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SPG Q3 FFO Tops Estimates on Leasing Strength, Outlook Raised

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Key Takeaways

  • Simon's Q3 FFO of $3.37 per share beat estimates, while revenues climbed 13.3% to $1.81 billion.
  • U.S. Malls and Premium Outlets occupancy reached 96.5%, while retailer sales per square foot rose 14.8%.
  • Simon raised its 2026 FFO guidance and increased its quarterly dividend by 4.5%.

Simon Property Group (SPG - Free Report) delivered third-quarter 2026 Real Estate funds from operations (FFO) of $3.37 per share, beating the Zacks Consensus Estimate by 1.5%. The figure climbed 4.7% from $3.22 a year earlier.

Total revenues rose 13.3% year over year to $1.81 billion and surpassed the consensus mark by 4.9%. Continued leasing momentum, higher rents and stronger retailer sales supported results. Occupancy at U.S. Malls and Premium Outlets edged up to 96.5%.

SPG's Lease Income Drives Revenue Growth

Lease income increased 15.7% year over year to $1.68 billion. Fixed lease income reached $1.35 billion, up from $1.17 billion, while variable lease income rose to $327.25 million from $279.38 million.

Management fees and other revenues grew to $46.18 million from $36.93 million. However, other income fell to $86.98 million from $111.72 million.

Simon Property's Rental and Retail Metrics Improve

Base minimum rent per square foot at U.S. Malls and Premium Outlets advanced 6.1% to $62.75 from $59.14. Reported retailer sales per square foot reached $852 for the trailing 12 months, up 14.8% from $742.

The Mills portfolio was 98.9% occupied, down from 99.4% a year earlier, but its base minimum rent climbed to $42.44 per square foot from $38.25. During the first nine months, Simon signed 853 new leases versus 819 a year earlier at an average initial base rent of $76.03 per square foot.

SPG Reports Higher Property-Level NOI

Domestic property net operating income (NOI) increased 6.6% to $1.54 billion from $1.44 billion a year earlier. Portfolio NOI, which includes international properties, rose 6.7% to $1.63 billion.

International property NOI grew to $96.47 million from $90.14 million. However, NOI from other platform investments declined to $30.67 million from $54.08 million, while Klépierre NOI eased to $64.98 million from $69.33 million. Beneficial interest in combined NOI increased 1.9% to $1.78 billion.

Simon Property Faces Higher Operating Costs

Total operating expenses increased 28.1% year over year to $1.01 billion from $788.66 million. Depreciation and amortization rose to $510.77 million from $338.64 million, while property operating expenses climbed to $180.83 million from $149.81 million. Interest expense increased to $287.59 million from $242.79 million.

SPG Details Its Redevelopment Investments

At September-end, redevelopment projects represented $1.15 billion in expected net investment at the company's share, with a projected stabilized return of 9%.

The company forecast $412.07 million in redevelopment investment for 2026 and $280.76 million for 2027. After construction loans and other funding, anticipated net cash investment for the two years totaled $570.22 million.

Simon Property Maintains Ample Liquidity

During the quarter, Simon completed an $800 million two-tranche senior notes offering with a weighted-average coupon of 5.45% and a term of 7.7 years. It also closed seven secured loan transactions totaling approximately $970 million at a weighted-average interest rate of 6.33%.

The company ended September with approximately $9 billion of liquidity, including $1.3 billion in cash, inclusive of its share of joint venture cash, and $7.7 billion in available revolving credit capacity. Simon also repurchased approximately 1.14 million shares for $236.5 million during the quarter.

SPG Raises 2026 FFO Guidance and Dividend

Simon raised its 2026 Real Estate FFO outlook to $13.30-$13.40 per share from $13.20-$13.30. The revised midpoint of $13.35 represents a 10-cent increase. The consensus estimate is pegged at $13.24, below the guided range.

The company also declared a quarterly common stock dividend of $2.30 per share for the fourth quarter, up 4.5% year over year. The dividend is payable on Dec. 31, 2026, to shareholders of record as of Dec. 10.

SPG’s Zacks Rank

Currently, SPG 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

Federal Realty Investment Trust (FRT - Free Report) reported third-quarter core FFO per share of $1.87, which rose 5.6% year over year and beat the Zacks Consensus Estimate by 1.1%. Results reflected higher rental income, strong comparable retail leasing activity and growth in adjusted comparable property operating income.

Kimco Realty Corporation (KIM - Free Report) reported third-quarter 2026FFO of 47 cents per share, which rose 6.8% from a year earlier and outpaced the Zacks Consensus Estimate of 46 cents. Strong leasing and higher minimum rents supported growth, while lower above- and below-market rent adjustments and other rental property income tempered gains.

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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