WASHINGTON (dpa-AFX) - Mall operator Simon Property Group, Inc. (SPG) reported Monday funds from operations for the second quarter that increased from last year, reflecting improved revenues amid higher occupancy and rent.
Funds from operations per share topped analysts' expectations, while quarterly revenues came in below their estimates. The company also raised its earnings forecast for the full-year 2014, as well as quarterly dividend.
The company noted that it completed the spin-off of 98 smaller malls and community centers to Washington Prime Group Inc. on May 28, with the results of operations of WPG being classified as discontinued operations in both the second quarter's. WPG then became an independent, publicly-traded REIT listed on the NYSE under the symbol 'WPG'.
In conjunction with the spin-off of WPG, the company also retained about $1.0 billion of proceeds from unsecured and secured indebtedness which WPG incurred.
'I am very pleased with our quarterly results as our strong momentum continued, with 5.6% quarterly growth in comparable property net operating income. It was also an eventful quarter with our completion of the Washington Prime Group spin-off and the re-launch of our brand,' Chairman and CEO David Simon said in a statement.
The Indianapolis, Indiana-based largest public real estate company in the U.S. reported funds from operations or FFO, of $783.83 million or $2.16 per share for the second quarter, higher than $766.29 million or $2.11 per share in the prior-year quarter.
The results for the latest quarter include FFO of $0.15 per share from the spun-off WPG properties, while the year-ago quarter included $0.24 per share.
Excluding the WPG properties and the transaction costs related to the spin-off, FFO per share for the quarter grew 12.8 percent.
On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $2.14 per share for the quarter. Analysts estimates typically exclude special items.
Net income for the quarter grew to $406.59 million or $1.31 per share from $339.94 million or $1.10 per share in the year-ago quarter.
Income from continuing operations was $489.61 million or $1.34 per share, up from $359.13 million or $0.99 per share a year ago.
The results for the latest quarter include $0.10 per share of transaction costs related to the WPG spin-off.
Total revenues for the quarter increased to $1.18 billion from $1.08 billion in the same quarter last year, but missed nine Wall Street analysts' consensus estimate of $1.25 billion.
Minimum rent revenue for the quarter was $728 million, up from $675 million in the year-ago quarter, and tenant reimbursements revenue increased to $342 million from $307 million same quarter last year.
Overage rent revenue remained relatively flat with last year at $39 million, and Management fees and other revenues grew to $34 million from $32 million a year ago.
As at the end of the second quarter, U.S. occupancy improved 140 basis points from last year to 96.5 percent. Total sales per square foot grew 5.4 percent to $608 from last year's $577, and base minimum rent per square foot increased 10.7 percent to $45.83 from last year's $41.41.
Operating income for the quarter increased to $561.53 million from $509.94 million in the prior-year quarter. Comparable property Net Operating Income (NOI) growth was 5.6 percent. Comparable properties include U.S. Malls, Premium Outlets and The Mills, and excludes the WPG properties.
The company also declared a quarterly common stock dividend that was increased 13 percent from the year-ago quarter to $1.30 per share, payable on August 29 to stockholders of record on August 15, 2014.
'Based upon our results to date and expectations for the remainder of 2014, we are again increasing our full-year 2014 guidance,' Simon added.
Looking ahead to fiscal 2014, Simon Property raised its earnings guidance by $0.40 to a range of $4.61 to $4.71 per share, and FFO by $0.05 to the range of $9.01 to $9.11 per share. Street is currently looking for full-year earnings of $9.15 per share.
The company had earlier on May 29 cut its full-year outlook, to reflect the spin-off of WPG.
In Wednesday's regular trading session, SPG is currently trading at $170.15, down $1.18 or 0.69% on a volume of 0.29 million shares.
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