By Angela Chen
Simon Property Group Inc. raised its earnings guidance for the
year Friday as first-quarter earnings increased 6.2% on higher
occupancy and rent numbers.
Earnings beat expectations, though revenue was in line.
The Indianapolis real-estate investment trust has benefited in
recent quarters from higher occupancy rates as it focuses on its
bigger malls and outlets. Last May, Simon Property spun off its
strip centers and smaller enclosed malls into an independent,
publicly traded real-estate investment trust called Washington
Prime Group Inc. The company's occupancy and sales-per-square-foot
rates have improved since then.
The company looked to beef up by bidding $16.8 billion for rival
Macerich Co., the nation's third-largest mall owner by market
value, in March, but it withdrew its offer a little more than three
weeks ago when Macerich refused to engage.
It has since announced a $2 billion stock buyback and formed a
joint venture with Sears Holdings Corp. Sears will lease back the
properties, which are located at Simon malls, from the joint
venture. Simon, meanwhile, has contributed $114 million in cash to
the venture.
For the quarter ended March 31, Simon earned $362 million, or
$1.16 a share, up from $341 million, or $1.10 a share, a year
earlier.
Revenue grew 5.1% to $1.22 billion.
Analysts polled by Thomson Reuters expected a profit of $1.06 a
share on $1.22 billion in revenue.
Funds from operations, a closely watched profitability
measurement for real-estate investment trusts, fell to $2.28 a
share from $2.38 a share a year earlier. The measurement was
weighed by the spinoff of Washington Prime Group properties, Simon
said.
U.S. malls occupancy as of March 31 was 95.8%, up from 95.5% a
year earlier, as the base minimum rent per square foot increased
11% to $47.59. Total sales per square foot grew 7.8% to $621.
For 2015, the company expects per-share earnings of $5.10 to
$5.20, up from its previous guidance of $5.05 to $5.15. Analysts
expected $4.79 a share.
Funds from operations are expected to fall within a range of
$9.65 to $9.75 a share, up a nickel from the previous range.
Simon also raised its quarterly dividend to $1.50 from $1.40, a
move expected to cost the company an additional $31.1 million a
quarter.
Shares, inactive premarket, are up about 4% this year through
Thursday's close.
Write to Angela Chen at angela.chen@dowjones.com
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