Simon Property Group Inc., the largest mall owner in the country and operator of several high-profile malls in Massachusetts, reported greater-than-expected funds from operations (FFO) that rose 13.5 percent on higher rent and lower expenses.
Simon also reduced its quarterly dividend to the minimum required under rules for real estate investment trusts and shaved its 2009 outlook to adjust for a 17.25 million-share offering last month.
Simon said first-quarter FFO rose to $476.8 million, or $1.61 per share, easily beating the $1.47 analysts on average had expected, according to Reuters Estimates.
A year earlier, Simon reported FFO of $420.1 million, or $1.46 per share.
The Indianapolis-based company says it expects to report full-year FFO per share of $6.05 to $6.20, down from its prior forecast of $6.40 to $6.60 per share. Analysts have forecast $6.09, according to Reuters Estimates.
Simon reduced its quarterly dividend to 60 cents a share in cash and stock from 90 cents per share, but raised the cash component of the dividend by 3 cents per share.
Simon owns, or has an interest in, 386 properties comprising 262 million square feet (24 million square meters) of space in North America, Europe and Asia.
The recession has crimped consumer spending, taking a toll on retailers and their landlords. For Simon, shoppers seeking bargains have translated into better results at its U.S. outlet centers than its malls.
Occupancy at its malls declined to 90.8 percent from 91.7 percent and sales per square foot fell 7.3 percent to $455, but average rent rose 6.8 percent to $40.29 per square foot.
At its premium outlet centers, occupancy slid to 96.9 percent from 97.9 percent. Sales per square foot slipped just 0.8 percent, while average rent rose 11 percent to $29.21 per square foot.
Meanwhile, the frozen credit markets have prompted Simon and other mall and outlet center owners to conserve cash and strengthen their balance sheets.
During the quarter, Simon raised $1.6 billion through stock and bond offerings, as well as through new mortgages.
By the end of the quarter, it had $1.1 billion of cash on hand, including its share of joint venture cash, and access to about $3 billion under its revolving credit facility.
Simon owns and operates 15 properties in the Bay State, including the Wrentham Village Outlets, South Shore Plaza Mall in Braintree and Boston’s upscale Copley Place. (Reuters)
