INDIANAPOLIS, May 8, 2002 /PRNewswire-FirstCall via COMTEX/ -- Simon Property
Group, Inc. (the "Company") (NYSE: SPG) today announced results for the quarter
ended March 31, 2002. Diluted funds from operations increased 7.5% to $148.4
million from $138.0 million in 2001. On a per share basis the increase was 6.8%
to $0.79 per share from $0.74 per share in 2001. Net income available to common
shareholders decreased 3.0% to $30.0 million from $30.9 million in 2001. Diluted
earnings per share were $0.17 per share for the first quarter of 2002 as
compared to $0.18 in 2001.
Funds from operations and net income available to shareholders were negatively
impacted by $0.02 per share in the first quarter of 2002 due to a $5.4 million
currency hedge expense related to the acquisition of assets from Rodamco North
America N.V. ("RNA"). SFAS 133 requires that this charge, reflected in other
expenses, be recorded each quarter. This hedge, which was unwound in
contemplation of the RNA acquisition closing on May 3rd, will generate a gain in
the second quarter in excess of the first quarter expense.
Occupancy for mall and freestanding stores in the regional malls at March 31,
2002 was 90.9% as compared to 90.2% at March 31, 2001. Total retail sales per
square foot were $377 per square foot at March 31, 2002, a 1.0% decrease from
$381 at March 31, 2001, while comparable retail sales per square foot were $383
per square foot, a 1.5% decrease from $389 at March 31, 2001. Average base rents
for mall and freestanding stores in the regional mall portfolio were $29.51 per
square foot at March 31, 2002, an increase of $0.91 or 3.2% from March 31, 2001.
The average initial base rent for new mall store leases signed during the
quarter was $37.64, an increase of $6.60 or 21.3% over the tenants who closed or
whose leases expired.
"Our portfolio of high-quality regional malls continues to perform well in a
challenging environment," said David Simon, Chief Executive Officer. "Occupancy
and rents are higher than they were one year ago, contributing to our FFO growth
for the quarter. Our portfolio is now stronger than ever with the recently
completed RNA transaction. We acquired some of the best malls in the country,
which will enhance our corporate profitability."
Acquisition Activities
The acquisition of assets from Rodamco North America, N.V. (RNA) by Simon, The
Rouse Company (Rouse) and Westfield America Trust (Westfield) was completed on
May 3, 2002. The portfolio acquired by Simon consists primarily of interests in
13 high-quality, highly-productive regional malls in the United States.
Simon's share of the gross RNA purchase price was approximately $1.59 billion,
including the assumption of $579 million of property-level debt and preferred
stock. Simon arranged a $600 million, 12-month acquisition credit facility which
bears interest at LIBOR plus 65 basis points with seven of its lead lenders to
fund a portion of the transaction.
Prior to the completion of this acquisition, Simon owned four of the portfolio
assets in joint ventures with RNA. At the closing of the transaction, Teachers
Insurance and Annuity Association (TIAA) acquired a 50% interest in three of
these assets: The Florida Mall in Orlando, Florida; Miami International Mall in
Miami, Florida; and West Town Mall in Knoxville, Tennessee; for $198.2 million
plus the assumption of its pro rata share of mortgage debt on the assets.
Simon, Rouse and Westfield also jointly acquired interests in several non-
retail assets and two retail assets, generally considered to be non-core assets
and intended for sale. Since the January 13, 2002 announcement of this
acquisition, significant progress has been made on these dispositions, including
the sale of the 745 5th Avenue office building in New York, which also closed on
May 3rd.
Disposition Activities
The Company has completed or announced several dispositions in 2002 in its
efforts to aggressively recycle capital.
* On April 1, the Company completed the sale of its interest in Orlando
Premium Outlets for $46.6 million in cash plus its pro rata share of
property-level debt.
* On April 30, the Company announced its agreement to sell its interests
in all five "Mills-type" assets to the Mills Corporation for
$175 million in cash plus its pro rata share of property-level debt.
The Company also sold two underperforming assets, Eastgate Consumer Mall (in
March) and Windsor Park Mall (in April), for $15 million.
Financing Activities
On April 16, 2002, the Company completed a three year refinancing of its
existing $1.25 billion unsecured corporate credit facility. The facility now
matures in April 2005 and contains a one-year extension, at the Company's sole
option. The facility's interest rate continues to be LIBOR plus 65 basis points
and contains the same financial covenants as SPG's existing facility. The
facility also includes a money market competitive bid option program which has
been historically successful and allows the Company to hold auctions at lower
pricing for short term funds (30, 60, or 90 days) for up to $625 million.
Dividends
Today the Company also declared a common stock dividend of $0.55 per share, an
increase of 4.8% from the previous quarterly amount of $0.525 per share. This
dividend will be paid on May 31, 2002 to shareholders of record on May 17, 2002.
The Company also declared dividends on its three public issues of preferred
stock, all payable on July 1, 2002 to shareholders of record on June 17, 2002:
* 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.
2002 Earnings Estimates
The Company remains comfortable with its previously provided guidance that it
will report diluted funds from operations (FFO) within a range of $3.72 to $3.82
per share for 2002.
This guidance is based on management's view of current market conditions in the
regional mall business, anticipates no further deterioration of overall economic
conditions, and assumes that 2002 tenant sales productivity and portfolio
occupancy will be comparable to 2001 levels.
Estimates of future FFO and future earnings 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. (NYSE: SPG), headquartered in Indianapolis, Indiana,
is a real estate investment trust engaged in the ownership and management of
income-producing properties, primarily regional malls and community shopping
centers. Through its subsidiary partnerships, it currently owns or has an
interest in 258 properties containing an aggregate of 195 million square feet of
gross leasable area in 36 states, as well as eight assets in Europe and Canada.
Additional Simon Property Group information is available at www.shopsimon.com .
Supplemental Materials
The Company's supplemental information package (on Form 8-K) may be requested in
e-mail or hard copy formats by contacting Shelly Doran - Vice President 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 first 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 10:00 a.m. Eastern Daylight Time tomorrow, May
9th. 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 Three Months
Ended Ended
March 31, March 31,
2002 2001
Revenue:
Minimum rent $309,145 $307,131
Overage rent 8,276 9,883
Tenant reimbursements 150,029 148,514
Other income 27,497 25,148
Total revenue 494,947 490,676
Expenses:
Property operating 84,780 78,774
Depreciation and amortization 110,715 106,515
Real estate taxes 52,213 52,792
Repairs and maintenance 17,823 19,727
Advertising and promotion 11,778 13,806
Provision for credit losses 3,202 2,904
Other 12,995 6,785
Total operating expenses 293,506 281,303
Operating Income 201,441 209,373
Interest Expense 147,862 157,924
Income before Minority Interest 53,579 51,449
Minority Interest (2,588) (2,116)
Gain on Sales of Real Estate - 2,711
Income before Unconsolidated Entities 50,991 52,044
Income from Unconsolidated Entities 9,434 11,731
Income before Extraordinary Items and
Cumulative Effect of Accounting Change 60,425 63,775
Extraordinary Items - Debt Related Transactions - (25)
Cumulative Effect of Accounting Change - (1,638)(B)
Income before Allocation to Limited Partners 60,425 62,112
Less: Limited Partners' Interest in the
Operating Partnerships 11,085 11,742
Less: Preferred Distributions of the SPG
Operating Partnership 2,835 2,912
Less: Preferred Dividends of Subsidiary - 7,334
Net Income 46,505 40,124
Preferred Dividends (16,499) (9,185)
Net Income Available to Common Shareholders $30,006 $30,939
SIMON
Combined Financial Highlights- Continued(A)
Unaudited
(In thousands, except as noted)
Three Months Three Months
Ended Ended
March 31, March 31,
2002 2001
PER SHARE DATA:
Basic Income per Paired Share:
Before Extraordinary Items and
Cumulative Effect of Accounting Change $0.17 $0.19
Extraordinary Items 0.00 0.00
Cumulative Effect of Accounting Change 0.00 (0.01)
Net Income Available to Common Shareholders $0.17 $0.18
Diluted Income per Paired Share:
Before Extraordinary Items and
Cumulative Effect of Accounting Change $0.17 $0.19
Extraordinary Items 0.00 0.00
Cumulative Effect of Accounting Change 0.00 (0.01)
Net Income Available to Common Shareholders $0.17 $0.18
SELECTED BALANCE SHEET INFORMATION
March 31, December 31,
2002 2001
Cash and Cash Equivalents $243,261 $259,760
Investment Properties, Net $11,248,156 $11,317,221
Mortgages and Other Indebtedness $8,812,130 $8,841,378
SELECTED REGIONAL MALL OPERATING STATISTICS
March 31, March 31,
2002 2001
Occupancy(C) 90.9% 90.2%
Average Rent per Square Foot(C) $29.51 $28.60
Total Sales Volume (in millions)(D) $3,644 $3,658
Comparable Sales per Square Foot(D) $383 $389
Total Sales per Square Foot(D) $377 $381
Notes:
(A) Represents combined condensed financial statements of Simon Property
Group, Inc. and its paired share affiliate, SPG Realty Consultants,
Inc.
(B) Due to the adoption of SFAS 133 - Accounting for Derivatives and
Financial Instruments on January 1, 2001.
(C) Includes mall and freestanding stores.
(D) 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 Three Months
Ended Ended
March 31, March 31,
2002 2001
Income before extraordinary items and
cumulative effect of accounting change (1) (2) $60,425 $63,775
Plus: Depreciation and amortization
from combined consolidated properties 110,358 106,166
Plus: Simon's share of depreciation and
amortization from unconsolidated entities 36,343 31,257
Plus: MerchantWired impairment charge and other,
net of tax benefit 4,178 -
Less: Gain on sales of real estate - (2,711)
Less: Minority interest portion of depreciation,
amortization and extraordinary items (1,995) (1,487)
Less: Preferred distributions
(including those of subsidiary) (19,334) (19,431)
FFO of the Simon Portfolio $189,975 $177,569
FFO of the Simon Portfolio $189,975 $177,569
Basic FFO per Paired Share:
Basic FFO Allocable to the Companies $138,880 $128,766
Basic Weighted Average Paired Shares Outstanding 173,946 172,001
Basic FFO per Paired Share $0.80 $0.75
Diluted FFO per Paired Share:
Diluted FFO Allocable to the Companies $148,386 $138,047
Diluted Weighted Average Number of
Equivalent Paired Shares 188,913 186,609
Diluted FFO per Paired Share $0.79 $0.74
Notes:
(1) Includes gains on land sales of $8.6 million and $1.2 million for the
three months ended March 31, 2002 and 2001, respectively.
(2) Includes straight-line adjustments to minimum rent of $1.3 million and
$4.3 million for the three months ended March 31, 2002 and 2001,
respectively.
SOURCE Simon Property Group, Inc.
CONTACT:
Investors, Shelly Doran, +1-317-685-7330, or
Media, Billie
Scott, +1-317-263-7148, both of Simon Property Group, Inc.
URL: http://www.shopsimon.com
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