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Simon Property (SPG) Q4 FFO Beat, '24 View Below Expectation
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Simon Property Group, Inc.'s (SPG - Free Report) fourth-quarter 2023 funds from operations (FFO) per share of $3.69 surpassed the Zacks Consensus Estimate of $3.34. Also, the figure increased 8.5% year over year.
Results reflect better-than-anticipated revenues on lower property operating expenses and a rise in the base rent per square foot and occupancy levels. However, higher interest expenses partly offset the upsides. This retail behemoth’s 2024 FFO per share outlook was lower than expected.
Simon Property generated revenues of $1.53 billion in the quarter, surpassing the Zacks Consensus Estimate of $1.46 billion. The reported figure increased 9.1% year over year.
For the full-year 2023, FFO per share came in at $12.51, higher than the prior-year tally of $11.95, beating the Zacks Consensus Estimate of $12.16. This was backed by 6.9% growth in revenues to $5.66 billion.
Behind the Headlines
SPG reported revenues from lease income of nearly $1.36 billion, 5.9% higher than the prior-year period’s figure. Our estimate was pegged at $1.3 billion.
As of Dec 31, 2023, the occupancy for the U.S. Malls and Premium Outlets portfolio came in at 95.8%, up 90 basis points from 94.9% as of Dec 31, 2022. We projected the metric to be 95.4%.
The base minimum rent per square foot for the U.S. Malls and Premium Outlets portfolio was $56.82 as of Dec 31, 2023, rising from $55.13 as of Dec 31, 2022, reflecting an increase of 3.1%. Our estimate was pegged at $56.51.
Simon Property’s property operating expenses in the fourth quarter came in at $122.8 million, decreasing 3.5% from the prior-year quarter. The domestic property net operating income (NOI) increased 7.3% year over year, and the portfolio NOI ascended 7.2%.
Moreover, quarterly interest expenses of $224.9 million marked an increase of 12% year over year. Our estimate was pegged at $205.3 billion.
Balance Sheet Position
Simon Property exited the fourth quarter of 2023 with $10.9 billion of liquidity. This comprised $2.8 billion of cash in hand, including its share of joint-venture cash and $8.1 billion of available capacity under the company’s revolving credit facilities.
Outlook
For 2024, Simon Property projects FFO per share in the range of $11.85-$12.10. This is lower than the Zacks Consensus Estimate of $12.17.
Dividend Update
Concurrent with its fourth-quarter earnings release, Simon Property announced a quarterly common stock dividend of $1.95 for the first quarter of 2024, marking a 2.6% hike from the prior quarter. The dividend will be paid out on Mar 29 to shareholders of record as of Mar 8, 2024.
Currently, SPG carries a Zacks Rank #3 (Hold).
Simon Property Group, Inc. Price, Consensus and EPS Surprise
We now look forward to the earnings releases of other retail REITs like Regency Centers Corporation (REG - Free Report) and Federal Realty Investment Trust (FRT - Free Report) , which are slated to report on Feb 8 and Feb 12, respectively.
The Zacks Consensus Estimate for FRT’s fourth-quarter 2023 FFO per share is pegged at $1.64, suggesting a year-over-year increase of 3.8%. FRT currently carries a Zacks Rank #3.
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 (SPG) Q4 FFO Beat, '24 View Below Expectation
Simon Property Group, Inc.'s (SPG - Free Report) fourth-quarter 2023 funds from operations (FFO) per share of $3.69 surpassed the Zacks Consensus Estimate of $3.34. Also, the figure increased 8.5% year over year.
Results reflect better-than-anticipated revenues on lower property operating expenses and a rise in the base rent per square foot and occupancy levels. However, higher interest expenses partly offset the upsides. This retail behemoth’s 2024 FFO per share outlook was lower than expected.
Simon Property generated revenues of $1.53 billion in the quarter, surpassing the Zacks Consensus Estimate of $1.46 billion. The reported figure increased 9.1% year over year.
For the full-year 2023, FFO per share came in at $12.51, higher than the prior-year tally of $11.95, beating the Zacks Consensus Estimate of $12.16. This was backed by 6.9% growth in revenues to $5.66 billion.
Behind the Headlines
SPG reported revenues from lease income of nearly $1.36 billion, 5.9% higher than the prior-year period’s figure. Our estimate was pegged at $1.3 billion.
As of Dec 31, 2023, the occupancy for the U.S. Malls and Premium Outlets portfolio came in at 95.8%, up 90 basis points from 94.9% as of Dec 31, 2022. We projected the metric to be 95.4%.
The base minimum rent per square foot for the U.S. Malls and Premium Outlets portfolio was $56.82 as of Dec 31, 2023, rising from $55.13 as of Dec 31, 2022, reflecting an increase of 3.1%. Our estimate was pegged at $56.51.
Simon Property’s property operating expenses in the fourth quarter came in at $122.8 million, decreasing 3.5% from the prior-year quarter. The domestic property net operating income (NOI) increased 7.3% year over year, and the portfolio NOI ascended 7.2%.
Moreover, quarterly interest expenses of $224.9 million marked an increase of 12% year over year. Our estimate was pegged at $205.3 billion.
Balance Sheet Position
Simon Property exited the fourth quarter of 2023 with $10.9 billion of liquidity. This comprised $2.8 billion of cash in hand, including its share of joint-venture cash and $8.1 billion of available capacity under the company’s revolving credit facilities.
Outlook
For 2024, Simon Property projects FFO per share in the range of $11.85-$12.10. This is lower than the Zacks Consensus Estimate of $12.17.
Dividend Update
Concurrent with its fourth-quarter earnings release, Simon Property announced a quarterly common stock dividend of $1.95 for the first quarter of 2024, marking a 2.6% hike from the prior quarter. The dividend will be paid out on Mar 29 to shareholders of record as of Mar 8, 2024.
Currently, SPG carries a Zacks Rank #3 (Hold).
Simon Property Group, Inc. Price, Consensus and EPS Surprise
Simon Property Group, Inc. price-consensus-eps-surprise-chart | Simon Property Group, Inc. Quote
Upcoming Earnings Releases
We now look forward to the earnings releases of other retail REITs like Regency Centers Corporation (REG - Free Report) and Federal Realty Investment Trust (FRT - Free Report) , which are slated to report on Feb 8 and Feb 12, respectively.
The Zacks Consensus Estimate for REG’s fourth-quarter 2023 FFO per share is pegged at $1.02, implying a year-over-year increase of 4.1%. REG currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for FRT’s fourth-quarter 2023 FFO per share is pegged at $1.64, suggesting a year-over-year increase of 3.8%. FRT currently carries a Zacks Rank #3.
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.