Simon Property Group from Indianapolist to Noventa di Piave

INDIANAPOLIS, Ind. – Simon Property Group, Inc. (NYSE: SPG) today reported results for the quarter and nine months ended September 30, 2013.

Results for the Quarter

-Funds from Operations (“FFO”) was $802.8 million, or $2.21 per diluted share, as compared to $720.1 million, or $1.99 per diluted share, in the prior year period. The FFO increase on a per diluted share basis was 11.1 percent.
-Net income attributable to common stockholders was $311.7 million, or $1.00 per diluted share, as compared to $254.9 million, or $0.84 per diluted share, in the prior year period.
Results for the Nine Months
-Funds from Operations (“FFO”) was $2.311 billion, or $6.38 per diluted share, as compared to $2.057 billion, or $5.70 per diluted share, in the prior year period. The FFO increase on a per diluted share basis was 11.9 percent.
-Net income attributable to common stockholders was $934.7 million, or $3.01 per diluted share, as compared to $1.116 billion, or $3.71 per diluted share, in the prior year period. Results for 2012 include primarily non-cash net gains from acquisitions and dispositions of $1.36 per diluted share.

“We achieved excellent financial performance for the quarter and had successful openings of three new Premium Outlet Centers. We have also completed our acquisition of ownership interests in the European designer outlet business of McArthurGlen,” said David Simon, Chairman and CEO. “Our relentless focus on operating performance and executing our growth strategy through expansions, new Premium Outlets development and smart acquisitions delivered strong results, including 4.9% growth in comparable property net operating income for our U.S. Malls and Premium Outlets for the quarter. We are pleased to raise our dividend and increase our 2013 FFO guidance based on our results to date and our expectations for the remainder of 2013.”

Dividends

Today the Company announced that the Board of Directors declared a quarterly common stock dividend of $1.20 per share. This is an increase of $0.05 per share from the previous quarter, and a year over year increase of 9.1%. The dividend will be payable on November 29, 2013 to stockholders of record on November 15, 2013.

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 December 31, 2013 to stockholders of record on December 17, 2013.

Development Activity

Three new Premium Outlets opened during the quarter:

-August 1st – Toronto Premium Outlets in Halton Hills (Toronto), Canada is a 360,000 square foot center with over 100 high quality outlet stores. The center is the Canadian entry point for many upscale, U.S. retailers and designer brands and opened 98% leased. The Company owns a 50% interest in this project.
-August 22nd – St. Louis Premium Outlets in Chesterfield (St. Louis), Missouri is located on the south side of I-64/US Highway 40 east of the Daniel Boone Bridge. The center’s first phase of 350,000 square feet with 85 stores opened 100% leased. St. Louis Premium Outlets is a part of Chesterfield Blue Valley, a mixed-use development to include office space, hotel, restaurant and entertainment venues. The Company owns a 60% interest in the project.
-August 29th – Busan Premium Outlets in Busan, Korea is a 360,000 square foot center that serves the southeastern Korean peninsula, including the cities of Busan, Ulsan and Daegu, as well as local and overseas visitors. The center opened 99% leased. The Company owns a 50% interest in this project, which is its third Premium Outlet Center in Korea.
Four new Premium Outlets are currently under construction:
-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 215,000 square foot center scheduled to open in March of 2015. The Company owns a 45% interest in this project.

In early October, we opened The Shops at Nanuet, a 750,000 square foot open-air, state-of-the-art center located in Rockland County, New York. This project transformed the property from an enclosed mall to a main-street outdoor shopping destination providing customers with a wide variety of fashion and specialty retail, dining and entertainment opportunities. In October, we also completed a 105,000 square foot expansion of Orlando Premium Outlets-Vineland Ave which is 100% leased.

Redevelopment and expansion projects, including the addition of anchors and big box tenants, are underway at more than 35 properties in the U.S. and Asia. The Company’s share of the cost of these projects is approximately $1.1 billion.

Acquisitions

On October 16, 2013, the Company completed the closing of its acquisition of ownership interests in four McArthurGlen Designer Outlets: Parndorf (Vienna, Austria), La Reggia (Naples, Italy), Noventa di Piave (Venice, Italy) and Roermond (Roermond, the Netherlands). McArthurGlen is the leader in upscale, European designer outlet centers.

Simon Property Group previously completed the acquisition of a 50% ownership in McArthurGlen’s management and development company through a joint venture, as well as an interest in Ashford Designer Outlets in Kent, UK, and became a partner in a new designer outlet under development in Vancouver, British Columbia, Canada.

Total cash consideration for the McArthurGlen transaction was approximately $500 million.

Dispositions

During the third quarter, the Company completed the sale of the following assets:
-Arsenal Mall and Office in Watertown (Boston), Massachusetts
-Terrace at The Florida Mall in Orlando, Florida

Proceeds from the sale of these assets were approximately $76 million.

Financing Activity

On August 7, 2013, Moody’s Investors Service upgraded its rating of Simon Property Group’s senior unsecured debt to A2, with a stable outlook.

On October 2, 2013, Simon Property Group, L.P., the Company’s majority-owned operating partnership subsidiary, issued €750 million 7-year senior unsecured notes at 2.375%. This represents the Company’s first offering in the euro-denominated debt market. Net proceeds from the public offering were used to repay euro-denominated borrowings under the Company’s unsecured revolving credit facility and for general corporate purposes.
The Company has also been active in the secured debt markets in 2013, closing or locking rates on 22 new loans totaling approximately $3.0 billion, of which SPG’s share is $2.2 billion. The weighted average interest rate on these new loans is 2.85% and the weighted average term is 7.6 years.

2013 Guidance

Today the Company updated and raised its guidance, estimating that FFO will be within a range of $8.72 to $8.78 per diluted share for the year ending December 31, 2013, and net income will be within a range of $4.10 to $4.16 per diluted share. This represents an increase of $0.10 per diluted share for midpoint of the range provided on July 29, 2013.
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:

Sustainability

During the quarter, Simon Property Group was honored for its leadership and transparency on sustainable practices and was named to the 2013 CDP Global 500 Climate Disclosure Leadership Index (CDLI). This annual index highlights FTSE Global 500 companies that demonstrate leadership through disclosure of information regarding climate change and score within the top 10% of the five hundred companies assessed.

This is the third time Simon Property Group has been awarded the CDLI distinction due to its top score on disclosure of greenhouse gas emissions and energy use, and SPG is the only real estate company included in 2013. Simon Property Group has also been named to the S&P 500 Climate Disclosure Leadership Index five times including this year.

In addition, Simon Property Group was recognized as the leading retail real estate company in North America for its sustainability practices by The Global Real Estate Sustainability Benchmark (GRESB), and ranked #1 among fifteen U.S. retail real estate peers in GRESB’s recently released 2013 Report.

Conference Call

Simon Property Group will hold a conference call to discuss our financial results today at 9:00 a.m. Eastern Time, Friday, October 25, 2013. Live streaming audio of the conference call will be accessible at investors.simon.com. An online replay will be available until January 25, 2014 at investors.simon.com. A searchable podcast of the conference call will be available at http://www.REITcafe.com.

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. The Company currently owns or has an interest in more than 325 retail real estate properties in North America and Asia 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.

Source: Simon Property Group Inc.

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