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Simon Property (SPG) Beats on Q2 FFO, Ups '21 View, Hikes Dividend

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Simon Property Group, Inc.’s (SPG - Free Report) second-quarter 2021 adjusted funds from operations (FFO) per share of $2.92 handily exceeded the Zacks Consensus Estimate of $2.37.

This performance was backed by better-than-expected top-line growth. The retail REIT behemoth also raised the 2021 FFO per share outlook based on its results in the year so far and expectations for the rest of 2021. It also announced a hike in the quarterly dividend.

According to David Simon, chairman, chief executive officer and president, "We are encouraged by the increase in our shopper traffic, retailer sales and leasing activity.”

The company generated revenues of $1.25 billion during the quarter, surpassing the Zacks Consensus Estimate of $1.18 billion.

The quarterly FFO per share also compares favorably with the year-ago figure of $2.12, and revenues increased 18.1%, year on year.

Inside the Headline Numbers

For the U.S. Malls and Premium Outlets portfolio, occupancy was 91.8% as of Jun 30, 2021, expanding 100 basis points (bps) sequentially but contracting 110 bps year on year. Base minimum rent per square feet was $55.03 as of Jun 30, 2021, down 1.8% year on year.

On a combined basis, domestic and international properties’ net operating income (NOI) increased 16.6% year on year. Portfolio NOI, which comprises NOI from domestic properties, international properties and NOI from its investment in Taubman Realty Group, climbed 32.5% from the prior-year period.

Balance Sheet Position

Simon Property exited second-quarter 2021 with more than $8.8 billion of liquidity. This comprised $1.9 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.

Outlook

Simon Property raised the 2021 FFO per share guidance and now projects the same at $10.70-$10.80, up from the $9.70-$9.80 guided earlier. This suggests an increase of $1.00 per share at the mid-point. The guided range is also above the Zacks Consensus Estimate of $9.84.

Dividend Hike

Simon Property announced a 7.1% hike in its third-quarter 2021 dividend. The company will now pay $1.50 per share compared with the $1.40 paid earlier. The increased dividend will be paid on Sep 30, to shareholders on record as of Sep 9, 2021.

The company paid its second-quarter dividend of $1.40 per share, in cash, on Jul 23, which marked a 7.7% hike sequentially and year over year.

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

Performance of Other Retail REITs

Kimco Realty Corp.’s (KIM - Free Report) second-quarter NAREIT FFO per share came in at 34 cents, topping the Zacks Consensus Estimate of 31 cents. This also compared favorably with the year-ago quarter tally of 24 cents. Results reflected better-than-anticipated revenue numbers. Moreover, the retail REIT raised the guidance for 2021 on improved outlook.

Realty Income Corporation’s (O - Free Report) second-quarter 2021 adjusted AFFO per share of 88 cents came in line with the Zacks Consensus Estimate. The reported figure also compares favorably with the prior-year quarter’s 86 cents. Results reflect better-than-expected improvement in revenues. The retail REIT also raised its 2021 adjusted FFO per share guidance and increased the 2021 acquisitions volume projections to $4.5 billion.

We now look forward to the earnings release of another retail REIT — Regency Centers Corporation (REG - Free Report) — which is slated to be out on Aug 5.

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.