Simon Property Group Inc. (SPG:US), the largest U.S. mall owner, reported funds from operations that beat analysts’ estimates amid increased shopper spending at its regional retail centers and outlet malls.
FFO, which gauges a property company’s ability to generate cash, climbed in the fourth quarter to $827.4 million, or $2.29 a share, from $678.9 million, or $1.91, a year earlier, the real estate investment trust said today in a statement. The average (SPG:US) estimate of 19 analysts in a Bloomberg survey was $2.17 a share.
Demand for space at regional malls is rising, helping to boost revenue at Indianapolis-based Simon. U.S. retail sales excluding autos advanced 4.1 percent in December from a year earlier, according to data from the Commerce Department. Simon is the U.S.’s biggest owner of both regional malls and outlet centers, where retailers sell at a discount.
“They’re doing very well,” Rich Moore, an analyst at RBC Capital Markets in Solon, Ohio, said in a telephone interview before earnings were announced. “The notion that there are bargains to be had at the outlet center is enticing to people.”
Simon raised its quarterly dividend (SPG:US) to $1.15 a share from $1.10, the sixth straight increase.
Fourth-quarter revenue rose 15 percent from a year earlier to $1.34 billion. Occupancies at Simon’s U.S. properties climbed to 95.3 percent from 94.6 percent. The base minimum rent in the quarter was $40.73 a square foot, up from $39.40 a year earlier. Tenant sales increased 6.6 percent to $568 a square foot.
The company estimates that FFO for the year will be $8.40 to $8.50 a share. The 19 estimates of analysts in a Bloomberg survey is $8.42. For 2012, FFO was $7.98 a share.
Fourth-quarter results were announced before the start of regular U.S. trading. Simon rose 1.1 percent to $161.97 on Feb. 1. Its shares have advanced 19 percent in the past 12 months, compared with an 11 percent gain in the Bloomberg REIT (BBREIT) Index.
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