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Simon Property: Earnings Release & Supplemental Information UNAUDITED THIRD QUARTER 2015

The following excerpt is from the company's SEC filing.

Table of Contents

TABLE OF CONTENTS

EARNINGS RELEASE AND SUPPLEMENTAL INFORMATION

FOR THE QUARTER ENDED SEPTEMBER 30, 2015

Earnings Release

Overview

The Company and Reporting Calendar

Stock Information, Credit Ratings and Senior Unsecured Debt Covenants

Financial Data

Selected Financial and Equity Information

Pro-Rata Statements of Operations

Pro-Rata Balance Sheet

Net Operating Income (NOI) Composition

Reconciliations of Non-GAAP Financial Measures

Consolidated Net Income to NOI

FFO of the Operating P artnership to Funds Available for Distribution (Our Share)

Other Income, Other Expense and Capitalized Interest

Operational Data

U.S. Malls and Premium Outlets Operating Information

The Mills and International Operating Information

U.S. Malls and Premium Outlets Lease Expirations

U.S. Malls and Premium Outlets Top Tenants

Development Activity

Capital Expenditures

Development Activity Summary

Development Activity Report

U.S. Anchor/Big Box Openings

Balance Sheet Information

Common and Preferred Stock Information

Changes in Common Share and Limited Partnership Unit Ownership

Preferred Stock/Units Outstanding

Credit Profile

Summary of Indebtedness

Total Debt Amortization and Maturities by Year (Our Share)

Property and Debt Information

40-49

Includes reconciliation of consolidated net income to funds from operations.

3Q 2015 SUPPLEMENTAL

EARNINGS RELEASE

Contacts:

FOR IMMEDIATE RELEASE

Tom Ward

317-685-7330 Investors

Les Morris

317-263-7711 Media

SIMON PROPERTY GROUP REPORTS THIRD QUARTER 2015 RESULTS AND RAISES QUARTERLY DIVIDEND

AND FULL YEAR 2015 GUIDANCE

INDIANAPOLIS, October 27, 2015

- Simon, a leading global retail real estate company, today reported results for the quarter ended September 30, 2015.

RESULTS FOR THE QUARTER

Funds from Operations ("FFO") was $918.7 million, or $2.54 per diluted share, as compared to $689.4 million, or $1.90 per diluted share, in the prior year period, a 33.7% increase. The third quarter 2014 results include a loss on the extinguishment of debt of $127.6 million, or $0.35 per diluted share, related to cash tender offers and the redemption of a series of senior notes of Simon Property Group L.P.

Net income attributable to common stockholders was $420.0 million, or $1.36 per diluted share, as compared to $252.0 million, or $0.81 per diluted share, in the prior year period.

Growth in comparable FFO per diluted share for the three months ended September 30, 2015 was 12.9%

RESULTS FOR THE NINE MONTHS

Funds from Operations ("FFO") was $2.705 billion, or $7.46 per diluted share, as compared to $2.339 billion, or $6.43 per diluted share, in the prior year period.

Net income attributable to common stockholders was $1.255 billion, or $4.04 per diluted share, as compared to $1.0 billion, or $3.22 per diluted share, in the prior year period.

Growth in comparable FFO per diluted share for the nine months ended September 30, 2015 was 11.7%

For a reconciliation of FFO and net income per diluted share on a comparable basis, please see Footnote H of the Footnotes to Unaudited Reconciliation of Non-GAAP Financial Measures.

EARNINGS RELEASE

"This was an excellent quarter for our Company, with strong financial and operational performance, successful openings of new and expanded Premium Outlet® Centers and the groundbreaking of two new outlet centers, including our first outlet center in France," said David Simon, Chairman and CEO. "Today we are pleased to raise our dividend for the fourth consecutive quarter and once again increase guidance for 2015."

U.S. MALLS AND PREMIUM OUTLETS OPERATING STATISTICS

SEPTEMBER 30,

YEAR-OVER-YEAR

CHANGE

Occupancy

80 bps

Base Minimum Rent per sq.ft.

Releasing Spread per sq. ft.

(1)(2)

+$1.33

Releasing Spread (percentage change)

+110 bps

Total Sales per sq. ft.

Represents mall stores in Malls and all owned square footage in Premium Outlets.

Same space measure that compares opening and closing rates on individual spaces leased during trailing 12-month period.

Trailing 12-month sales per square foot for mall stores less than 10,000 square feet in Malls and all owned square footage in Premium Outlets.

COMPARABLE PROPERTY NET OPERATING INCOME

Comparable property NOI growth for the three months ended September 30, 2015 was 4.3%. The growth for the nine months ended September 30, 2015 was 3.8%. Comparable properties include U.S. Malls, Premium Outlets and The Mills.

DIVIDENDS

Today Simon's Board of Directors declared a quarterly common stock dividend of $1.60 per share. This is a 23.1% increase year-over-year. The dividend will be payable on November 30, 2015 to stockholders of record on November 16, 2015.

Simon's Board of Directors also declared the quarterly dividend on its 8

% Series J Cumulative Redeemable Preferred Stock (NYSE: SPGPrJ) of $1.046875 per share, payable on December 31, 2015 to stockholders of record on December 17, 2015.

DEVELOPMENT ACTIVITY

During the third quarter, and subsequent to quarter end, we opened several Premium Outlets new developments and expansions, as well as one significant mall expansion.

On August 13

, we opened Gloucester Premium Outlets, a 375,000 square foot center in Gloucester, New Jersey. Simon owns a 50% interest in this center.

, we completed a 185,000 square foot expansion of San Francisco Premium Outlets. Simon owns 100% of this center.

On August 27

, we completed a 264,000 square foot expansion at Chicago Premium Outlets, one of the country's most successful outlet centers. Simon owns 100% of this center.

On October 1

we opened Tucson Premium Outlets, a 366,000 square foot center with more than 90 retailers featuring high-quality designer and name brands. Simon owns 100% of this center.

On October 9

, we completed a new two-level, 260,000 square foot 'Fashion Wing' expansion at Del Amo Fashion Center, anchored by a new Nordstrom store. Simon owns a 50% interest in this center.

On October 29

, Tampa Premium Outlets will open with 441,000 square feet of high-quality, name brand stores. Simon owns 100% of this center.

Also, Vancouver Designer Outlet, a 242,000 square foot center with high-quality, name brand stores, in Vancouver, British Columbia, Canada opened on July 9

. Simon owns a 45% interest in this center.

Construction continues on other significant expansion projects including Roosevelt Field, King of Prussia Mall, Stanford Shopping Center, The Galleria in Houston, Sawgrass Mills and Woodbury Common Premium Outlets.

At quarter-end, redevelopment and expansion projects, including the addition of new anchors, were underway at 30 properties in the U.S. Simon's share of the costs of all new development and redevelopment projects under construction at quarter-end was approximately $2.4 billion.

During the third quarter, construction started on:

Clarksburg Premium Outlets, a 392,000 square foot center, in Clarksburg, Maryland scheduled to open in October 2016. Simon owns 66% of this project.

Provence Designer Outlet, a 269,000 square foot center, in Miramas, France scheduled to open in March 2017. Simon owns 90% of this project.

FINANCING ACTIVITY

The Company was active in both the unsecured and secured credit markets through the first nine months of the year continuing to lower our effective borrowing costs.

In August, Simon issued $1.10 billion of senior notes consisting of $500 million of 2.50% notes due 2020 and $600 million of 3.50% notes due 2025. Combined, the issuance has a weighted average term of 7.8 years and a weighted average coupon rate of 3.05%.

During the first nine months, we closed on 11 new secured loans totaling approximately $2.7 billion (U.S. dollar equivalent), of which SPG's share is $1.4 billion. The weighted average interest rate and term on these loans is 2.95% and 8.3 years, respectively.

As of September 30, 2015, Simon had approximately $6.0 billion of liquidity consisting of cash on hand, including its share of joint venture cash, and available capacity under its revolving credit facilities.

2015 GUIDANCE

Today, the Company is raising both the low and high ends of its previously provided full year 2015 FFO range and currently estimates a range of $10.10 to $10.15 per diluted share for the year ending December 31, 2015, with net income to be within a range of $5.50 to $5.55 per diluted share.

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:

For the year ending December 31, 2015

LOW END

HIGH END

Estimated net income available to common stockholders per diluted share *

Depreciation and amortization including Simon's share of unconsolidated entities

Gain upon acquisition of controlling interests, sale or disposal of assets and interests in unconsolidated entities, net

(0.05)

(0.05)

Estimated FFO per diluted share *

Includes $0.22 of a gain upon the sale of marketable securities.

CONFERENCE CALL

Simon will hold a conference call to discuss the quarterly financial results today at 11:00 a.m. Eastern Time, Tuesday, October 27, 2015. A live webcast of the conference call will be accessible in listen-only mode at investors.simon.com. An audio replay of the conference call will be available until November 4, 2015. To access the audio replay, dial 1-888-286-8010 (international 617-801-6888) passcode 81372553.

SUPPLEMENTAL MATERIALS AND WEBSITE

Supplemental information on our third quarter 2015 performance is available at investors.simon.com. This information has also been furnished to the SEC in a current report on Form 8-K.

We routinely post important information online at our investor relations website, investors.simon.com. We use this website, press releases, SEC filings, quarterly conference calls, presentations and webcasts to disclose material, non-public information in accordance with Regulation FD. We encourage members of the investment community to monitor these distribution channels for material disclosures. Any information accessed through our website is not incorporated by reference into, and is not a part of, this document.

NON-GAAP FINANCIAL MEASURES

This press release includes FFO, FFO per share, comparable FFO per share, comparable earnings per share and comparable property net operating income growth, which are financial performance measures not defined by generally accepted accounting principles in the United States ("GAAP"). Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release and in Simon's supplemental information for the quarter. FFO and comparable property net operating income growth are financial performance measures widely used in the REIT industry. Our definitions of these non-GAAP measures may not be the same as similar measures reported by other REITs.

FORWARD-LOOKING STATEMENTS

Certain statements made in this press release may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained, and it is possible that the Company's actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to: the Company's ability to meet debt service requirements, the availability and terms of financing, changes in the Company's credit rating, changes in market rates of interest and foreign exchange rates for foreign currencies, changes in value of investments in foreign entities, the ability to hedge interest rate and currency risk, risks associated with the acquisition, development, expansion, leasing and management of properties, general risks related to retail real estate, the liquidity of real estate investments, environmental liabilities, international, national, regional and local economic conditions, changes in market rental rates, security breaches that could compromise our information technology or infrastructure or personally identifiable data of customers of our retail properties, trends in the retail industry, relationships with anchor tenants, the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, risks relating to joint venture properties, the intensely competitive market environment in the retail industry, costs of common area maintenance, risks related to international activities, insurance costs and coverage, the loss of key management personnel, terrorist activities, changes in economic and market conditions and maintenance of our status as a real estate investment trust. The Company discusses these and other risks and uncertainties under the heading "Risk Factors" in its annual and quarterly periodic reports filed with the SEC. The Company may update that discussion in its periodic reports, but except as required by law, the Company undertakes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

ABOUT SIMON

Simon is a global leader in retail real estate ownership, management and development and a S&P100 company (Simon Property Group, NYSE:SPG). Our industry-leading retail properties and investments across North America, Europe and Asia provide shopping experiences for millions of consumers every day and generate billions in annual retail sales. For more information, visit simon.com.

Simon Property Group, Inc. and Subsidiaries

Unaudited Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

FOR THE THREE MONTHS

ENDED SEPTEMBER 30,

REVENUE:

Minimum rent

788,368

740,214

2,309,951

2,190,983

Overage rent

47,433

52,502

123,419

123,336

Tenant reimbursements

373,223

350,595

1,077,702

1,018,316

Management fees and other revenues

38,568

36,396

113,674

101,145

Other income

72,545

54,987

260,736

139,918

Total revenue

1,320,137

1,234,694

3,885,482

3,573,698

EXPENSES:

Property operating

115,820

106,742

315,418

294,318

289,360

281,661

873,243

849,369

Real estate taxes

114,145

97,359

327,519

291,058

Repairs and maintenance

21,189

21,416

73,599

72,838

Advertising and promotion

38,756

38,359

98,727

99,128

(Recovery of) provision for credit losses

(361)

1,769

6,172

8,635

Home and regional office costs

37,204

40,753

112,454

120,999

General and administrative

14,838

14,388

45,182

44,842

31,599

24,690

74,025

62,457

Total operating expenses

662,550

627,137

1,926,339

1,843,644

657,587

607,557

1,959,143

1,730,054

Interest expense

(229,654)

(249,780)

(692,801)

(758,945)

Loss on extinguishment of debt

(127,573)

Income and other taxes

(3,658)

(6,589)

(13,440)

(20,078)

Income from unconsolidated entities

68,221

55,631

203,289

168,473

Gain upon acquisition of controlling interests and sale or disposal of assets

17,717

16,339

154,242

Consolidated income from continuing operations

492,496

296,963

1,472,530

1,146,173

Discontinued operations and gain on disposal

67,524

Discontinued operations transaction expenses

(38,163)

CONSOLIDATED NET INCOME

1,175,534

Net income attributable to noncontrolling interests

71,653

44,161

214,901

172,828

Preferred dividends

2,503

2,503

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

420,009

251,968

1,255,126

1,000,203

BASIC AND DILUTED EARNINGS PER COMMON SHARE:

Income from continuing operations

0.08

Simon Property Group, Inc. and Subsidiaries

Unaudited Consolidated Balance Sheets

(Dollars in thousands, except share amounts)

DECEMBER 31,

2014

ASSETS:

Investment properties at cost

33,208,645

31,318,532

Less - accumulated depreciation

9,664,911

8,950,747

23,543,734

22,367,785

Cash and cash equivalents

856,861

612,282

Tenant receivables and accrued revenue, net

564,344

580,197

Investment in unconsolidated entities, at equity

2,480,603

2,378,800

Investment in Klépierre, at equity

1,801,587

1,786,477

Deferred costs and other assets

1,394,174

1,806,789

Total assets

30,641,303

29,532,330

LIABILITIES:

Mortgages and unsecured indebtedness

22,629,054

20,852,993

Accounts payable, accrued expenses, intangibles, and deferred revenues

1,307,707

1,259,681

Cash distributions and losses in partnerships and joint ventures, at equity

1,364,943

1,167,163

Other liabilities

193,683

275,451

Total liabilities

25,495,387

23,555,288

Commitments and contingencies

Limited partners' preferred interest in the Operating Partnership

25,537

EQUITY:

Stockholders' Equity

Capital stock (850,000,000 total shares authorized, $0.0001 par value, 238,000,000 shares of excess common stock, 100,000,000 authorized shares of preferred stock):

Series J 8

% cumulative redeemable preferred stock, 1,000,000 shares authorized, 796,948 issued and outstanding with a liquidation value of $39,847

43,815

44,062

Common stock, $0.0001 par value, 511,990,000 shares authorized, 314,804,425 and 314,320,664 issued and outstanding, respectively

Class B common stock, $0.0001 par value, 10,000 shares authorized, 8,000 issued and outstanding

Capital in excess of par value

9,370,114

9,422,237

Accumulated deficit

(4,336,116)

(4,208,183)

Accumulated other comprehensive loss

(248,369)

(61,041)

Common stock held in treasury at cost, 5,394,345 and 3,540,754 shares, respectively

(437,134)

(103,929)

Total stockholders' equity

4,392,341

5,093,177

Noncontrolling interests

728,038

858,328

Total equity

5,120,379

5,951,505

Total liabilities and equity

Unaudited Joint Venture Statements of Operations

(Dollars in thousands)

FOR THE THREE MONTHS

ENDED SEPTEMBER 30,

447,790

436,580

1,325,056

1,289,263

43,669

42,760

136,191

133,146

203,832

202,973

597,461

588,772

55,060

54,157

170,600

228,793

Total Revenue

750,351

736,470

2,229,308

2,239,974

OPERATING EXPENSES:

135,467

141,083

398,528

434,147

145,351

147,946

435,615

442,141

57,767

59,934

172,818

167,523

15,919

16,289

53,365

51,874

20,395

18,535

54,485

54,458

(212)

2,937

4,288

38,861

43,760

122,214

141,243

Total Operating Expenses

413,548

427,757

1,239,962

1,295,674

336,803

308,713

989,346

944,300

(147,333)

(147,817)

(443,396)

(449,512)

INCOME FROM CONTINUING OPERATIONS

189,470

160,896

545,950

494,788

Income from operations of discontinued joint venture interests

5,079

Gain on sale or disposal of assets and interests in unconsolidated entities

35,779

581,729

499,867

THIRD-PARTY INVESTORS' SHARE OF NET INCOME

95,018

81,810

296,896

259,340

OUR SHARE OF NET INCOME

94,452

79,086

284,833

240,527

AMORTIZATION OF EXCESS INVESTMENT (A)

(22,884)

(26,187)

(71,426)

(76,168)

OUR SHARE OF LOSS FROM UNCONSOLIDATED DISCONTINUED OPERATIONS

(652)

OUR SHARE OF GAIN ON SALE OR DISPOSAL OF ASSETS AND INTERESTS IN UNCONSOLIDATED ENTITIES, NET

(16,339)

INCOME FROM UNCONSOLIDATED ENTITIES (B)

71,568

52,899

197,068

163,707

The above financial presentation does not include any information related to our investment in Klépierre S.A.

("Klépierre") and Simon HBC joint venture. For additional information, see footnote B.

Unaudited Joint Venture Balance Sheets

DECEMBER 31,

Assets:

Investment properties, at cost

16,998,613

16,087,282

Less - accumulated depreciation

5,745,006

5,457,899

11,253,607

10,629,383

854,397

993,178

335,259

362,201

11,386

554,938

536,600

12,998,201

12,532,748

LIABILITIES AND PARTNERS' DEFICIT:

13,932,542

13,272,557

951,901

1,015,334

385,277

493,718

15,269,720

14,781,609

Preferred units

67,450

Partners' deficit

(2,338,969)

(2,316,311)

Total liabilities and partners' deficit

Our Share of:

(875,336)

(663,700)

Add: Excess Investment (A)

1,809,694

1,875,337

Our net Investment in unconsolidated entities, at equity

934,358

1,211,637

The above financial presentation does not include any information related to our investment in Klépierre and Simon HBC joint venture. For additional information, see footnote B attached hereto.

EARNINGS RELEASE

Unaudited Reconciliation of Non-GAAP Financial Measures (C)

(Amounts in thousands, except per share amounts)

Reconciliation of Consolidated Net Income to FFO

ENDED SEPTEMBER 30,

Consolidated Net Income (D)

Adjustments to Arrive at FFO:

Depreciation and amortization from consolidated properties

285,490

277,936

861,570

915,040

Our share of depreciation and amortization from unconsolidated entities, including Klépierre

143,747

135,131

395,815

410,848

Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net

(17,717)

(154,484)

Net income attributable to noncontrolling interest holders in properties

(839)

(750)

(2,138)

(1,720)

Noncontrolling interests portion of depreciation and amortization

(895)

(869)

(2,726)

(2,729)

Preferred distributions and dividends

(1,313)

(3,939)

FFO of the Operating Partnership (E)

918,686

689,381

2,704,773

2,338,550

Diluted net income per share to diluted FFO per share reconciliation:

Depreciation and amortization from consolidated properties and our share of depreciation and amortization from unconsolidated entities, including Klépierre, net of noncontrolling interests portion of depreciation and amortization

(0.05)

(0.43)

Diluted FFO per share (F)

Details for per share calculations:

Diluted FFO allocable to unitholders

(131,790)

(100,286)

(389,777)

(339,171)

Diluted FFO allocable to common stockholders (G)

786,896

589,095

2,314,996

1,999,379

Basic and Diluted weighted average shares outstanding

309,417

310,772

310,333

310,713

Weighted average limited partnership units outstanding

51,817

52,873

52,251

52,709

Basic and Diluted weighted average shares and units outstanding

361,234

363,645

362,584

363,422

Basic and Diluted FFO per Share (F)

Percent Change

16.0%

Footnotes to Unaudited Reconciliation of Non-GAAP Financial Measures

Notes:

Excess investment represents the unamortized difference of our investment over equity in the underlying net assets of the related partnerships and joint ventures shown therein. The Company generally amortizes excess investment over the life of the related properties.

The Unaudited Joint Venture Statements of Operations do not include any operations or our share of net income or excess investment amortization related to our investment in Klépierre and Simon HBC joint venture. Amounts included in Footnotes D below exclude our share of related activity for our investment in Klépierre and Simon HBC joint venture. For further information on Klépierre, reference should be made to financial information in Klépierre's public filings and additional discussion and analysis in our Form 10-Q.

This report contains measures of financial or operating performance that are not specifically defined by GAAP, including FFO, FFO per share, comparable FFO per share and comparable EPS. FFO is a performance measure that is standard in the REIT business. We believe FFO provides investors with additional information concerning our operating performance and a basis to compare our performance with those of other REITs. We also use these measures internally to monitor the operating performance of our portfolio. Our computation of these non-GAAP measures may not be the same as similar measures reported by other REITs.

We determine FFO based upon the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT"). We determine FFO to be our share of consolidated net income computed in accordance with GAAP, excluding real estate related depreciation and amortization, excluding gains and losses from...


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