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Simon Property Group announces Q2 FY2009 results

INDIANAPOLIS, Ind. — Simon Property Group, Inc. (NYSE: SPG) today announced results for the quarter ended June 30, 2009. Funds from operations (“FFO”) for the quarter were $313.1 million, or $0.96 per share diluted. Results for the quarter were impacted by a non-cash impairment charge of $0.42 per share. Excluding the impact of this charge, FFO was $453.6 million, or $1.38 per share diluted. FFO for the second quarter of 2008 was $427.9 million, or $1.49 per share diluted.

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In the second quarter of 2009, the Company recognized a non-cash impairment charge of $140.5 million, or $0.42 per share diluted, representing the decline in the value of the Company’s investment in Liberty International, PLC (“Liberty”). As of June 30, 2009, the Company owned 35.4 million shares at a weighted average price of 574 pence. Liberty’s quoted market price as of June 30, 2009 was 397 pence. As of August 3, 2009, Liberty shares were trading at 436 pence.

FFO for the second quarter of 2009 reflects dilution of $0.14 per share as a result of the issuance of 17.25 million shares of common stock by the Company in March and an additional 23 million shares in May of 2009.

Net loss attributable to common stockholders for the quarter ended June 30, 2009 was $(20.8) million, or $(0.08) per share diluted. Excluding the impact of the non-cash impairment charge, net income attributable to common stockholders was $93.9 million, or $0.35 per share diluted. Net income attributable to common stockholders for the quarter ended June 30, 2008 was $76.6 million, or $0.34 per share diluted.

“Our operating fundamentals remained sound, which resulted in a solid second quarter in the face of a difficult retail environment,” said David Simon, Chairman and Chief Executive Officer. “Our 2009 capital activity, including the issuance of 40.25 million shares of common stock and $1.25 billion of unsecured notes, strengthened one of the industry’s leading balance sheets and resulted in a current liquidity position of approximately $6 billion, including $2.9 billion of cash. The cash raised through these transactions demonstrated the Company’s ability to access capital and positions SPG for future growth.”

U.S. Portfolio Statistics(1)

Dividends

The Company announced today that the Board of Directors approved the declaration of a quarterly common stock dividend of $0.60 per share, consisting of a combination of cash and shares of the Company’s common stock. The Company intends that the cash component of the dividend will not exceed 20% in the aggregate, or $0.12 per share. The dividend is payable on September 18, 2009 to stockholders of record on August 17, 2009.

In accordance with the provisions of IRS Revenue Procedure 2008-68, stockholders may elect to receive payment of the dividend all in cash or all in common shares. To the extent that more than 20% of cash is elected, the cash portion will be prorated. Stockholders who elect to receive the dividend in cash will receive a cash payment of at least $0.12 per share. Stockholders who do not make an election will receive this dividend 20% in cash and 80% in common stock. The Company reserves the right to pay the dividend entirely in cash.

The number of shares issued as a result of the dividend will be calculated based on the volume weighted average trading prices of the Company’s common stock on September 9, September 10 and September 11, 2009.

An information letter and election form will be mailed to stockholders of record promptly after August 17, 2009. The properly completed election form to receive cash or common shares must be received by the Company’s transfer agent prior to 5:00 p.m. Eastern Daylight Time on September 8, 2009. Registered stockholders with questions regarding the dividend election may call BNY Mellon Shareowner Services, the Company’s transfer agent, at (800) 454-9768. If your shares are held through a bank, broker or nominee, and you have questions regarding the dividend election please contact such bank, broker or nominee, who will also be responsible for distributing to you the letter and election form and submitting the election form on your behalf.

Today the Company also declared dividends on its two outstanding public issues of preferred stock:

  • 6% Series I Convertible Perpetual Preferred (NYSE:SPGPrI) dividend of $0.75 per share is payable on August 31, 2009 to stockholders of record on August 17, 2009.
  • 8 3/8% Series J Cumulative Redeemable Preferred (NYSE:SPGPrJ) dividend of $1.046875 per share is payable on September 30, 2009 to stockholders of record on September 16, 2009.

Financing Update

During the second quarter of 2009, the following transactions were completed:

  • On May 12th, the Company completed the sale of 23 million shares of common stock at a public offering price of $50 per share.
  • On May 15th, the Company’s majority-owned partnership subsidiary, Simon Property Group, L.P. (“SPGLP”), issued $600 million aggregate principal amount of 6.75% senior unsecured notes due 2014 in an underwritten public offering. The notes were priced at 98.960% of the principal amount to yield 7.00% to maturity.
  • On June 30th, the Company retired $85 million of SPGLP’s 8% cumulative redeemable preferred units, at par value.
  • The Company completed two refinancings during the quarter for $230 million , and on July 30, 2009, closed an additional $400 million of mortgage financings for three regional malls.

As of June 30, 2009, the Company had over $2.9 billion of cash on hand, including its share of joint venture cash, and over $3.0 billion of available capacity on its revolving credit facility.

U.S. New Development and Redevelopment Activity

On April 23rd, the Company opened The Promenade at Camarillo Premium Outlets in Camarillo, California. The 220,000 square-foot expansion brings the property to a total of 674,000 square feet of gross leasable area and 160 stores. New stores at The Promenade include Neiman Marcus Last Call, Aldo, Charlotte Russe, Columbia Sportswear Company, Converse, Crocs, DC Shoes, Ecco, Esprit, Etnies:exs, Journeys, Karen Kane, Le Creuset, Loft Outlet, Michael Brandon, New Balance, Papaya, Rack Room Shoes, Robert Wayne Footwear, Tommy Bahama, Vans, and Zumiez.

The Company continues construction on the following development projects:

  • Cincinnati Premium Outlets, a 400,000 square foot upscale manufacturers’ outlet center serving the greater Cincinnati and Dayton markets. The center is 100% owned by Simon and is scheduled to open on August 6, 2009.
  • A 600,000 square foot Phase II expansion of The Domain in Austin, Texas. The expansion will include Dillard’s, a Village Road Show theater, Dick’s Sporting Goods (scheduled to open in October of 2009), 136,000 square feet of small shops and restaurants, and 78,000 square feet of office space. The Company owns 100% of this project, slated for an opening in February of 2010.
  • Addition of Nordstrom, Target and 146,000 square feet of small shops at South Shore Plaza in Braintree (Boston), Massachusetts. Nordstrom and the small shops are scheduled to open in March of 2010, with Target scheduled to open in October of 2010. The center is 100% owned by Simon.

International Activity

On July 7th, the Company opened Ami Premium Outlets, the eighth Premium Outlet Center in Japan. The 225,000 square-foot first phase of the project opened fully leased to over 100 merchants including Adidas, Beams, BCBG Max Azria, Brooks Brothers, Coach, Cole Haan, Diesel, Fauchon, Lanvin en Bleu, Mayson Grey, Pal Zileri, Ray Ban, Tommy Hilfiger, True Religion and Viaggio Blu. Simon owns 40% of this property.

Construction continues on the following international development projects:

  • Argine (Naples, Italy) – a 300,000 square foot shopping center scheduled to open in March of 2010. Simon owns a 24% interest in this project.
  • Catania (Sicily, Italy) – a 642,000 square foot shopping center scheduled to open in June of 2010. Simon owns a 24% interest in this project.
  • Three projects in China located in Hangzhou, Suzhou, and Zhengzhou. The centers range in size from 310,000 to 750,000 square feet, will be anchored by Wal-Mart, and are scheduled to open in the fall of 2009. Simon owns a 32.5% interest in each of these projects.

2009 Guidance

Today the Company reaffirmed the guidance provided on May 1, 2009, after giving effect to the impact of the mid-May equity and senior notes offerings and the second quarter non-cash impairment charge, estimating that diluted FFO will be within a range of $5.35 to $5.50 per share for the year, and that diluted net income will be within a range of $1.05 to $1.20 per share.

FFO guidance is as follows:

  • Conference Call

    The Company will provide an online simulcast of its quarterly conference call at www.simon.com (Investor Relations tab), www.earnings.com, and www.streetevents.com. To listen to the live call, please go to any of these websites at least fifteen minutes prior to the call to register, download and install any necessary audio software. The call will begin at 11:00 a.m. Eastern Daylight Time (New York time) today, August 4, 2009. An online replay will be available for approximately 90 days at www.simon.com, www.earnings.com, and www.streetevents.com.

  • Supplemental Materials and Financial Statements

    The Company will publish a supplemental information package which will be available at www.simon.com in the Investor Relations section, Financial Information tab. It will also be furnished to the SEC as part of a current report on Form 8-K. If you wish to receive a copy via mail or email, please call 800-461-3439.

    The Company’s financial statements have been adjusted to reflect the retrospective adoption of Statement of Financial Accounting Standard No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment to ARB 51 (“FAS 160”) which became effective for us on January 1, 2009. The financial statements also reflect certain reclassifications related to the applicability of EITF Topic D-98, Classification and Measurement of Redeemable Securities (“D-98”). The adoption of FAS 160 and the Company’s concurrent review of the application of D-98 resulted in the reclassification of noncontrolling interests within the equity section of our consolidated balance sheets, and the classification outside of permanent equity for any redeemable securities not meeting the requirements for permanent equity. The adoption of FAS 160 also resulted in the reclassifications of noncontrolling interests in the consolidat ed statement of operations. None of these reclassifications had any effect on our net income attributable to common stockholders or per share amounts previously reported.

About Simon Property Group

Simon Property Group, Inc. is an S&P 500 company and the largest public U.S. real estate company. Simon is a fully integrated real estate company which operates from five retail real estate platforms: regional malls, Premium Outlet Centers®, The Mills®, community/lifestyle centers and international properties. It currently owns or has an interest in 386 properties comprising 262 million square feet of gross leasable area in North America, Europe and Asia. The Company is headquartered in Indianapolis, Indiana and employs more than 5,000 people worldwide. Simon Property Group, Inc. is publicly traded on the NYSE under the symbol SPG. For further information, visit the Company’s website at www.simon.com.

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