INDIANAPOLIS, May 2, 2023
/PRNewswire/ -- Simon®, a real estate investment
trust engaged in the ownership of premier shopping, dining,
entertainment and mixed-use destinations, today reported results
for the quarter ended March 31,
2023.
"We are off to a good start in 2023," said David Simon, Chairman, Chief Executive Officer
and President. "We continue to strengthen our Company through
disciplined investments and proactive capital markets activities,
further enhancing our already strong financial flexibility.
Given our current view for the remainder of 2023, today we raised
our quarterly dividend and are increasing the mid-point of our
full-year 2023 guidance."
Results for the Quarter
- Net income attributable to common stockholders was $451.8 million, or $1.38 per diluted share, as compared to
$426.6 million, or $1.30 per diluted share in 2022.
- Funds From Operations ("FFO") was $1.026
billion, or $2.74 per diluted
share as compared to $1.015 billion,
or $2.70 per diluted share in the
prior year.
- Domestic property Net Operating Income ("NOI") increased 4.0%
and portfolio NOI increased 3.9%, in each case, compared to the
prior year period.
U.S. Malls and Premium Outlets Operating Statistics
- Occupancy was 94.4% at March 31,
2023, compared to 93.3% at March 31,
2022, an increase of 1.1%.
- Base minimum rent per square foot was $55.84 at March 31,
2023, compared to $54.14 at
March 31, 2022, an increase of
3.1%.
- Reported retailer sales per square foot was $759, an increase of 3.3% for the trailing 12
months ended March 31, 2023.
Development Activity
On April 27, 2023, we opened
Paris-Giverny Designer Outlet, in Normandy, France. The
center includes 228,000 square feet of prestigious luxury and
premium brands, providing shoppers in the western region of
Paris with one of the finest
open-air retail and leisure experiences. Simon owns a 74%
interest in this center.
During the quarter, construction restarted on a 338,000 square
foot upscale outlet located in Jenks (Tulsa), Oklahoma, projected to open in the fall of
2024. Simon owns 100% of this project.
Construction continues on redevelopment and expansion projects
at properties in North America,
Europe and Asia.
Capital Markets and Balance Sheet Liquidity
During the quarter, the Company completed a two tranche senior
notes offering totaling $1.3
billion. Combined, the two new issues of senior notes
had a weighted-average term of 20 years and a weighted-average
coupon rate of 5.675%.
The Company also closed on a new $5.0
billion multi-currency unsecured revolving credit facility,
replacing the Company's prior $4.0
billion senior unsecured revolving credit facility.
The new facility will initially mature on June 30, 2027 and at our sole option, can be
extended for an additional year to June
30, 2028. Based upon the Company's current credit
ratings, the interest rate for U.S. Dollar borrowings is unchanged
from the prior facility at SOFR plus 82.5 basis points (inclusive
of a 10 basis point SOFR spread adjustment).
As of March 31, 2023, Simon had
approximately $9.3 billion of
liquidity consisting of $1.8 billion
of cash on hand, including its share of joint venture cash, and
$7.5 billion of available capacity
under its revolving credit facilities.
Dividends
Today, Simon's Board of Directors declared a quarterly common
stock dividend of $1.85 for the
second quarter of 2023. This is an increase of $0.15, or 8.8% year-over-year. The dividend
will be payable on June 30, 2023 to
shareholders of record on June 9,
2023.
Simon's Board of Directors declared the quarterly dividend on
its 8 3/8% Series J Cumulative Redeemable Preferred Stock (NYSE:
SPGPrJ) of $1.046875 per share,
payable on June 30, 2023 to
shareholders of record on June 16,
2023.
2023 Guidance
The Company currently estimates net income to be within a range
of $6.45 to $6.60 per diluted share and FFO to be within a
range of $11.80 to $11.95 per diluted share for the year ending
December 31, 2023. The FFO per
diluted share range is an increase from the $11.70 to $11.95
per diluted share range provided on February
6, 2023, or an increase of $0.05 per diluted share at the
mid-point.
The following table provides the GAAP to non-GAAP reconciliation
for the expected range of estimated net income attributable to
common stockholders per diluted share to FFO per diluted share:
For the year ending
December 31, 2023
|
|
|
|
|
Low
End
|
|
High
End
|
Estimated net income
attributable to common stockholders per diluted
share
|
$6.45
|
|
$6.60
|
Depreciation and
amortization including Simon's share of unconsolidated
entities
|
5.35
|
|
5.35
|
|
|
|
|
Estimated FFO per
diluted share
|
$11.80
|
|
$11.95
|
Conference Call
Simon will hold a conference call to discuss the quarterly
financial results today from 5:00 p.m. to
6:00 p.m. Eastern Time, Tuesday, May
2, 2023. 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
May 9, 2023. To access the
audio replay, dial 1-844-512-2921 (international +1-412-317-6671)
passcode 13737588.
Supplemental Materials and Website
Supplemental information on our first quarter 2023 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 on 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 and portfolio NOI
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 NOI 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: changes in economic and market
conditions that may adversely affect the general retail
environment, including but not limited to those caused by
inflation, recessionary pressures, wars, such as in Ukraine, and supply chain disruptions; the
inability to renew leases and relet vacant space at existing
properties on favorable terms; the potential loss of anchor stores
or major tenants; the inability to collect rent due to the
bankruptcy or insolvency of tenants or otherwise; an increase in
vacant space at our properties; the potential for violence, civil
unrest, criminal activity or terrorist activities at our
properties; natural disasters; the availability of
comprehensive insurance coverage; the intensely competitive market
environment in the retail industry, including e-commerce; security
breaches that could compromise our information technology or
infrastructure; the increased focus on ESG metrics and reporting;
environmental liabilities; our international activities subjecting
us to risks that are different from or greater than those
associated with our domestic operations, including changes in
foreign exchange rates; our continued ability to maintain our
status as a REIT; changes in tax laws or regulations that result in
adverse tax consequences; risks associated with the acquisition,
development, redevelopment, expansion, leasing and management of
properties; the inability to lease newly developed properties on
favorable terms; the loss of key management personnel;
uncertainties regarding the impact of pandemics, epidemics or
public health crises, and the associated governmental restrictions
on our business, financial condition, results of operations, cash
flow and liquidity; changes in market rates of interest; the impact
of our substantial indebtedness on our future operations, including
covenants in the governing agreements that impose restrictions on
us that may affect our ability to operate freely; any disruption in
the financial markets that may adversely affect our ability to
access capital for growth and satisfy our ongoing debt service
requirements; any change in our credit rating; risks relating to
our joint venture properties, including guarantees of certain joint
venture indebtedness; and general risks related to real estate
investments, including the illiquidity of real estate
investments.
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 subsequent other 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 real estate investment trust engaged in
the ownership of premier shopping, dining, entertainment and
mixed-use destinations and an S&P 100 company (Simon Property
Group, NYSE: SPG). Our properties across North America, Europe and Asia provide community gathering places for
millions of people every day and generate billions in annual
sales.
Simon Property
Group, Inc.
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
|
|
|
For the Three
Months
|
|
Ended March
31,
|
|
2023
|
2022
|
|
|
|
REVENUE:
|
|
|
Lease income
|
$
1,248,185
|
$ 1,207,867
|
Management fees and
other revenues
|
28,949
|
27,587
|
Other income
|
73,715
|
60,468
|
Total
revenue
|
1,350,849
|
1,295,922
|
|
|
|
EXPENSES:
|
|
|
Property
operating
|
111,748
|
103,664
|
Depreciation and
amortization
|
307,059
|
310,163
|
Real estate
taxes
|
111,159
|
111,691
|
Repairs and
maintenance
|
22,174
|
22,304
|
Advertising and
promotion
|
24,159
|
25,263
|
Home and regional
office costs
|
56,820
|
52,197
|
General and
administrative
|
9,107
|
7,833
|
Other
|
45,900
|
42,416
|
Total operating
expenses
|
688,126
|
675,531
|
|
|
|
OPERATING INCOME
BEFORE OTHER ITEMS
|
662,723
|
620,391
|
|
|
|
Interest
expense
|
(199,429)
|
(185,159)
|
Income and other tax
benefit
|
13,453
|
1,435
|
Income from
unconsolidated entities
|
21,900
|
81,184
|
Unrealized gains
(losses) in fair value of publicly traded equity instruments,
net
|
20,608
|
(31,032)
|
Gain on acquisition of
controlling interest, sale or disposal of, or recovery
on,
|
|
|
assets and interests in
unconsolidated entities and impairment, net
|
-
|
1,491
|
|
|
|
CONSOLIDATED NET
INCOME
|
519,255
|
488,310
|
|
|
|
Net income attributable
to noncontrolling interests
|
66,594
|
60,846
|
Preferred
dividends
|
834
|
834
|
|
|
|
NET INCOME
ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$
451,827
|
$ 426,630
|
|
|
|
|
|
|
BASIC AND DILUTED
EARNINGS PER COMMON SHARE:
|
|
|
Net income
attributable to common stockholders
|
$
1.38
|
$ 1.30
|
Simon Property
Group, Inc.
Unaudited Consolidated Balance Sheets
(Dollars in thousands, except share amounts)
|
|
|
|
|
March
31,
|
December 31,
|
|
2023
|
2022
|
ASSETS:
|
|
|
Investment properties,
at cost
|
$
38,505,497
|
$ 38,326,912
|
Less - accumulated
depreciation
|
16,823,305
|
16,563,749
|
|
21,682,192
|
21,763,163
|
Cash and cash
equivalents
|
1,155,423
|
621,628
|
Tenant receivables and
accrued revenue, net
|
779,702
|
823,540
|
Investment in TRG, at
equity
|
3,062,030
|
3,074,345
|
Investment in
Klépierre, at equity
|
1,541,743
|
1,561,112
|
Investment in other
unconsolidated entities, at equity
|
3,440,532
|
3,511,263
|
Right-of-use assets,
net
|
494,591
|
496,930
|
Deferred costs and
other assets
|
1,141,583
|
1,159,293
|
Total
assets
|
$
33,297,796
|
$ 33,011,274
|
|
|
|
LIABILITIES:
|
|
|
Mortgages and unsecured
indebtedness
|
$
25,569,968
|
$ 24,960,286
|
Accounts payable,
accrued expenses, intangibles, and deferred revenues
|
1,351,870
|
1,491,583
|
Cash distributions and
losses in unconsolidated entities, at equity
|
1,703,448
|
1,699,828
|
Dividend
payable
|
2,436
|
1,997
|
Lease
liabilities
|
495,573
|
497,953
|
Other
liabilities
|
497,210
|
535,736
|
Total
liabilities
|
29,620,505
|
29,187,383
|
|
|
|
Commitments and
contingencies
|
|
|
Limited partners'
preferred interest in the Operating Partnership and
noncontrolling
|
|
|
redeemable
interests
|
224,419
|
212,239
|
|
|
|
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 3/8%
cumulative redeemable preferred stock, 1,000,000 shares
authorized,
|
|
|
796,948 issued and
outstanding with a liquidation value of $39,847
|
41,352
|
41,435
|
|
|
|
Common stock, $ 0.0001
par value, 511,990,000 shares authorized, 342,905,419
and
|
|
|
342,905,419 issued and
outstanding, respectively
|
34
|
34
|
|
|
|
Class B common stock,
$0.0001 par value, 10,000 shares authorized, 8,000
|
|
|
issued and
outstanding
|
-
|
-
|
|
|
|
Capital in excess of
par value
|
11,231,471
|
11,232,881
|
Accumulated
deficit
|
(6,069,767)
|
(5,926,974)
|
Accumulated other
comprehensive loss
|
(160,854)
|
(164,873)
|
Common stock held in
treasury, at cost, 15,916,949 and 15,959,628 shares,
respectively
|
(2,038,723)
|
(2,043,979)
|
Total stockholders'
equity
|
3,003,513
|
3,138,524
|
Noncontrolling
interests
|
449,359
|
473,128
|
Total
equity
|
3,452,872
|
3,611,652
|
Total liabilities
and equity
|
$
33,297,796
|
$ 33,011,274
|
Simon Property
Group, Inc.
|
Unaudited Joint
Venture Combined Statements of Operations
|
(Dollars in
thousands)
|
|
|
|
|
For the Three
Months
Ended March 31,
|
|
2023
|
2022
|
|
|
|
REVENUE:
|
|
|
Lease income
|
$
735,048
|
$ 717,768
|
Other income
|
90,046
|
112,585
|
Total
revenue
|
825,094
|
830,353
|
|
|
|
OPERATING
EXPENSES:
|
|
|
Property
operating
|
154,922
|
149,515
|
Depreciation and
amortization
|
164,473
|
170,562
|
Real estate
taxes
|
64,004
|
65,324
|
Repairs and
maintenance
|
18,774
|
21,481
|
Advertising and
promotion
|
20,710
|
19,318
|
Other
|
53,310
|
48,843
|
Total operating
expenses
|
476,193
|
475,043
|
|
|
|
OPERATING INCOME
BEFORE OTHER ITEMS
|
348,901
|
355,310
|
|
|
|
Interest
expense
|
(168,206)
|
(144,448)
|
NET
INCOME
|
$
180,695
|
$ 210,862
|
|
|
|
Third-Party
Investors' Share of Net Income
|
$
90,259
|
$ 104,657
|
|
|
|
Our Share of Net
Income
|
90,436
|
106,205
|
Amortization of
Excess Investment (A)
|
(14,921)
|
(15,139)
|
|
|
|
Income from
Unconsolidated Entities (B)
|
$
75,515
|
$ 91,066
|
|
|
Note:
|
The above financial
presentation does not include any information related to our
investments in Klépierre S.A.
("Klépierre") and The
Taubman Realty Group ("TRG"). For additional information, see
footnote B.
|
Simon Property
Group, Inc.
|
Unaudited Joint
Venture Combined Balance Sheets
|
(Dollars in
thousands)
|
|
|
|
|
|
|
March
31,
|
December
31,
|
|
|
2023
|
2022
|
|
Assets:
|
|
|
|
Investment properties,
at cost
|
$
19,281,318
|
$ 19,256,108
|
|
Less - accumulated
depreciation
|
8,615,876
|
8,490,990
|
|
|
10,665,442
|
10,765,118
|
|
Cash and cash
equivalents
|
1,442,100
|
1,445,353
|
|
Tenant receivables and
accrued revenue, net
|
504,883
|
546,025
|
|
Right-of-use assets,
net
|
138,209
|
143,526
|
|
Deferred costs and
other assets
|
$
445,744
|
$ 482,375
|
|
Total assets
|
$
13,196,378
|
$ 13,382,397
|
|
|
|
|
|
Liabilities and
Partners' Deficit:
|
|
|
|
Mortgages
|
$
14,544,401
|
$ 14,569,921
|
|
Accounts payable,
accrued expenses, intangibles, and deferred revenue
|
881,365
|
961,984
|
|
Lease
liabilities
|
127,840
|
133,096
|
|
Other
liabilities
|
403,041
|
446,064
|
|
Total
liabilities
|
15,956,647
|
16,111,065
|
|
|
|
|
|
Preferred
units
|
67,450
|
67,450
|
|
Partners'
deficit
|
(2,827,719)
|
(2,796,118)
|
|
Total liabilities and
partners' deficit
|
$
13,196,378
|
$ 13,382,397
|
|
|
|
|
|
Our Share
of:
|
|
|
|
Partners'
deficit
|
$
(1,234,120)
|
$
(1,232,086)
|
|
Add: Excess Investment
(A)
|
1,212,729
|
1,219,117
|
|
Our net Investment in
unconsolidated entities, at equity
|
$
(21,391)
|
$ (12,969)
|
|
|
|
Note:
|
The above financial
presentation does not include any information related to our
investments in Klépierre,
TRG and other platform
investments. For additional information, see footnote B.
|
Simon Property
Group, Inc.
|
Unaudited
Reconciliation of Non-GAAP Financial Measures (C)
|
(Amounts in thousands,
except per share amounts)
|
|
|
|
|
|
Reconciliation of
Consolidated Net Income to FFO
|
|
|
|
|
|
For the Three Months
Ended
|
|
|
March
31,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
Consolidated Net
Income (D)
|
$
519,255
|
|
$
488,310
|
Adjustments to
Arrive at FFO:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization from consolidated
|
|
|
|
|
properties
|
304,234
|
|
307,913
|
|
Our share of
depreciation and amortization from
|
|
|
|
|
unconsolidated entities,
including Klépierre, TRG and other corporate investments
|
209,330
|
|
225,086
|
|
Gain on acquisition of
controlling interest, sale or disposal of, or recovery
on,
|
|
|
|
|
assets and interests in
unconsolidated entities and impairment, net
|
-
|
|
(1,491)
|
|
Net (income) loss
attributable to noncontrolling interest holders in
|
|
|
|
|
properties
|
(762)
|
|
996
|
|
Noncontrolling
interests portion of depreciation and amortization, gain on
consolidation of properties,
|
|
|
|
|
and loss (gain) on
disposal of properties
|
(4,775)
|
|
(4,389)
|
|
Preferred distributions
and dividends
|
(1,313)
|
|
(1,313)
|
FFO of the Operating
Partnership
|
$
1,025,969
|
|
$
1,015,112
|
|
|
|
|
|
Diluted net income
per share to diluted FFO per share reconciliation:
|
|
|
|
Diluted net income
per share
|
$
1.38
|
|
$
1.30
|
|
Depreciation and
amortization from consolidated properties
|
|
|
|
|
and our share of
depreciation and amortization from unconsolidated
|
|
|
|
|
entities, including
Klépierre, TRG and other corporate investments, net of
noncontrolling
|
|
|
|
|
interests portion of
depreciation and amortization
|
1.36
|
|
1.41
|
|
Gain on acquisition of
controlling interest, sale or disposal of, or recovery
on,
|
|
|
|
|
assets and interests in
unconsolidated entities and impairment, net
|
-
|
|
(0.01)
|
Diluted FFO per
share
|
$
2.74
|
|
$
2.70
|
|
|
|
|
|
Details for per share
calculations:
|
|
|
|
|
|
|
|
|
FFO of the Operating
Partnership
|
$
1,025,969
|
|
$
1,015,112
|
Diluted FFO allocable
to unitholders
|
(129,646)
|
|
(127,645)
|
Diluted FFO allocable
to common stockholders
|
$
896,323
|
|
$
887,467
|
|
|
|
|
|
Basic and Diluted
weighted average shares outstanding
|
326,954
|
|
328,606
|
Weighted average
limited partnership units outstanding
|
47,291
|
|
47,264
|
|
|
|
|
|
Basic and Diluted
weighted average shares and units outstanding
|
374,245
|
|
375,870
|
|
|
|
|
|
Basic and Diluted FFO
per Share
|
$
2.74
|
|
$
2.70
|
Percent Change
|
1.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Simon Property Group, Inc.
|
Footnotes to Unaudited Financial
Information
|
|
Notes:
|
|
|
|
(A)
|
|
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 assets.
|
|
|
|
(B)
|
|
The Unaudited Joint
Venture Combined Statements of Operations do not include any
operations or our share of net income or excess investment
amortization related to our investments in Klépierre, TRG and other
platform investments. Amounts included in Footnote D below
exclude our share of related activity for our investments in
Klépierre, TRG and other platform investments. 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-K.
|
|
|
|
(C)
|
|
This report contains
measures of financial or operating performance that are not
specifically defined by GAAP, including FFO and FFO per share.
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") Funds From Operations White
Paper - 2018 Restatement. Our main business includes acquiring,
owning, operating, developing, and redeveloping real estate in
conjunction with the rental of retail real estate. Gains and
losses of assets incidental to our main business are included in
FFO. 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 extraordinary items, excluding gains and losses from the sale,
disposal or property insurance recoveries of, or any impairment
related to, depreciable retail operating properties, plus the
allocable portion of FFO of unconsolidated joint ventures based
upon economic ownership interest, and all determined on a
consistent basis in accordance with GAAP. However, you should
understand that FFO does not represent cash flow from operations as
defined by GAAP, should not be considered as an alternative to net
income determined in accordance with GAAP as a measure of operating
performance, and is not an alternative to cash flows as a measure
of liquidity.
|
|
|
|
(D)
|
|
Includes our share
of:
|
|
|
|
|
-
|
Gain on land sales of
$4.5 million and ($0.1) million for the three months ended March
31, 2023 and 2022, respectively.
|
|
|
|
|
-
|
Straight-line
adjustments decreased income by ($7.7) million and ($10.3) million
for the three months ended March 31, 2023 and 2022,
respectively.
|
|
|
|
|
-
|
Amortization of fair
market value of leases increased (decreased) income by $0.1 million
and ($0.1) million for the three months ended March 31, 2023 and
2022, respectively.
|
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SOURCE Simon