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Simon Property (SPG) Beats on Q1 FFO & Revenues, Raises '21 View

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Simon Property Group, Inc.’s SPG first-quarter 2021 funds from operations (FFO) per share of $2.48 handily exceeded the Zacks Consensus Estimate of $2.25. This performance was backed by better-than-expected top-line growth.

According to David Simon, chairman, chief executive officer and president, "Our business has substantially improved after addressing the impacts from the COVID-19 pandemic including significantly restrictive governmental orders as evidenced by our improved profitability and cash flow growth, increasing shopper traffic, increasing retailer sales, and leasing momentum across our portfolio”. He also noted that the Taubman Realty Group portfolio is seeing similar results.

The company generated revenues of $1.24 billion during the quarter, surpassing the Zacks Consensus Estimate of $1.15 billion. The retail REIT behemoth also raised the 2021 FFO per share outlook.

However, the FFO per share slipped 10.8%, while revenues declined 8.4%, year on year, reflecting the adverse impact of the pandemic.

Inside the Headline Numbers

For the U.S. Malls and Premium Outlets portfolio, occupancy was 90.8% as of Mar 31, 2021, shrinking 320 basis points, year on year. Base minimum rent per square feet was $56.07 as of Mar 31, 2021, up 0.6% year on year.

On a combined basis, domestic and international properties net operating income (NOI) fell 8.4% year on year, reflecting the pandemic’s impact. However, portfolio NOI, which comprises NOI from domestic properties, international properties and NOI from its investment in Taubman Realty Group, climbed 4% from the prior-year period.

Balance Sheet Position

Simon Property exited first-quarter 2021 with more than $8.4 billion of liquidity. This comprised $1.5 billion of cash on hand, including its share of joint-venture cash, as well as $6.9 billion of available capacity under the company’s revolving credit facilities, net of $500 million outstanding under the U.S. commercial paper program.

During the reported quarter, the REIT was active in both unsecured and secured credit markets. Simon Property completed a two-tranche senior notes offering totaling $1.5 billion, having a combined weighted average term of 8.4 years and a weighted average coupon rate of 1.96%. Through one of its subsidiaries, the company also accomplished a Euro senior notes offering totaling €750 million, with a 1.125% coupon rate and term of 12 years. It closed six non-recourse mortgage loans aggregating $1.3 billion (U.S. dollar equivalent), of which Simon's share is $589 million. The weighted average interest rate on these loans is 3.36%.

Outlook

Simon Property raised the 2021 FFO per share guidance and now projects the same at $9.70-$9.80, up from the $9.50-$9.75 guided earlier. This suggests an increase of 13 cents per share at the mid-point. The guided range is also above the Zacks Consensus Estimate of $9.67.

Dividend Update

Simon Property paid a first-quarter common stock cash dividend of $1.30 per share on Apr 23. The company’s board of directors noted that it will announce a common stock dividend for second-quarter 2021 on or before Jun 30, 2021.

Currently, Simon Property carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Simon Property Group, Inc. Price, Consensus and EPS Surprise

Simon Property Group, Inc. Price, Consensus and EPS Surprise
Simon Property Group, Inc. Price, Consensus and EPS Surprise

Simon Property Group, Inc. price-consensus-eps-surprise-chart | Simon Property Group, Inc. Quote

Performance of Other Retail REITs

Kimco Realty Corp.’s KIM first-quarter NAREIT FFO came in at 33 cents per share, surpassing the Zacks Consensus Estimate of 30 cents. Results highlighted better-than-anticipated top-line numbers. Moreover, the retail REIT raised the outlook for 2021. With a well-located and largely grocery-anchored portfolio that offers essential goods and services, the retail REIT witnessed decent leasing activity during the first quarter. Rent-collection figures were also healthy. The company collected 94% of total pro-rata base rents billed during the first quarter.

Realty Income Corporation’s O first-quarter adjusted FFO per share of 86 cents beat the Zacks Consensus Estimate of 85 cents. The encouraging performance reflected improved revenues in the quarter. The retail REIT also apprised of its rental receipts through Mar 31, 2021, and noted that it has collected 94.1% of contractual rent due for the first quarter across the total portfolio.

Regency Centers Corporation’s REG first-quarter 2021 NAREIT FFO per share of 90 cents handily topped the Zacks Consensus Estimate of 75 cents. Results reflected higher-than-anticipated revenue numbers. The retail REIT has also issued an upbeat outlook. Total revenues of $274.7 million outpaced the Zacks Consensus Estimate of $255.5 million.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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