10-QPeriod: Q1 FY2008

SIMON PROPERTY GROUP INC. Quarterly Report for Q1 Ended Mar 31, 2008

Filed May 9, 2008For Securities:SPGSPG-PJ

Summary

Simon Property Group, Inc. (SPG) reported its first quarter 2008 financial results. The company's revenue increased to $895.3 million, up from $852.1 million in the prior year's first quarter. Net income available to common stockholders saw a slight decrease to $87.9 million, down from $98.4 million in Q1 2007, resulting in diluted earnings per share of $0.39, compared to $0.44 in the prior year. This decrease was partly attributed to lower lease settlement income in 2008 and a net loss recorded from the company's interest in SPG-FCM Ventures related to the Mills acquisition. The company highlighted solid core business fundamentals, with regional mall comparable sales per square foot increasing by 0.8% and average base rents rising by 4.3%. Premium Outlet centers also demonstrated strong performance with comparable sales up 5.4%. SPG continued its development activities, opening new properties and expanding its portfolio. The company maintained a strong liquidity position with a significant credit facility and generated substantial cash flow from operations, which is expected to be sufficient for operational needs and future growth initiatives.

Key Highlights

  • 1Total revenue for the first quarter of 2008 increased to $895.3 million, up from $852.1 million in the same period of 2007.
  • 2Diluted earnings per common share decreased to $0.39 from $0.44 in the prior year, primarily due to lower lease settlement income and a loss related to the Mills acquisition.
  • 3Regional mall comparable sales per square foot increased by 0.8% to $491, and average base rents grew by 4.3% to $37.73 psf.
  • 4Premium Outlet Centers showed strong performance with comparable sales per square foot increasing by 5.4% to $511 and occupancy at 97.9%.
  • 5The company opened three new properties in late 2007 and early 2008, including Houston Premium Outlets, Philadelphia Premium Outlets, and The Domain.
  • 6Simon Property Group maintained a strong liquidity position with $428.7 million in cash and cash equivalents and a $3.5 billion credit facility, with $1.6 billion in available borrowing capacity as of March 31, 2008.
  • 7The company is actively developing new properties, with approximately $375 million planned for new U.S. developments and $400 million for strategic expansions and renovations in 2008.

Frequently Asked Questions

In the first quarter of 2008, Simon Property Group's total revenue increased to $895.3 million from $852.1 million in the same period of 2007. However, net income available to common stockholders decreased to $87.9 million, resulting in diluted earnings per share of $0.39, down from $0.44 in Q1 2007. This decline was influenced by lower lease settlement income and losses associated with the Mills acquisition.

The company reported positive trends in its core segments. Regional mall comparable sales per square foot saw a modest increase of 0.8% and average base rents grew by 4.3%. Premium Outlet Centers demonstrated stronger performance, with comparable sales per square foot up 5.4% and high occupancy rates.

Simon Property Group maintains a strong financial position. As of March 31, 2008, the company had $428.7 million in cash and cash equivalents and a substantial $3.5 billion credit facility with $1.6 billion available for borrowing. The company expects its cash flow from operations to be sufficient to cover its operational needs and future growth initiatives.

Yes, Simon Property Group is actively involved in development and expansion. The company opened new properties in late 2007 and early 2008, and has significant capital planned for new U.S. developments and strategic renovations and expansions throughout 2008. International development is also ongoing.