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| Simon Property Group Announces First Quarter Results and Quarterly Dividends |
INDIANAPOLIS, April 29 /PRNewswire-FirstCall/ -- Simon Property Group, Inc. (the "Company" or "Simon") (NYSE: SPG) today announced results for the quarter ended March 31, 2008:
-- Funds from operations ("FFO") for the quarter increased 7.1% to $420.1
million from $392.4 million in the first quarter of 2007. On a diluted
per share basis the increase was 6.6% to $1.46 from $1.37 in 2007.
-- Net income available to common stockholders for the quarter decreased
10.7% to $87.9 million from $98.4 million in the first quarter of 2007.
On a diluted per share basis the decrease was 11.4% to $0.39 from $0.44
in 2007. The decrease in net income for the quarter is primarily
attributable to lower income from unconsolidated entities as a result
of increased depreciation expense related to the acquisition of the
Mills portfolio of assets, completed in April of 2007.
U.S. Portfolio Statistics(1)
As of As of
March 31, March 31, Change
2008 2007
Occupancy
Regional Malls (2) 91.7% 91.8% 10 basis point decrease
Premium Outlet
Centers(R)(3) 97.9% 99.1% 120 basis point decrease
Community/Lifestyle
Centers(3) 93.3% 93.1% 20 basis point increase
Comparable Sales
per Sq. Ft.
Regional Malls(4) $491 $487 0.8% increase
Premium Outlet
Centers(3) $511 $485 5.4% increase
Average Rent per
Sq. Ft
Regional Malls(2) $37.73 $36.18 4.3% increase
Premium Outlet
Centers(3) $26.32 $24.84 6.0% increase
Community/Lifestyle
Centers(3) $12.47 $11.94 4.4% increase
(1) Statistics do not include the Mills portfolio of assets.
(2) For mall and freestanding stores.
(3) For all owned gross leasable area (GLA).
(4) For mall and freestanding stores with less than 10,000 square feet.
Dividends
Today the Company announced a quarterly common stock dividend of $0.90 per share. This dividend will be paid on May 30, 2008 to stockholders of record on May 16, 2008. 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 May 30, 2008 to stockholders of record on
May 16, 2008.
-- 8 3/8% Series J Cumulative Redeemable Preferred (NYSE: SPGPrJ) dividend
of $1.046875 per share is payable on June 30, 2008 to stockholders of
record on June 16, 2008.
U.S. New Development and Redevelopment Activity
On March 27, 2008, the Company opened Houston Premium Outlets in Cypress, Texas. Located approximately 30 miles northwest of Houston on US Route 290, Houston Premium Outlets contains 426,000 square feet of gross leasable area and 120 designer and brand-name outlet stores. The center is currently 92% leased to merchants including Ann Taylor, BCBG Max Azria, Banana Republic, Burberry, Calvin Klein, Coach, Cole Haan, Crocs, Elie Tahari, Juicy Couture, Kate Spade, Lucky Brand Jeans, Michael Kors, Nike, True Religion and Waterford Wedgwood.
The Company continues construction on:
-- Hamilton Town Center -- a 950,000 square foot open-air retail center in
Noblesville, Indiana. JCPenney and a 16-screen theater have already
opened at the project. The remainder of the 634,000 square foot first
phase of the center is scheduled to open in May of 2008. Simon owns 50%
of this center.
-- Pier Park -- an 867,000 square foot community/lifestyle center in
Panama City Beach, Florida. Dillard's, JCPenney, Target and a 16-
screen theater have already opened at the center. The remainder of the
project, 100% owned by Simon, is scheduled to open in May of 2008.
-- Jersey Shore Premium Outlets -- a 435,000 square foot upscale
manufacturers' outlet center in Tinton Falls, New Jersey. The center is
100% owned by Simon and is scheduled to open in November of 2008.
The following redevelopment and expansion projects have been completed year-to-date in 2008:
-- Aventura Mall in N. Miami Beach, Florida -- Addition of Nordstrom,
small shops and parking deck
-- Burlington Mall in Burlington (Boston), Massachusetts -- Addition of
Nordstrom and small shops
-- Las Vegas Premium Outlets in Las Vegas, Nevada -- 104,000 square foot
expansion with the addition of two five-level parking garages
-- Philadelphia Premium Outlets in Limerick, Pennsylvania -- 120,000
square foot expansion
-- Rio Grande Valley Premium Outlets in Mercedes, Texas -- 144,000 square
foot expansion
The Company also continues construction on several additional redevelopment and expansion projects to be completed in 2008/2009, including the following:
-- The Fashion Mall at Keystone in Indianapolis, Indiana -- Addition of
Nordstrom
-- Northshore Mall in Peabody (Boston), Massachusetts -- Addition of
Nordstrom, small shops and restaurants
-- Orlando Premium Outlets in Orlando, Florida -- 114,000 square foot
expansion and the addition of a four-level parking garage
-- The Promenade at Camarillo in Camarillo, California -- 220,000 square
foot expansion
-- Ross Park Mall in Pittsburgh, Pennsylvania -- Addition of Nordstrom and
small shops
Capital Markets
On March 6th, the Company completed a $705 million secured recourse term loan on six existing lowly-levered, high quality Simon assets. The facility, which can be increased to $850 million during its term, will mature in March 2010 and contains two one-year extensions at the Company's sole option. The base interest rate on the Company's new facility is LIBOR plus 70.0 basis points. Participants in the facility consist of 16 of the Company's core banking and lending group. International Activity On March 25, 2008, the Company completed the third phase of Gotemba Premium Outlets, located 60 miles west of Tokyo, Japan. The 95,000 square foot expansion brings the property to a total of 482,000 square feet of gross leasable area containing 200 retail and restaurant tenants. Phase III is 100% leased and resulted in the net addition of 35 new tenants to the center including Aquascutum, DeLonghi, Issey Miyake, Jil Sander, Junko Shimada, Lacoste, Le Creuset, Marni, Nikon, Puma, St. John, Via Bus Stop and Y's Clothing Company. Gotemba Premium Outlets, 40% owned by Simon, currently generates sales in excess of $1,000 per square foot.
New international development projects under construction include:
-- Argine (Naples, Italy) -- a 300,000 square foot shopping center
scheduled to open in March of 2009. Simon owns 24% of this project.
-- Catania (Sicily, Italy) -- a 642,000 square foot shopping center
scheduled to open in June of 2010. Simon owns 24% of this project.
-- Sendai Izumi Premium Outlets -- a 172,000 square foot upscale outlet
center in Sendai, Japan. The center is scheduled to open in October of
2008. Simon owns 40% of this project, its seventh Premium Outlet Center
in Japan.
-- Five projects in China located in Changshu, Hangzhou, Hefei, Suzhou,
and Zhengzhou. The centers range in size from 300,000 to 750,000 square
feet and will be anchored by Wal-Mart. A 2008 opening is scheduled for
Changshu, followed by anticipated 2009 openings for Hangzhou, Hefei,
Suzhou and Zhengzhou. Simon owns 32.5% of these projects.
Awards
Protecting the Environment through Energy Efficiency
-- On March 4th, the Company announced that it was named a 2008 ENERGY
STAR Partner of the Year by the U.S. Environmental Protection Agency
(EPA) for outstanding energy management and reductions in greenhouse
gas emissions at its malls across the country. Simon is the first REIT
to win the award in the last five years and is the only REIT to be
recognized this year.
The Company was honored for smart energy management practices and
investments throughout operations that resulted in significant energy
and financial savings. Largely due to energy management efforts, Simon
has shown a consistent trend of reducing both electricity and natural
gas use since 2003.
The 2008 Partner of the Year Awards recognize efforts to use energy
efficiently in facility operations and to integrate superior energy
management into overall organizational strategy. Award winners are
selected from more than 9,000 organizations that participate in the
ENERGY STAR program.
Best Retail Gift Card Award
-- On March 13th the Company announced that it was awarded the distinction
of Best in Category in the Retail Gift Card Program category at the
2008 Prepaid Card Expo in Las Vegas. The award is sponsored by
Paybefore, the nation's leading provider of information to the rapidly
growing prepaid and stored value card industry.
The Simon Giftcard program, launched nationwide in 2003, is the largest
Visa bank-issued gift card program in the world. To date, more than 34
million cards have been sold. In 2007 alone, the Simon Visa prepaid
gift card program generated more than $500 million in sales. The Simon
Giftcard is issued by US Bank and MetaBank.
2008 Guidance
The Company currently estimates that diluted FFO will be within a range of $6.35 to $6.45 per share for the year ending December 31, 2008, and diluted net income will be within a range of $2.03 to $2.13 per share. This represents an increase in the lower end of the previously provided guidance range of $0.10 per share for both FFO and diluted net income. 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, 2008
Low High
End End
Estimated diluted net income available to
common stockholders per share $2.03 $2.13
Depreciation and amortization including our
share of joint ventures 4.45 4.45
Impact of additional dilutive securities (0.13) (0.13)
Estimated diluted FFO per share $6.35 $6.45
Conference Call
The Company will provide an online simulcast of its quarterly conference call at www.simon.com (Investor Relations 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 11:00 a.m. Eastern Daylight Time today, April 29, 2008. An online replay will be available for approximately 90 days at www.simon.com , www.earnings.com , and www.streetevents.com . A fully searchable podcast of the conference call will also be available at www.REITcafe.com shortly after completion of the call. Supplemental Materials The Company will publish a supplemental information package which will be available at www.simon.com in the Investor Relations section, Financial Information tab. It will also be furnished to the SEC as part of a current report on Form 8-K. If you wish to receive a copy via mail or email, please call 800-461-3439. 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, the ability to hedge interest rate risk, risks associated with the acquisition, development and expansion 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 SEC that could cause the Company's actual results to differ materially from the forward-looking statements that the Company makes. 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. 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 the United States ("GAAP"). About Simon Simon Property Group, Inc. is an S&P 500 company and the largest public U.S. real estate company. Simon is a fully integrated real estate company which operates from five retail real estate platforms: regional malls, Premium Outlet Centers(R), The Mills(R), community/lifestyle centers and international properties. It currently owns or has an interest in 380 properties comprising 259 million square feet of gross leasable area in North America, Europe and Asia. The Company is headquartered in Indianapolis, Indiana and employs more than 5,000 people worldwide. Simon Property Group, Inc. is publicly traded on the NYSE under the symbol SPG. For further information, visit the Company's website at www.simon.com .
SIMON
Consolidated Statements of Operations
Unaudited
(In thousands)
For the Three Months Ended
March 31,
2008 2007
REVENUE:
Minimum rent $550,682 $510,865
Overage rent 16,651 17,892
Tenant reimbursements 250,248 230,613
Management fees and other revenues 33,020 20,875
Other income 44,697 71,896
Total revenue 895,298 852,141
EXPENSES:
Property operating 112,761 109,227
Depreciation and amortization 228,043 215,271
Real estate taxes 84,520 79,182
Repairs and maintenance 29,021 29,007
Advertising and promotion 19,373 18,884
Provision for credit losses 6,582 542
Home and regional office costs 39,600 33,699
General and administrative 5,302 3,899
Other 18,138 13,464
Total operating expenses 543,340 503,175
OPERATING INCOME 351,958 348,966
Interest expense (229,917) (222,478)
Minority interest in income of
consolidated entities (2,284) (2,910)
Income tax benefit (expense) of
taxable REIT subsidiaries 23 (1,285)
Income from unconsolidated entities 7,141 21,773
Limited partners' interest in the
Operating Partnership (22,733) (25,878)
Preferred distributions of the
Operating Partnership (4,904) (5,239)
Income from continuing operations 99,284 112,949
Discontinued operations, net of
Limited Partners' interest - (162)
NET INCOME 99,284 112,787
Preferred dividends (11,351) (14,406)
NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS $87,933 $98,381
SIMON
Per Share Data
Unaudited
For the Three Months Ended
March 31,
2008 2007
Basic Earnings Per Common Share:
Income from continuing operations $0.39 $0.44
Discontinued operations - results
of operations and gain on
sale, net - -
Net income available to common
stockholders $0.39 $0.44
Percentage Change -11.4%
Diluted Earnings Per Common Share:
Income from continuing operations $0.39 $0.44
Discontinued operations - results
of operations and gain on
sale, net - -
Net income available to common
stockholders $0.39 $0.44
Percentage Change -11.4%
SIMON
Consolidated Balance Sheets
Unaudited
(In thousands, except as noted)
March 31, December 31,
2008 2007
ASSETS:
Investment properties, at cost $24,592,802 $24,415,025
Less - accumulated depreciation 5,499,242 5,312,095
19,093,560 19,102,930
Cash and cash equivalents 428,659 501,982
Tenant receivables and accrued
revenue, net 374,387 447,224
Investment in unconsolidated
entities, at equity 1,868,115 1,886,891
Deferred costs and other assets 1,198,404 1,118,635
Note receivable from related party 540,000 548,000
Total assets $23,503,125 $23,605,662
LIABILITIES:
Mortgages and other indebtedness $17,445,746 $17,218,674
Accounts payable, accrued expenses,
intangibles, and deferred revenues 1,066,471 1,251,044
Cash distributions and losses in
partnerships and joint ventures, at
equity 358,677 352,798
Other liabilities, minority interest
and accrued dividends 208,316 180,644
Total liabilities 19,079,210 19,003,160
COMMITMENTS AND CONTINGENCIES
LIMITED PARTNERS' INTEREST IN THE
OPERATING PARTNERSHIP 699,546 731,406
LIMITED PARTNERS' PREFERRED INTEREST
IN THE OPERATING PARTNERSHIP 245,654 307,713
STOCKHOLDERS' EQUITY
CAPITAL STOCK OF SIMON PROPERTY
GROUP, INC. (750,000,000 total
shares authorized, $.0001 par value,
237,996,000 shares of excess
common stock):
All series of preferred stock,
100,000,000 shares authorized,
14,817,651 and 14,801,884 issued
and outstanding, respectively,
and with liquidation values of
$740,883 and $740,094,
respectively 747,314 746,608
Common stock, $.0001 par value,
400,000,000 shares authorized,
229,130,633 and 227,719,614 issued
and outstanding, respectively 24 23
Class B common stock, $.0001 par
value, 12,000,000 shares
authorized, 8,000 issued and
outstanding - -
Class C common stock, $.0001 par
value, 4,000 shares authorized,
issued and outstanding - -
Capital in excess of par value 5,104,240 5,067,718
Accumulated deficit (2,168,255) (2,055,447)
Accumulated other comprehensive
income (17,604) 18,087
Common stock held in treasury at
cost, 4,387,236 and 4,697,332
shares, respectively (187,003) (213,606)
Total stockholders' equity 3,478,715 3,563,383
Total liabilities and stockholders'
equity $23,503,125 $23,605,662
SIMON
Joint Venture Statements of Operations
Unaudited
(In thousands)
For the Three Months Ended
March 31,
STATEMENTS OF OPERATIONS 2008 2007
Revenue:
Minimum rent $470,063 $269,930
Overage rent 18,716 17,268
Tenant reimbursements 228,745 131,822
Other income 46,091 41,567
Total revenue 763,615 460,587
Operating Expenses:
Property operating 152,924 86,925
Depreciation and amortization 171,699 82,778
Real estate taxes 65,744 34,551
Repairs and maintenance 30,338 22,881
Advertising and promotion 14,296 7,700
Provision for credit losses 5,033 11
Other 37,977 25,709
Total operating expenses 478,011 260,555
Operating Income 285,604 200,032
Interest expense (248,873) (107,156)
Income (loss) from unconsolidated
entities 21 (84)
Gain (loss) on sale of assets - (4,759)
Income from Continuing Operations 36,752 88,033
Income from consolidated joint venture
interests (A) - 2,637
Income from discontinued joint venture
interests (B) 47 17
Net Income $36,799 $90,687
Third-Party Investors' Share of Net
Income $18,651 $54,645
Our Share of Net Income 18,148 36,042
Amortization of Excess Investment (11,007) (14,269)
Income from Unconsolidated Entities,
Net $7,141 $21,773
SIMON
Joint Venture Balance Sheets
Unaudited
(In thousands)
March 31, December 31,
BALANCE SHEETS 2008 2007
Assets:
Investment properties, at cost $21,090,639 $21,009,416
Less - accumulated depreciation 3,366,667 3,217,446
17,723,972 17,791,970
Cash and cash equivalents 639,046 747,575
Tenant receivables 342,230 435,093
Investment in unconsolidated
entities 212,122 258,633
Deferred costs and other assets 781,055 713,180
Total assets $19,698,425 $19,946,451
Liabilities and Partners' Equity:
Mortgages and other indebtedness $16,367,309 $16,507,076
Accounts payable, accrued expenses,
and deferred revenue 1,011,862 972,699
Other liabilities 806,978 825,279
Total liabilities 18,186,149 18,305,054
Preferred units 67,450 67,450
Partners' equity 1,444,826 1,573,947
Total liabilities and partners'
equity $19,698,425 $19,946,451
Our Share of:
Total assets $8,098,627 $8,040,987
Partners' equity $762,856 $776,857
Add: Excess Investment (C) 746,582 757,236
Our net Investment in Joint Ventures $1,509,438 $1,534,093
Mortgages and other indebtedness $6,523,573 $6,568,403
SIMON
Footnotes to Financial Statements
Unaudited
Notes:
(A) Consolidation occurs when the Company acquires an additional ownership
interest in a joint venture and, as a result, gains control of the
joint venture. These interests have been separated from operational
interests to present comparative results of operations.
(B) Discontinued joint venture interests represent assets and partnership
interests that have been sold.
(C) 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 Net Income to FFO (1)
Unaudited
(In thousands, except as noted)
For the Three Months Ended
March 31,
2008 2007
Net Income(2)(3)(4)(5) $99,284 $112,787
Adjustments to Net Income to Arrive
at FFO:
Limited partners' interest in the
Operating Partnership and
preferred distributions of the
Operating Partnership 27,637 31,117
Limited partners' interest in
discontinued operations - (41)
Depreciation and amortization
from consolidated properties,
and discontinued operations 225,056 212,488
Simon's share of depreciation and
amortization from unconsolidated
entities 86,628 55,331
Loss on sales of assets and
interests in unconsolidated
entities and discontinued operations,
net of limited partners' interest - 2,380
Minority interest portion of
depreciation and amortization (2,298) (2,017)
Preferred distributions and
dividends (16,255) (19,645)
FFO of the Operating Partnership $420,052 $392,400
Per Share Reconciliation:
Diluted net income available to
common stockholders per share $0.39 $0.44
Adjustments to net income to arrive
at FFO:
Depreciation and amortization
from consolidated properties
and Simon's share of depreciation
and amortization from
unconsolidated entities, net of
minority interest portion of
depreciation and amortization 1.10 0.95
Gain on sales of assets and
interests in unconsolidated
entities and discontinued operations,
net of limited partners' interest - 0.01
Impact of additional dilutive
securities for FFO per share (0.03) (0.03)
Diluted FFO per share $1.46 $1.37
Details for per share calculations:
FFO of the Operating Partnership $420,052 $392,400
Adjustments for dilution calculation:
Impact of preferred stock and
preferred unit conversions and
option exercises (6) 12,389 12,816
Diluted FFO of the Operating
Partnership 432,441 405,216
Diluted FFO allocable to unitholders (84,600) (80,076)
Diluted FFO allocable to common
stockholders $347,841 $325,140
Basic weighted average shares
outstanding 223,455 222,443
Adjustments for dilution calculation:
Effect of stock options 617 857
Impact of Series C preferred unit
conversion 76 191
Impact of Series I preferred unit
conversion 2,246 2,701
Impact of Series I preferred stock
conversion 11,126 11,002
Diluted weighted average shares
outstanding 237,520 237,194
Weighted average limited partnership
units outstanding 57,769 58,415
Diluted weighted average shares and
units outstanding 295,289 295,609
Basic FFO per share $1.49 $1.40
Percent Increase 6.4%
Diluted FFO per share $1.46 $1.37
Percent Increase 6.6%
SIMON
Footnotes to Reconciliation of 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 in accordance with the definition set forth
by the National Association of Real Estate Investment Trusts
("NAREIT"). As defined by NAREIT, FFO is 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 real
estate, 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 change or resulting
from the sale of depreciable 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 of $1.2 million
and $7.6 million for the three months ended March 31, 2008 and 2007,
respectively.
(3) Includes the Company's share of straight-line adjustments to minimum
rent of $8.2 million and $5.1 million for the three months ended March
31, 2008 and 2007, respectively.
(4) Includes the Company's share of the fair market value of leases from
acquisitions of $13.7 million and $13.9 million for the three months
ended March 31, 2008 and 2007, respectively.
(5) Includes the Company's share of debt premium amortization of $4.9
million and $7.0 million for the three months ended March 31, 2008 and
2007, respectively.
(6) Includes dividends and distributions of Series I preferred stock and
Series C and Series I preferred units.
SOURCE Simon Property Group, Inc.
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