DOW JONES NEWSWIRES
Simon Property Group Inc.'s (SPG) fourth-quarter net income rose
22% on strong performance from its outlet centers.
But the largest U.S. mall owner by number of properties gave a
cautious outlook. The real-estate investment trust sees 2009
earnings of $1.95 to $2.15 and funds from operation, a key
profitability measure for REITs, of $6.40 to $6.60 a share.
Analysts surveyed by Thomson Reuters had expected $2.27 and $6.56,
respectively.
Simon's shares fell 1% to $44 in premarket trading. The stock
has lost more than half its value since September.
The company also said Friday it would switch the format of its
90-cent quarterly dividend payment to 10% cash and 90% stock, still
allowing it to meet the requirement for real estate investment
trusts' dividends, but also allowing it to conserve cash.
REITs, especially those dealing in commercial retail property,
have been slammed of late as commercial real estate prices have
dropped and foreclosures have risen. REITs posted their worst year
on record last year.
Meanwhile, Simon - which owns 386 malls and shopping centers
globally - posted fourth-quarter net income of $152.3 million, or
64 cents a share, up from $125 million, or 51 cents a share, a year
earlier. Last year's results included 60 cents in write-downs and
losses from discontinued operations.
Funds from operations rose to $1.86 a share from $1.76 a share.
Revenue slid 0.6% to $1.03 billion.
Analysts surveyed by Thomson Reuters expected earnings of 80
cents, funds from operations of $1.85 and revenue of $1.01
billion.
The regional malls unit saw occupancy rates fall 1.1 percentage
points as average rents increased 6.5%. At premium outlets,
occupancy dropped 0.8 percentage point and rents rose 7.7%.
Comparable-store sales per square foot declined 4.3% at malls but
rose 1.8% at outlets.
Retail sales have been declining as customers curb their
discretionary spending - which means retailers are weaker and poses
more difficulties for landlords, some of whom carry heavy debt
loads.
Struggling retailers have even begun asking landlords to lower
rents to ease their burden somewhat. Chief Executive David Simon
said earlier this month that the only tenants who have asked the
company for concessions are those in bankruptcy or about to
file.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front
page of today's most important business and market news, analysis
and commentary. You can use this link on the day this article is
published and the following day.