assumptions,
it can give no assurance that its expectations will be attained, and it is
possible that our actual results may differ materially from those indicated by
these forward-looking statements due to a variety of risks and uncertainties.
Those risks and uncertainties include, but are not limited to, the national,
regional and local economic climate, competitive market forces, changes in
market rental rates, trends in the retail industry, the inability to collect
rent due to the bankruptcy or insolvency of tenants or otherwise, and changes in
market rates of interest. The reader is directed to the Company's various
filings with the Securities and Exchange Commission, including quarterly reports
on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K for a
discussion of such risks and uncertainties.
Simon Property Group, Inc., headquartered in Indianapolis, Indiana, is a
self-administered and self-managed real estate investment trust which, through
its subsidiary partnerships, is engaged in the ownership, development,
management, leasing, acquisition and expansion of income-producing properties,
primarily regional malls and community shopping centers. It currently owns or
has an interest in 252 properties containing an aggregate of 187 million square
feet of gross leasable area in 36 states as well as six assets in Europe and
Canada. Together with its affiliated management company, Simon owns or manages
approximately 191 million square feet of gross leasable area in retail and
mixed-use properties. Shares of Simon Property Group, Inc. are paired with
beneficial interests in shares of stock of SPG Realty Consultants, Inc.
Additional Simon Property Group information is available at www.shopsimon.com .
Supplemental Materials
The Company's September 30, 2001 Form 10-Q and supplemental information package
(on Form 8-K) may be requested in e-mail or hard copy formats by contacting
Shelly Doran - Director of Investor Relations, Simon Property Group, P.O. Box
7033, Indianapolis, IN 46207 or via e-mail at sdoran@simon.com.
Conference Call
The Company will provide an online simulcast of its third quarter conference
call at www.shopsimon.com (Corporate Info tab) and www.streetevents.com . To
listen to the live call, please go to either 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 4:00 p.m. Eastern Standard Time today, November
8th. An online replay will be available for approximately 90 days at
www.shopsimon.com .
SIMON
Combined Financial Highlights(A)
Unaudited
(In thousands, except as noted)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Revenue:
Minimum rent $312,328 $299,708 $926,845 $890,435
Overage rent 8,568 9,700 25,581 28,456
Tenant reimbursements 146,308 145,237 441,271 444,384
Other income 33,443 39,281 85,896 96,161
Total revenue 500,647 493,926 1,479,593 1,459,436
Expenses:
Property operating 81,620 78,779 243,060 235,220
Depreciation and
amortization 111,196 106,983 324,459 304,611
Real estate taxes 45,807 49,032 147,320 147,183
Repairs and maintenance 17,287 15,930 56,347 51,690
Advertising and promotion 14,049 11,473 40,473 42,728
Provision for credit losses 2,677 3,326 7,824 7,671
Other 13,552 8,990 27,098 27,474
Total operating expenses 286,188 274,513 846,581 816,577
Operating Income 214,459 219,413 633,012 642,859
Interest Expense 149,044 160,668 456,938 474,534
Income before Minority
Interest 65,415 58,745 176,074 168,325
Minority Interest (2,486) (2,382) (7,717) (7,099)
Gain (Loss) on Sales of
Real Estate (131) 151 2,552 8,809(B)
Income before Unconsolidated
Entities 62,798 56,514 170,909 170,035
Income from Unconsolidated
Entities 6,787 20,920 32,421 54,447
Income before Extraordinary
Items and Cumulative Effect
of Accounting Change 69,585 77,434 203,330 224,482
Extraordinary Items -
Debt Related Transactions (220) - (245) (440)
Cumulative Effect of
Accounting Change - - (1,638)(C) (12,342)(D)
Income before Allocation
to Limited Partners 69,365 77,434 201,447 211,700
Less: Limited Partners'
Interest in the
Operating
Partnerships 13,780 16,075 39,400 42,346
Less: Preferred Distributions
of the SPG Operating
Partnership 2,835 2,816 8,582 8,450
Less: Preferred Dividends
of Subsidiary - 7,333 14,668 22,001
Net Income 52,750 51,210 138,797 138,903
Preferred Dividends (16,499) (9,185) (34,861) (27,623)
Net Income Available
to Common Shareholders $36,251 $42,025 $103,936 $111,280
SIMON
Combined Financial Highlights- Continued (A)
Unaudited
(In thousands, except as noted)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
PER SHARE DATA:
Basic and Diluted Income per
Paired Share:
Before Extraordinary Items and
Cumulative Effect of
Accounting Change $0.21 $0.24 $0.61 $0.69
Extraordinary Items - - - -
Cumulative Effect of
Accounting Change - - (0.01) (0.05)
Net Income Available to
Common Shareholders $0.21 $0.24 $0.60 $0.64
SELECTED BALANCE SHEET INFORMATION September 30, December 31,
2001 2000
Cash and Cash Equivalents $161,733 $223,111
Investment Properties, Net $11,447,354 $11,564,414
Mortgages and Other Indebtedness $8,792,090 $8,728,582
SELECTED REGIONAL MALL OPERATING STATISTICS September 30,
2001 2000
Occupancy(E) 90.6% 90.5%
Average Rent per Square Foot(E) $29.03 $27.97
Total Sales Volume (in millions)(F) $11,161 $10,842
Comparable Sales per Square Foot(F) $380 $385
Total Sales per Square Foot(F) $378 $375
Notes:
(A) Represents combined condensed financial statements of Simon Property
Group, Inc. and its paired share affiliate, SPG Realty Consultants,
Inc.
(B) Net of asset write downs of $10.6 million for the nine months ended
September 30, 2000.
(C) Due to the adoption of SFAS 133 - Accounting for Derivatives and
Financial Instruments on January 1, 2001.
(D) Due to the adoption of SAB 101 on January 1, 2000, which requires
overage rent to be recognized as revenue only when each tenant's sales
exceed their sales threshold. Previously, the Company recognized
overage rent based on reported and estimated sales through the end of
the period, less the applicable prorated base sales amount.
(E) Includes mall and freestanding stores.
(F) Based on the standard definition of sales for regional malls adopted
by the International Council of Shopping Centers, which includes only
mall and freestanding stores.
SIMON
Combined Financial Highlights- Continued(A)
Unaudited
(In thousands, except as noted)
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS ("FFO")
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Income before extraordinary
items and cumulative effect
of accounting change (A)(B) $69,585 $77,434 $203,330 $224,482
Plus: Depreciation and
amortization from combined
consolidated properties 110,799 105,600 323,545 302,742
Plus: Simon's share of
depreciation and amortization
from unconsolidated entities 33,955 30,395 98,675 87,251
Plus: Write-off of Technology
Investments 16,645 - 16,645 -
Less: (Gain) Loss on sales
of real estate 131 (151) (2,552) (8,809)
Less: Minority interest portion
of depreciation, amortization
and extraordinary items (1,540) (1,491) (4,527) (4,446)
Less: Preferred distributions
(including those
of subsidiary) (19,334) (19,334) (58,111) (58,074)
FFO of the Simon Portfolio $210,241 $192,453 $577,005 $543,146
FFO of the Simon Portfolio $210,241 $192,453 $577,005 $543,146
Basic FFO per Paired Share:
Basic FFO Allocable
to the Companies $152,683 $139,472 $418,965 $394,021
Basic Weighted Average
Paired Shares Outstanding 172,746 172,759 172,413 173,216
Basic FFO per Paired Share $0.88 $0.81 $2.43 $2.27
Diluted FFO per Paired Share:
Diluted FFO Allocable to
the Companies $162,847 $148,962 $447,549 $421,997
Diluted Weighted Average Number
of Equivalent Paired Shares 187,416 187,293 187,153 187,803
Diluted FFO per Paired Share $0.87 $0.80 $2.39 $2.25
Notes:
(A) Includes gains on land sales of $5.0 million and $6.3 million for the
three months ended September 30, 2001 and 2000, respectively, and $8.3
million and $10.8 million for the nine months ended September 30, 2001
and 2000, respectively.
(B) Includes straight-line adjustments to minimum rent of $3.3 million and
$4.6 million for the three months ended September 30, 2001 and 2000,
respectively, and $9.4 million and $14.9 million for the nine months
ended September 30, 2001 and 2000, respectively.
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SOURCE Simon Property Group
CONTACT: Investors, Shelly Doran +1-317-685-7330, or Media, Billie
Scott, +1-317-263-7148, both of Simon Property Group
URL: http://www.shopsimon.com
http://www.prnewswire.com
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