Simon Property Group Reports First Quarter Results And Raises Quarterly Dividend

INDIANAPOLIS, May 6, 2014 /PRNewswire/ — Simon Property Group, Inc. (NYSE:
SPG) today reported results for the quarter ended March 31, 2014.

Results for the Quarter

— Funds from Operations (“FFO”) was $865.3 million, or $2.38 per diluted
share, as compared to $741.9 million, or $2.05 per diluted share, in the
prior year period. The FFO increase per diluted share was 16.1%.
— Net income attributable to common stockholders was $341.6 million, or
$1.10 per diluted share, as compared to $283.1 million, or $0.91 per
diluted share, in the prior year period.
“We are off to an outstanding start in 2014, reporting strong financial and
operating results led by a 16.1% growth in FFO per diluted share,” said David
Simon, Chairman and CEO. “The increase in comparable property net operating
income of 3.7% was driven by strong releasing spreads and occupancy gains, and
demonstrates our ability to continue to increase our cash flow. We are
increasing our full-year 2014 guidance and raising our dividend due to our
strong first quarter performance and expectations for continued growth.”

U.S. Malls and Premium Outlets Operating Statistics
—————————————————

As of

March 31, Year-over-Year

2014 2013 Change
—- —- ——

Occupancy (1) 95.5% 94.7% + 80 basis
points

Total Sales per
sq. ft. (2) $576 $575 +0.2%

Base Minimum
Rent per sq.
ft. (1) $42.77 $41.05 +4.2%

Releasing
Spread per sq.
ft. (1)(3) $9.90 $7.00 + $2.90

Releasing + 610 basis
Spread points
(percentage
change) (1)(3) 19.5% 13.4%

(1) Represents
mall
stores
in Malls
and all
owned
square
footage
in
Premium
Outlets.

(2) Trailing
12-month
sales
per
square
foot for
mall
stores
less
than
10,000
square
feet in
Malls
and all
owned
square
footage
in
Premium
Outlets.

(3) Same
space
measure
that
compares
opening
and
closing
rates on
individual
spaces
leased
during
trailing
12-month
period.

Dividends

Today the Company announced that the Board of Directors declared a quarterly
common stock dividend of $1.30 per share. This is an increase of $0.05 from the
previous quarter, and a year-over-year increase of 13%. The dividend will be
payable on May 30, 2014 to stockholders of record on May 16, 2014.

The Company also declared the quarterly dividend on its 8 3/8% Series J
Cumulative Redeemable Preferred Stock (NYSE: SPGPrJ) of $1.046875 per share,
payable on June 30, 2014 to stockholders of record on June 16, 2014.

Development Activity

During the first quarter, we started construction on three significant
redevelopment and expansion projects:

— Stanford Shopping Center in Palo Alto, California – relocation of
Bloomingdale’s (opening October 2014), and a 120,000 square foot small
shop expansion including restaurants and leading retailers
— Houston Galleria in Houston, Texas – relocation of Saks Fifth Avenue,
and 105,000 square foot small shop expansion including restaurants and
leading retailers
— Yeoju Premium Outlets in Yeoju (Seoul), Korea – 259,000 square foot
expansion of this highly productive outlet center
Redevelopment and expansion projects, including the addition of new anchors, are
underway at 29 properties in the U.S., Asia and Mexico.

Construction continues on four new Premium Outlets opening in 2014 and 2015:

— Charlotte Premium Outlets in Charlotte, North Carolina is a 400,000
square foot center scheduled to open in July of 2014. The Company owns a
50% interest in this project.
— Twin Cities Premium Outlets in Eagan, Minnesota is a 410,000 square foot
center scheduled to open in August of 2014. The Company owns a 35%
interest in this project.
— Montreal Premium Outlets in Mirabel, Quebec, Canada is a 360,000 square
foot center scheduled to open in October of 2014. The Company owns a 50%
interest in this project.
— Vancouver Designer Outlet in Vancouver, British Columbia, Canada is a
242,000 square foot center scheduled to open in April of 2015. The
Company owns a 45% interest in this project.
The Company’s share of the costs of all development and redevelopment projects
currently under construction is approximately $1.5 billion.

Acquisitions and Dispositions

As previously announced in January 2014, we acquired our joint venture partners’
remaining interest in Kravco Simon Investments, an owner of interests in a
portfolio of 10 assets. This transaction included the remaining interest in King
of Prussia Mall, bringing our ownership of that asset to 100%.

In January, we completed the acquisition of our joint venture partner’s interest
in Arizona Mills, as well as land in Oyster Bay, Long Island for future
development. We now own 100% of Arizona Mills.

Financing Activity

In January, 2014, Simon Property Group, L.P., completed a $1.2 billion senior
unsecured notes offering with a weighted average duration of 7.5 years and an
average coupon rate of 2.975%. The offering was comprised of $600 million of
2.20% five-year senior notes and $600 million of 3.75% ten-year senior notes.
Net proceeds from the public offering were used to repay debt and for general
corporate purposes.

On April 7th, the Company announced that it had amended and extended its $4.0
billion unsecured multi-currency revolving credit facility. The newly refinanced
facility, which can be increased to $5.0 billion during its term, will initially
mature on June 30, 2018 and can be extended for an additional year to June 30,
2019 at the Company’s sole option. The interest rate on the amended revolver is
reduced to LIBOR plus 80 basis points from LIBOR plus 95 basis points. The
Company has a combined $6.0 billion of total revolving credit capacity.

Washington Prime Group Inc. Spin-Off

Activities continue related to the announced spin-off transaction of our strip
centers and smaller enclosed malls. During the first quarter, we announced the
senior management team and Board of Directors for Washington Prime Group Inc. We
continue to expect the transaction will be completed in the second quarter of
2014.

2014 Guidance

Today the Company increased its FFO guidance by $0.10 to a range of $9.60 to
$9.70 per diluted share for the year ending December 31, 2014, and net income to
a range of $4.55 to $4.65 per diluted share. This guidance does not take into
consideration any impact from the previously mentioned spin-off of Washington
Prime Group. The Company plans to update guidance once the spin-off transaction
is completed.

The following table provides the reconciliation for the expected range of
estimated net income available to common stockholders per diluted share to
estimated FFO per diluted share:

For the year ending December
31, 2014
—————————-

Low High

End End
— —

Estimated net income available
to common stockholders per
diluted share $4.55 $4.65

Depreciation and amortization
including the Company’s share
of unconsolidated entities 5.06 5.06

Gain upon acquisition of
controlling interests, sale
or disposal of assets and
interests in unconsolidated
entities, net (0.01) (0.01)
—– —–

Estimated FFO per diluted
share $9.60 $9.70
===== =====

Conference Call

Simon Property Group will hold a conference call to discuss the quarterly
financial results today at 11:00 a.m. Eastern Time, Tuesday, April 22, 2014.
Live streaming audio of the conference call will be accessible at
investors.simon.com. An online replay will be available until May 6, 2014 at
investors.simon.com.

Supplemental Materials and Website

Supplemental information on our first quarter 2014 performance is available at
investors.simon.com. This information has also been furnished to the SEC in a
current report on Form 8-K.

We routinely post important information online at our investor relations
website, investors.simon.com. We use this website, press releases, SEC filings,
quarterly conference calls, presentations and webcasts to disclose material,
non-public information in accordance with Regulation FD. We encourage members of
the investment community to monitor these distribution channels for material
disclosures. Any information accessed through our website is not incorporated by
reference into, and is not a part of, this document.

Non-GAAP Financial Measures

This press release includes FFO and comparable property net operating income
growth, which are financial performance measures not defined by generally
accepted accounting principles in the United States (“GAAP”). Reconciliations of
these non-GAAP financial measures to the most directly comparable GAAP measures
are included in this press release and in the Company’s supplemental information
for the quarter. FFO and comparable property net operating income growth are
financial performance measures widely used in the REIT industry. Our definitions
of these non-GAAP measures may not be the same as similar measures reported by
other REITs.

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 its 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, changes in value of investments in
foreign entities, the ability to hedge interest rate and currency risk, risks
associated with the acquisition, development, expansion, leasing and management
of properties, general risks related to retail real estate, the liquidity of
real estate investments, environmental liabilities, international, national,
regional and local economic conditions, 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, and the
intensely competitive market environment in the retail industry, 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 our annual and quarterly
reports filed with the SEC. 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 unless required by law.

About Simon Property Group

Simon Property Group, Inc. (NYSE: SPG) is an S&P 100 company and a global leader
in the retail real estate industry. We currently own or have an interest in more
than 325 retail real estate properties in North America, Asia and Europe
comprising approximately 242 million square feet. We are headquartered in
Indianapolis, Indiana and employ approximately 5,500 people in the U.S. For more
information, visit simon.com.

Simon Property Group, Inc. and Subsidiaries

Unaudited Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

For the Three
Months

Ended March 31,
—————

2014 2013
—- —-

REVENUE:

Minimum rent $828,920 $777,907

Overage rent 33,784 37,699

Tenant
reimbursements 372,639 338,969

Management fees and
other revenues 30,607 29,729

Other income 49,041 30,754

Total revenue 1,314,991 1,215,058
——— ———

EXPENSES:

Property operating 121,087 109,910

Depreciation and
amortization 326,461 316,633

Real estate taxes 114,252 109,705

Repairs and
maintenance 36,916 29,725

Advertising and
promotion 24,571 21,259

Provision for credit
losses 5,209 2,734

Home and regional
office costs 35,288 34,894

General and
administrative 14,855 14,509

Other 20,480 18,000

Total operating
expenses 699,119 657,369
——- ——-

OPERATING INCOME 615,872 557,689

Interest expense (268,151) (285,026)

Income and other
taxes (6,938) (13,193)

Income from
unconsolidated
entities 57,423 54,231

Gain upon acquisition of controlling
interests and sale or disposal

of assets and
interests in
unconsolidated
entities, net 2,897 20,767

CONSOLIDATED NET
INCOME 401,103 334,468

Net income
attributable to
noncontrolling
interests 58,621 50,496

Preferred dividends 834 834

NET INCOME
ATTRIBUTABLE TO
COMMON STOCKHOLDERS $341,648 $283,138
======== ========

BASIC EARNINGS PER COMMON SHARE:

Net income
attributable to
common stockholders $1.10 $0.91
===== =====

DILUTED EARNINGS PER COMMON SHARE:

Net income
attributable to
common stockholders $1.10 $0.91
===== =====

Simon Property Group, Inc. and Subsidiaries

Unaudited Consolidated Balance Sheets

(Dollars in thousands, except share amounts)

March 31, December 31,

2014 2013
—- —-

ASSETS:

Investment
properties
at cost $35,598,458 $35,126,344

Less –
accumulated
depreciation 10,309,988 10,067,743

25,288,470 25,058,601

Cash and
cash
equivalents 1,013,368 1,716,863

Tenant
receivables
and
accrued
revenue,
net 530,479 581,482

Investment
in
unconsolidated
entities,
at
equity 2,347,523 2,433,399

Investment
in
Klepierre,
at
equity 2,010,771 2,014,415

Deferred
costs
and
other
assets 1,564,988 1,519,814

Total
assets $32,755,599 $33,324,574
=========== ===========

LIABILITIES:

Mortgages
and
unsecured
indebtedness $23,186,610 $23,588,531

Accounts
payable,
accrued
expenses,
intangibles,
and
deferred
revenues 1,259,452 1,374,113

Cash
distributions
and
losses
in
partnerships
and
joint
ventures,
at
equity 1,139,034 1,091,591

Other
liabilities 198,610 257,222

Total
liabilities 25,783,706 26,311,457
———- ———-

Commitments and contingencies

Limited partners’ preferred interest
in the Operating Partnership and
noncontrolling

redeemable
interests
in
properties 107,612 190,485

EQUITY:

Stockholders’ Equity

Capital stock (850,000,000 total
shares authorized, $ 0.0001 par
value, 238,000,000

shares of excess common stock,
100,000,000 authorized shares of
preferred stock):

Series J 8 3/8% cumulative redeemable
preferred stock, 1,000,000 shares
authorized,

796,948
issued
and
outstanding
with a
liquidation
value
of $
39,847 44,308 44,390

Common stock, $ 0.0001 par value,
511,990,000 shares authorized,
314,299,970 and

314,251,245
issued
and
outstanding,
respectively 31 31

Class B common stock, $ 0.0001 par
value, 10,000 shares authorized,
8,000

issued
and
outstanding – –

Capital
in
excess
of par
value 9,288,321 9,217,363

Accumulated
deficit (3,273,092) (3,218,686)

Accumulated
other
comprehensive
loss (67,579) (75,795)

Common
stock
held in
treasury
at
cost,
3,649,434
and
3,650,680
shares,
respectively (117,696) (117,897)

Total
stockholders’
equity 5,874,293 5,849,406

Noncontrolling
interests 989,988 973,226

Total
equity 6,864,281 6,822,632

Total
liabilities
and
equity $32,755,599 $33,324,574
=========== ===========

Simon Property Group, Inc. and Subsidiaries

Unaudited Joint Venture Statements of Operations

(Dollars in thousands)

For the Three
Months

Ended March 31,
—————

2014 2013
—- —-

Revenue:

Minimum rent $436,519 $394,153

Overage rent 48,932 47,767

Tenant reimbursements 197,452 184,399

Other income 112,908 42,074

Total revenue 795,811 668,393

Operating Expenses:

Property operating 164,150 115,869

Depreciation and
amortization 156,077 127,686

Real estate taxes 56,812 54,706

Repairs and
maintenance 20,614 16,164

Advertising and
promotion 19,088 15,921

Provision for credit
losses 3,230 1,245

Other 53,060 35,682

Total operating
expenses 473,031 367,273
——- ——-

Operating Income 322,780 301,120

Interest expense (155,199) (147,486)
——– ——–

Income from Continuing
Operations 167,581 153,634

Loss from operations
of discontinued joint
venture interests – (320)

Net Income $167,581 $153,314
======== ========

Third-party
investors’ share of
net income $89,313 $83,766
======= =======

Our share of net
income 78,268 69,548

Amortization of Excess
Investment (A) (25,598) (24,829)

Income from
Unconsolidated
Entities (B) $52,670 $44,719
======= =======

Note: The above financial presentation does not include any
information related to our investment in

Klepierre S.A. (“Klepierre”). For additional information, see
footnote B.

Simon Property Group, Inc. and Subsidiaries

Unaudited Joint Venture Balance Sheets

(Dollars in thousands)

March 31, December 31,

2014 2013
—- —-

Assets:

Investment properties, at cost $16,019,083 $15,824,689

Less – accumulated depreciation 5,339,813 5,294,578

10,679,270 10,530,111

Cash and cash equivalents 747,103 792,751

Tenant receivables and accrued revenue, net 287,777 310,320

Investment in unconsolidated entities, at equity 28,832 38,352

Deferred costs and other assets 520,058 586,622

Total assets $12,263,040 $12,258,156
=========== ===========

Liabilities and Partners’ Deficit:

Mortgages $13,013,998 $13,024,257

Accounts payable, accrued expenses, intangibles, and deferred revenue 977,038 849,107

Other liabilities 542,950 514,822

Total liabilities 14,533,986 14,388,186

Preferred units 67,450 67,450

Partners’ deficit (2,338,396) (2,197,480)

Total liabilities and partners’ deficit $12,263,040 $12,258,156
=========== ===========

Our Share of:

Partners’ deficit $(763,064) $(717,776)

Add: Excess Investment (A) 1,971,553 2,059,584

Our net Investment in Joint Ventures $1,208,489 $1,341,808
========== ==========

Note: The above financial presentation does not include any information related to our investment in Klepierre.

For additional information, see footnote B attached hereto.

Simon Property Group, Inc. and Subsidiaries

Unaudited Reconciliation of Non-GAAP Financial Measures (C)

(Amounts in thousands, except per share amounts)

Reconciliation of Consolidated Net Income to FFO
————————————————

For the Three Months

Ended March 31,
—————

2014 2013
—- —-

Consolidated Net Income (D) $401,103 $334,468

Adjustments to Arrive at FFO:

Depreciation and amortization from consolidated

properties 322,604 312,585

Our share of depreciation and amortization from

unconsolidated entities, including Klepierre 147,256 121,549

Gain upon acquisition of controlling interests and
sale or disposal

of assets and interests in unconsolidated entities,
net (2,897) (20,767)

Net income attributable to noncontrolling interest
holders in

properties (523) (2,461)

Noncontrolling interests portion of depreciation
and amortization (897) (2,173)

Preferred distributions and dividends (1,313) (1,313)
———-

FFO of the Operating Partnership $865,333 $741,888
======== ========

Diluted Net Income Per Share to Diluted FFO Per Share Reconciliation:

Diluted net income per share $1.10 $0.91

Depreciation and amortization from consolidated
properties

and our share of depreciation and amortization from

unconsolidated entities, including Klepierre, net
of noncontrolling

interests portion of depreciation and amortization 1.29 1.20

Gain upon acquisition of controlling interests and
sale or disposal

of assets and interests in unconsolidated entities,
net (0.01) (0.06)

Diluted FFO per share $2.38 $2.05
===== =====

Details for per share calculations:
———————————–

FFO of the Operating Partnership $865,333 $741,888

Diluted FFO allocable to unitholders (124,878) (106,687)
——– ——–

Diluted FFO allocable to common stockholders $740,455 $635,201
======== ========

Basic and Diluted weighted average shares outstanding 310,623 309,987

Weighted average limited partnership units outstanding 52,386 52,065

Basic and Diluted weighted average shares and units outstanding 363,009 362,052
======= =======

Basic and Diluted FFO per Share $2.38 $2.05

Percent Change 16.1%

Simon Property Group, Inc. and Subsidiaries

Footnotes to Unaudited Reconciliation of Non-GAAP
Financial Measures

Notes:

(A) Excess
investment
represents
the
unamortized
difference
of our
investment
over equity
in the
underlying
net assets
of the
related
partnerships
and joint
ventures
shown
therein.
The Company
generally
amortizes
excess
investment
over the
life of the
related
properties.

(B) The
Unaudited
Joint
Venture
Statements
of
Operations
do not
include any
operations
or our
share of
net income
or excess
investment
amortization
related to
our
investment
in
Klepierre.
Amounts
included in
Footnotes D
below
exclude our
share of
related
activity
for our
investment
in
Klepierre.
For further
information,
reference
should be
made to
financial
information
in
Klepierre’s
public
filings and
additional
discussion
and
analysis in
our Form
10-Q.

(C) This report
contains
measures of
financial
or
operating
performance
that are
not
specifically
defined by
GAAP,
including
FFO and FFO
per share.
FFO is a
performance
measure
that is
standard in
the REIT
business.
We believe
FFO
provides
investors
with
additional
information
concerning
our
operating
performance
and a basis
to compare
our
performance
with those
of other
REITs. We
also use
these
measures
internally
to monitor
the
operating
performance
of our
portfolio.
Our
computation
of these
non-GAAP
measures
may not be
the same as
similar
measures
reported by
other
REITs.

We determine
FFO based
upon the
definition
set forth
by the
National
Association
of Real
Estate
Investment
Trusts
(“NAREIT”).
We
determine
FFO to be
our share
of
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
or
disposals
of, or any
impairment
charges
related to,
previously
depreciated
retail
operating
properties,
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.

We have
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
changes, or
a gain or
loss
resulting
from the
sale or
disposal
of, or any
impairment
charges
relating
to,
previously
depreciated
retail
operating
properties.
We include
in FFO
gains and
losses
realized
from the
sale of
land,
outlot
buildings,
marketable
and non-
marketable
securities,
and
investment
holdings of
non-retail
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.

(D) Includes our
share of:

– Gains on
land sales
of $6.8
million and
$0.4
million for
the three
months
ended March
31, 2014
and 2013,
respectively

– Straight-
line
adjustments
to minimum
rent of
$14.0
million and
$12.8
million for
the three
months
ended March
31, 2014
and 2013,
respectively

– Amortization
of fair
market value
of leases
from
acquisitions
of $5.4
million and
$10.7
million for
the three
months ended
March 31,
2014 and
2013,
respectively

– Debt premium
amortization
of $16.1
million and
$10.9
million for
the three
months
ended March
31, 2014
and 2013,
respectively.

SOURCE Simon Property Group, Inc.

 

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