Simon Property Group Inc., owner of a number of high-profile malls throughout New England, reported greater-than-expected quarterly funds from operations Friday, citing lower expenses and higher occupancy and sales at its malls and outlet centers.
The largest U.S. mall owner is rebounding from the economic downturn, which hit its tenants hard, and its failed attempt to buy rival General Growth Properties Inc. Investors want to know the company’s next move, as it sits on a cash pile of billions of dollars.
Second-quarter funds from operations, or FFO, rose 55 percent to $487.7 million, or $1.38 per share, from $313.1 million, or 96 cents per share, a year earlier, when the company recorded a non-cash charge of 42 cents a share.
Analysts on average had expected $1.34 per share, according to Thomson Reuters I/B/E/S.
FFO, a measure of performance for real estate investment trusts, removes the profit-reducing effect of depreciation of the company’s malls and shopping centers.
Simon maintained its forecast for full-year FFO of $5.77 to $5.87 per share, excluding an earlier debt-related charge.
Second-quarter net operating income, which measures the net amount of cash its properties generate, rose 1.9 percent from a year earlier, a sign that business is improving after the downturn.
The Indianapolis-based company owns or has an interest in 373 properties comprising 256 million square feet of leasable space in North America, Europe and Asia.
Simon recently lost its battle to buy General Growth, the No. 2 U.S. mall owner. It dropped out of the bidding after another suitor, a group lead by Brookfield Asset Management, agreed to bankroll General Growth’s exit from bankruptcy in exchange for most of the company and more than 100 million warrants.
As of the end of June, Simon was sitting on a $2.6 billion cash pile and had access to $3.3 billion under its revolving credit line.
The company said on Friday it expects to record a gain of $280 million in the third quarter on the sale of Simon Ivanhoe, which owns seven shopping centers in France and Poland, to Unibail-Rodamco.
In the second quarter, sales at its mall and outlet tenants’ stores rose to $474 per square foot from $456 a year earlier. Occupancy increased to 93.1 percent from 92.3 percent.
Average rent rose slightly, to $38.62 per square foot from $38.49 a year earlier.
