Simon Property Group’s (SPG - Free Report) second-quarter 2023 funds from operations (FFO) per share of $2.88 missed the Zacks Consensus Estimate of $2.91. Also, the figure declined 1% year over year.
Results reflect better-than-anticipated revenues on healthy leasing activity and a rise in the base rent per square foot and occupancy levels. However, higher operating expenses and interest expenses acted as dampeners. Shares of SPG are down more than 1.8% in the pre-market trading today.
Nevertheless, this retail behemoth raised its 2023 FFO per share outlook and quarterly dividend.
Simon Property generated revenues of $1.369 billion in the quarter, surpassing the Zacks Consensus Estimate of $1.326 billion. The reported figure increased 7% year over year.
Behind the Headlines
SPG reported revenues from lease income of $1.25 billion, 5% higher than the prior-year period’s figure. Our estimate for the same was pegged at $1.21 billion.
As of Jun 30, 2023, the occupancy for the U.S. Malls and Premium Outlets portfolio came in at 94.7%, up 80 basis points from 93.9% as of Jun 30, 2022. We projected the same to be 94.5%.
The base minimum rent per square foot for the U.S. Malls and Premium Outlets portfolio was $56.27 as of Jun 30, 2023, rising from $54.58 as of Jun 30, 2022, reflecting an increase of 3.1%. The figure also surpassed our estimate of $55.26.
Simon Property’s total operating expenses in the second¬ quarter came in at $711.7 million, increasing 9% from the prior-year quarter. The domestic property net operating income (NOI) increased 3.3% year over year, and the portfolio NOI increased 3.7%.
Moreover, quarterly interest expenses of $218.1 million marked an increase of 16.4% year over year.
Construction is underway for redevelopment and expansion projects at various properties in North America, Europe and Asia. In April, SPG unveiled a new shopping destination in Paris-Giverny, France.
Balance Sheet Position
Simon Property exited the second quarter of 2023 with $8.8 billion of liquidity. This comprised $1.4 billion of cash in hand, including its share of joint-venture cash, and $7.4 billion of available capacity under the company’s revolving credit facilities.
2023 Outlook Raised
For 2023, Simon Property now projects FFO per share in the range of $11.85-$11.95, up from the prior-guided range of $11.80-$11.95. This marks an increase of 2 cents per share at the midpoint. The Zacks Consensus Estimate for the same is currently pegged at $11.91.
Dividend Hiked
Concurrent with its second-quarter earnings release, Simon Property announced a quarterly common stock dividend of $1.90 for the third quarter of 2023, indicating a sequential hike of 2.7% and 8.6% year over year. The increased dividend will be paid out on Sep 29 to shareholders of record as of Sep 8, 2023.
Currently, SPG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Retail REITs
Kimco Realty Corp. (KIM - Free Report) reported a second-quarter 2023 FFO per share of 39 cents, in line with the Zacks Consensus Estimate. The figure was only a cent lower than the year-ago quarter’s tally.
KIM’s results reflected better-than-anticipated revenues, aided by rental rate growth and a rise in occupancy levels. Kimco revised its 2023 FFO per share outlook.
Federal Realty Investment Trust’s (FRT - Free Report) second-quarter 2023 FFO per share of $1.67 surpassed the Zacks Consensus Estimate of $1.62. This also marked a rise of 1.2% from the year-ago quarter’s tally of $1.65.
Results reflect healthy leasing activity and occupancy levels at its properties. Federal Realty generated 4.6% comparable property operating income growth, excluding lease termination fees and COVID-19 pandemic-related prior-period rents collected for the second quarter.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Simon Property Group’s (SPG - Free Report) second-quarter 2023 funds from operations (FFO) per share of $2.88 missed the Zacks Consensus Estimate of $2.91. Also, the figure declined 1% year over year.
Results reflect better-than-anticipated revenues on healthy leasing activity and a rise in the base rent per square foot and occupancy levels. However, higher operating expenses and interest expenses acted as dampeners. Shares of SPG are down more than 1.8% in the pre-market trading today.
Nevertheless, this retail behemoth raised its 2023 FFO per share outlook and quarterly dividend.
Simon Property generated revenues of $1.369 billion in the quarter, surpassing the Zacks Consensus Estimate of $1.326 billion. The reported figure increased 7% year over year.
Behind the Headlines
SPG reported revenues from lease income of $1.25 billion, 5% higher than the prior-year period’s figure. Our estimate for the same was pegged at $1.21 billion.
As of Jun 30, 2023, the occupancy for the U.S. Malls and Premium Outlets portfolio came in at 94.7%, up 80 basis points from 93.9% as of Jun 30, 2022. We projected the same to be 94.5%.
The base minimum rent per square foot for the U.S. Malls and Premium Outlets portfolio was $56.27 as of Jun 30, 2023, rising from $54.58 as of Jun 30, 2022, reflecting an increase of 3.1%. The figure also surpassed our estimate of $55.26.
Simon Property’s total operating expenses in the second¬ quarter came in at $711.7 million, increasing 9% from the prior-year quarter. The domestic property net operating income (NOI) increased 3.3% year over year, and the portfolio NOI increased 3.7%.
Moreover, quarterly interest expenses of $218.1 million marked an increase of 16.4% year over year.
Construction is underway for redevelopment and expansion projects at various properties in North America, Europe and Asia. In April, SPG unveiled a new shopping destination in Paris-Giverny, France.
Balance Sheet Position
Simon Property exited the second quarter of 2023 with $8.8 billion of liquidity. This comprised $1.4 billion of cash in hand, including its share of joint-venture cash, and $7.4 billion of available capacity under the company’s revolving credit facilities.
2023 Outlook Raised
For 2023, Simon Property now projects FFO per share in the range of $11.85-$11.95, up from the prior-guided range of $11.80-$11.95. This marks an increase of 2 cents per share at the midpoint. The Zacks Consensus Estimate for the same is currently pegged at $11.91.
Dividend Hiked
Concurrent with its second-quarter earnings release, Simon Property announced a quarterly common stock dividend of $1.90 for the third quarter of 2023, indicating a sequential hike of 2.7% and 8.6% year over year. The increased dividend will be paid out on Sep 29 to shareholders of record as of Sep 8, 2023.
Currently, SPG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Retail REITs
Kimco Realty Corp. (KIM - Free Report) reported a second-quarter 2023 FFO per share of 39 cents, in line with the Zacks Consensus Estimate. The figure was only a cent lower than the year-ago quarter’s tally.
KIM’s results reflected better-than-anticipated revenues, aided by rental rate growth and a rise in occupancy levels. Kimco revised its 2023 FFO per share outlook.
Federal Realty Investment Trust’s (FRT - Free Report) second-quarter 2023 FFO per share of $1.67 surpassed the Zacks Consensus Estimate of $1.62. This also marked a rise of 1.2% from the year-ago quarter’s tally of $1.65.
Results reflect healthy leasing activity and occupancy levels at its properties. Federal Realty generated 4.6% comparable property operating income growth, excluding lease termination fees and COVID-19 pandemic-related prior-period rents collected for the second quarter.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
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