Simon Property Group Reports Third Quarter 2020 Results


Simon Property Group

iCrowdNewswire   Nov 10, 20203:41 PM ET

Simon, a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment and mixed-use destinations, today reported results for the quarter ended September 30, 2020.

“I am pleased with the solid profitability and substantial improvement in cash flow from operations we generated in the third quarter,” said David Simon, Chairman, Chief Executive Officer and President.  “As we continue to navigate through the pandemic and the resulting economic conditions, the well-being of our employees, shoppers and communities we serve remains at the forefront.  Despite COVID-19, we are encouraged by the increases we are seeing in shopper traffic, retailer sales and tenant rent collections across our portfolio.  We continue to improve our company through innovative investment opportunities which, when combined with our A-rated balance sheet, sets us apart and allows us to re-define the future.”

Results for the Quarter

  • Net income attributable to common stockholders was $145.9 million, or $0.48 per diluted share, as compared to $544.3 million, or $1.77 per diluted share in 2019. The current year period includes a non-cash impairment charge of $91.3 million, or $0.26 per diluted share, related to the Company’s interests in four unconsolidated joint ventures.
  • Funds From Operations (“FFO”) was $723.2 million, or $2.05 per diluted share, as compared to $1.081 billion, or $3.05 per diluted share, in the prior year period. FFO in the current year period was negatively impacted by $1.10 due to reduced revenues from the Company’s domestic and international operations caused by the impact of the COVID-19 pandemic, partially offset by approximately $0.23 per diluted share from cost reduction initiatives. In comparison to the prior year, the current year period includes $0.10 per diluted share of lower straight-line lease income, $0.06 per diluted share of litigation expenses and $0.01 per diluted share of lower lease settlement income.
  • Portfolio net operating income (“NOI”) for the three months ended September 30, 2020 declined 22.4% and comparable property NOI declined 24.4%. The year-over-year decline is primarily due to reduced revenues from agreed upon tenant rent abatements, higher provisions for uncollectible rents, lower sales-based rents and a reduction in ancillary property income, including Simon Brand Ventures sponsorship income, partially offset by cost reduction initiatives. The Company did not amortize any rent abatements; instead, abatements were expensed in the period granted.

Results for the Nine Months

  • Net income attributable to common stockholders was $837.7 million, or $2.74 per diluted share, as compared to $1.588 billion, or $5.15 per diluted share in 2019. Results for the nine months ended 2020 include impairment charges of $98.2 million, or $0.28 per diluted share. Results for the nine months ended 2019 included a combined $83.6 million, or $0.24 per diluted share, of proceeds from an insurance settlement and a gain on the sale of our interest in a multi-family residential property.
  • FFO was $2.450 billion, or $6.95 per diluted share, as compared to $3.227 billion, or $9.09 per diluted share, in the prior year period. FFO for the nine months ended 2020 was negatively impacted by $2.23 per diluted share primarily due to reduced revenues from the Company’s domestic and international operations caused by the impact of the COVID-19 pandemic, partially offset by approximately $0.59 per diluted share from cost reduction initiatives. The nine months ended 2019 also included the $0.24 per diluted share noted above.
  • Portfolio NOI for the nine months ended September 30, 2020 declined 14.6% and comparable property NOI declined 14.4%.

U.S. Malls and Premium Outlets Operating Statistics

  • Occupancy was 91.4% at September 30, 2020.
  • Base minimum rent per square foot was $56.13 at September 30, 2020, an increase of 2.9% year-over-year.

Business Update
All of the Company’s U.S. retail properties are currently open, welcoming shoppers to this year’s extended holiday shopping season. 

During the quarter, seven retail properties in California were temporarily closed on July 15 due to a restrictive governmental order.  Six of the properties reopened August 31 and the seventh reopened on October 7, after the easing of governmental restrictions in Los Angeles. 

As of November 6, 2020, the Company has collected from its U.S. retail portfolio, 72% of its net billed rents for the second quarter.  Further, the Company has realized higher net billed rent collections for the third quarter, with a collection rate of 85% as of November 6, 2020. 

 

Q2 2020

Q3 2020

U.S. Portfolio Gross Contractual Rents

$1,625

$1,591

Rent Write-Offs Related to Tenants in Bankruptcy

(64)

(15)

Net Contractual Rents

1,561

1,576

Deferrals Agreed

(303)

(35)

Abatements Granted

(204)

(65)

Net Billed Rents

1,054

1,476

Collected 

$763

$1,250

Collected as percent of Net Billed Rents

72%

85%

Collected as percent of Net Billed Rents, Including Deferrals Agreed

78%

85%

 

Amounts are presented on a gross basis, not at the Company’s share.  U.S. portfolio gross contractual rents do not include any prior period deferrals or sales-based rents.  Amounts above relate to the contractual rents in the stated periods.  Abatements reduced Lease Income in the period they were granted.

Development Activity
During the quarter, we completed the redevelopment of former department store spaces at Broadway Square and Cape Cod Mall.  Also during the quarter, the 110,000 square-foot phase V expansion of Rinku Premium Outlets (Izumisano, (OsakaJapan) opened adding enhanced amenities, elevated food offerings and more than 40 new, exciting brands.  After this expansion, Rinku Premium Outlets is western Japan’s largest outlet center.  Simon owns 40% of this center.    

Construction continues on certain redevelopment and new development projects in the U.S. and internationally that are nearing completion.  Simon’s share of the remaining required net cash funding for these projects, that are currently scheduled to be completed by the end of 2021, is approximately $140 million

Capital Markets and Balance Sheet Liquidity
As of September 30, 2020, Simon had more than $9.7 billion of liquidity consisting of $1.5 billion of cash on hand, including its share of joint venture cash, and $8.2 billion of available capacity under its revolving credit facilities and term loan, net of $623 million outstanding under its U.S. commercial paper program.

During the quarter, the Company completed a three tranche senior notes offering totaling $2.0 billion.  Two tranches totaling $1.5 billion were new issues of senior notes with a weighted average term of 20 years and a weighted average coupon rate of 3.23%.  The third tranche of $500 million was issued as additional notes under an indenture pursuant to which the Company previously issued 3.50% notes due September 2025. 

The Company used a combination of proceeds from the offering and cash on hand to repay $2.5 billion outstanding under its Credit Facilities. 

Dividends
The Company paid its third quarter 2020 common stock dividend of $1.30 per share, in cash, on October 23, 2020.  Simon’s Board of Directors will declare a common stock cash dividend for the fourth quarter on or before December 31, 2020. 

Simon’s Board of Directors declared the quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred Stock of $1.046875 per share, payable on December 31, 2020 to shareholders of record on December 17, 2020. 

Conference Call
Simon will hold a conference call to discuss the quarterly financial results today at 5:00 p.m. Eastern TimeMonday, November 9, 2020.  A live webcast of the conference call will be accessible in listen-only mode at investors.simon.com.  An audio replay of the conference call will be available until November 16, 2020.  To access the audio replay, dial 1-855-859-2056 (international 404-537-3406) passcode 7809309. 

Supplemental Materials and Website
Supplemental information on our third quarter 2020 performance is available at investors.simon.com. This information has also been furnished to the SEC in a current report on Form 8-K.

We routinely post important information online on our investor relations website, investors.simon.com. We use this website, press releases, SEC filings, quarterly conference calls, presentations and webcasts to disclose material, non-public information in accordance with Regulation FD. We encourage members of the investment community to monitor these distribution channels for material disclosures.  Any information accessed through our website is not incorporated by reference into, and is not a part of, this document.

Non-GAAP Financial Measures
This press release includes FFO, FFO per share, comparable property Net Operating Income growth and portfolio Net Operating Income growth which are financial performance measures not defined by generally accepted accounting principles in the United States (“GAAP”). Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release and in Simon’s supplemental information for the quarter.  FFO and comparable property Net Operating Income growth are financial performance measures widely used in the REIT industry. Our definitions of these non-GAAP measures may not be the same as similar measures reported by other REITs.

Contact Information:

http://www.simon.com


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