Simon Property Group Inc. (SPG) swung to a second-quarter loss, as the nation's largest mall owner reported a $140.5 million write-down related to its investment in Liberty International PLC.

Impairments aside, the results were largely in line with Wall Street's expectations. But, they underscored continued challenges in the retail industry as Simon Property reported sales declines at its regional malls and premium outlet centers even as rents ticked higher.

In wake of the news, the company's shares rose 5.4% to $60.07 in recent trading.

"This downturn continues to impact people's shopping habits. We see this" in the sales numbers, said Alex Goldfarb, an analyst at Sandler O'Neill & Partners.

Indeed, at Simon's regional malls, occupancy rates were down to 90.9% from 91.8%, while average rents increased 3.8%. Outlet occupancy declined to 97% from 98.3%, and rents rose 23%. Comparable-store sales per square foot fell 11% at malls and 3.3% at outlets.

Mall REITs have been grappling with a retail industry hammered by steep declines in consumer spending and woes in the broader commercial property market as values plummet and foreclosures rise amid a continuing credit crunch and recession.

Simon reported a loss of $14.1 million, or 8 cents a share, compared with a year-ago profit of $114.4 million, or 34 cents a share, reflecting the decline in the value of the company's investment in Liberty International. Meanwhile, funds from operations, a key profitability measure for REITs, fell to 96 cents a share from $1.49. Excluding the write-down, earnings would have been 35 cents and FFO would have been $1.38.

Revenue decreased 11% to $903.6 million.

Analysts polled by Thomson Reuters expected per-share earnings of 31 cents, FFO of $1.37 and revenue of $879 million.

"As expected, it's a tough world for mall owners," said Jim Sullivan, an analyst at Green Street Advisors, noting the slippage at the outlet malls. "The outlet malls had really been the star performers in retail real estate."

Despite the poor business environment for retail, Simon Property remains on top of analyst lists of mall developers able to navigate the storm, while being well-capitalized to jump on future acquisition opportunities. But, such deals don't appear imminent.

"We don't want to rush to do a deal just to do a deal," said Chief Executive David Simon, during the earnings call Tuesday. He also said that, at this point, the company isn't actively pursuing a transaction with the government's Term Asset-Backed Securities Loan Facility, or TALF, program as Vornado Realty Trust (VNO) and Developers Diversified Realty Corp. (DDR) are seen exploring.

The company during the call also reiterated its plan to resume paying a cash dividend in 2010.

The retail landlord earlier this year adopted a dividend policy allowing it to pay 90% of its distribution in stock and 10% in cash to preserve capital amid a continuing credit crunch and weakening market fundamentals.

The company was part of a herd of REITs switching to such stock/cash combination dividends this year that fueled declines in share prices while remaining balance-sheet friendly.

-By A.D. Pruitt, Dow Jones Newswires; 212-416-2197; angela.pruitt@dowjones.com

(John Kell contributed to this report.)