Simon Property Group Inc. (SPG), a leading real estate investment trust (REIT), reported fourth quarter 2009 FFO (funds from operations) of $485.2 million or $1.40 per share, compared to $540.5 million or $1.86 per share in the year-earlier quarter.
Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Excluding non-recurring items, FFO for the quarter was $573.3 million or $1.66 per share. For full year 2009, FFO was $1.7 billion or $5.33 per share compared to $1.9 billion or $6.42 per share a year earlier. Excluding one-time items, FFO for 2009 was $2.0 billion or $6.01 per share.
Occupancy in the regional malls and premium outlet centers was 92.1% and 97.9%, respectively, at year-end 2009, compared to 92.4% and 98.9% in the year-ago period. Comparable sales in the regional malls decreased to $433 per square foot at year-end 2009 compared to $470 in the prior year, while that of premium outlet centers decreased to $500 from $509 in the previous year.
The decrease in the comparable sales was primarily due to the continued economic downturn, resulting in a cut in consumer discretionary spending.
Average rent per square feet in the regional malls increased marginally during the quarter to $40.04, compared to $39.49 in the year-ago period. In the premium outlet centers, average rent per square feet during the quarter increased to $33.45 year-over-year versus $27.65.
The company continues its active development and redevelopment programs. Currently, Simon Property has one development and redevelopment project each in the domestic market. During the quarter, the company acquired all of the outlet shopping center business of Prime Outlets Acquisition Company for $2.3 billion.
During the quarter, Simon Property increased its unsecured corporate credit facility to $3.565 billion with a base interest rate of LIBOR plus 210 basis points. At year-end 2009, the company had approximately $4.3 billion of cash on hand, including its share of joint venture cash, and an additional $3.1 billion of available capacity on its corporate credit facility.
Subsequent to the end of the quarter, Simon Property sold $2.25 billion of senior unsecured notes in an underwritten public offering. Net proceeds from the offering were used to fund the purchase of senior unsecured notes tendered in an any and all cash tender offer launched on Jan 12, 2010.
During the quarter, Simon Property decided to sell Simon Ivanhoe, a joint venture property that owns seven shopping centers in France and Poland, for €715 million. The company expects to generate a profit of $300 million from the sale, which is scheduled to be completed during the first half of 2010.
The company decided to pay its quarterly dividend of 60 cents per share in cash. Simon Property expects 2100 recurring FFO in the range of $5.72 to $5.87 per share.
Read the full analyst report on “SPG”
Zacks Investment Research
