Simon Property Group Inc.'s (SPG) third-quarter profit dropped
9.7% as the nation's largest shopping mall owner reported falling
occupancy, but results easily topped Wall Street expectations as
rents grew.
The real-estate investment trust has continued to raise rents
even as some retailers struggle amid the spending slowdown.
Commercial property prices have dropped and foreclosures have
risen.
Simon has built up its balance sheet and as of Sept 30., it had
$4 billion cash on hand--up from $2.9 billion in the prior
quarter--and over $3 billion available on its revolving credit
facility.
The company reported a profit of $112.1 million, or 38 cents a
share, down from $124.1 million, or 50 cents, a year earlier. Funds
from operations, a key profitability measure for REITs, fell to
$1.38 from $1.61. For the latest quarter, FFO were diluted by 23
cents due to the issuance of common stock earlier this year.
Revenue dropped 1.1% to $924.9 million.
Analysts surveyed by Thomson Reuters projected FFO of $1.32 and
revenue of $892 million.
At the regional mall business, occupancy fell to 91.4% from
92.5% while average rents improved 2%. Outlet occupancy decreased
to 97.5% from 98.8% and rents rose 21%. Comparable-store sales per
square foot dropped 11% at malls and 4.5% at outlets.
Meanwhile, Simon raised the low end of its full-year FFO target
by 5 cents. Chairman and Chief Executive David Simon said the
company saw continued improvement in the capital markets and from
its retailers.
Shares were down 0.4% to $67.90 in premarket trading. The stock
is up nearly one-third this year.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com