Mall operator Simon Property Group (SPG), the largest public real estate company in the US, reported Friday funds from operations for the fourth quarter profit that declined 10% from last year, hurt by impairment charges as well as a decline in comparable sales and occupancy.
Adjusted funds from operations per share declined 11%, but significantly topped analysts' expectations. Additionally, the company provided earnings forecast for the full year 2010, above view.
In a statement, Chairman and Chief Executive Officer, David Simon said, "I am very pleased with our fourth quarter and full year financial and operational performance. We reported funds from operations as adjusted per share of $1.66 for the quarter and $6.01 for the year. In addition, our regional mall and Premium Outlet Center portfolios generated positive comparable property net operating income growth in 2009. These are significant accomplishments given the state of the U.S. economy and the challenges faced by consumers in 2009."
Fourth Quarter Results
The Indianapolis-based S&P 500 company reported funds from operations or FFO, of $485.23 million or $1.40 per share for the fourth quarter, down from $540.53 million or $1.86 per share in the prior-year quarter.
Excluding the impact of $88.1 million or $0.26 per share non-cash impairment charges, adjusted FFO for the quarter was $573.3 million or $1.66 per share, compared to $540.53 million or $1.86 per share in the year-ago quarter.
On average, seventeen analysts polled by Thomson Reuters expected the company to report earnings of $1.52 per share for the fourth quarter. Analysts estimates typically exclude special items.
Net income for the quarter dropped to $91.54 million or $0.32 per share from $145.20 million or $0.64 per share in the comparable quarter a year ago. Excluding the impact of $73.3 million or $0.26 per share non-cash impairment charges, adjusted net income increased to $164.8 million or $0.58 per share from last year.
Total revenues for the quarter was flat with the same quarter last year at $1.03 billion, but topped eight Wall Street analysts' consensus estimate of $967.76 million.
Minimum rent revenue for the fourth quarter was $607.69 million, edged up from $607.10 million in the year-ago quarter, while overage rent revenue edged down to $39.12 million from $39.44 million in the prior-year quarter. Tenant reimbursements revenue declined to $277.32 million from $298.29 million same quarter last year.
Management fees and other revenues were $33.37 million, up from $31.22 million in the year-ago quarter, and other income rose to $70.68 million from $62.26 million in the prior-year quarter.
Other Metrics
Occupancy in regional malls as of the end of the fourth quarter was 92.1%, down 30 basis points from 92.4% last year. In the premium outlet centers, occupancy declined 100 basis points to 97.9% from 98.9% last year.
Comparable sales per square foot in the regional malls declined to $433 from last year's $470, and comparable sales per square foot in premium outlet centers was $500, down from $509 a year ago.
Rent per square foot rose to $40.04 in the regional malls from last year's $39.49, and the Rent per square foot in premium outlet centers was $33.45, higher than $27.65 a year ago.
Operating income for the quarter decreased to $425.60 million from $428.88 million in the prior-year quarter. Total operating expenses were $602.58 million, marginally up from $600.43 million in the year-ago quarter, including impairment charge of $56.88 million, higher than $16.49 million last year.
The company also reported a loss on sale of assets and interests in unconsolidated entities of $30.11 million in the latest quarter.
The company also declared a quarterly cash stock dividend of $0.60 per share, payable on February 26, to stockholders of record on February 16, 2010.
Full-Year Highlights
For fiscal 2009, Simon property posted FFO of $1.75 billion or $5.33 per share, down from $1.85 billion or $6.42 per share in the prior year. Excluding the impact of impairment charges, adjusted FFO increased to $1.98 billion or $6.01 per share from last year. Analysts expected the company to report earnings of $5.46 per share for fiscal 2009.
Net income for the year dropped to $283.10 million or $1.05 per share from $422.52 million or $1.87 per share in the year ago. Excluding non-cash impairment charges of $188.4 million or $0.71 per share, adjusted net income for the latest year rose to $471.5 million or $1.76 per share.
Total revenues for the full year edged down to $3.775 billion from $3.783 billion posted in fiscal 2008. The Street was looking for full-year 2009 revenues of 3.67 billion.
Outlook
For fiscal 2010, Simon Property currently expects earnings in a range of $2.58 to $2.73 per share, FFO in the range of $5.25 to $5.40 per share, and adjusted FFO of between $5.72 and $5.87 per share. Analysts have a consensus earnings estimate of $5.59 per share for fiscal 2010.
Stock Quote
In Friday's regular trading session, SPG is trading at $72.93, up $3.48 or 5.01% on a volume of 2.22 million shares. In the past 52-week period, the stock has been trading in a broad range of $24.27 to $83.82.
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