10-QPeriod: Q1 FY2011

SIMON PROPERTY GROUP INC. Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 6, 2011For Securities:SPGSPG-PJ

Summary

Simon Property Group, Inc. (SPG) reported a significant increase in diluted earnings per share for the first quarter of 2011 compared to the same period in 2010. This improvement was driven by a strong rebound in core business fundamentals, including an 8.2% increase in total sales per square foot for its mall and outlet properties, alongside positive releasing spreads and improved occupancy rates. The company also benefited from a reduction in interest expense due to deleveraging and lower interest rates, and the absence of a significant debt extinguishment loss incurred in the prior year. Financially, SPG demonstrated solid operational performance with total revenue growing to $1,019.9 million in Q1 2011 from $925.1 million in Q1 2010. While depreciation and amortization expenses increased, reflecting recent acquisitions, the company maintained strong cash flow from operations. The balance sheet shows a slight decrease in total assets and liabilities, with a notable reduction in cash and cash equivalents primarily due to debt reduction. The company continues to manage its debt effectively, with a focus on extending maturities and maintaining a healthy borrowing rate.

Financial Highlights

28 data points
Beta

Revenue

$1.02B

Net Income

$179.41M

17.6% Net Margin

EPS (Diluted)

$0.61

Total Assets

$24.57B

Cash & Equivalents

$636.05M

Free Cash Flow

$452.31M

Financial Statements
Beta
Revenue$1.02B
Operating Expenses$568.98M
Operating Income$451.95M
Interest Expense$248.12M
Net Income$179.41M
EPS (Basic)$0.61
EPS (Diluted)$0.61
Shares Outstanding (Basic)293.08M
Shares Outstanding (Diluted)293.29M

Key Highlights

  • 1Diluted EPS increased to $0.61 in Q1 2011 from $0.03 in Q1 2010, driven by operational improvements and absence of prior year debt extinguishment charges.
  • 2Total revenue grew to $1,019.9 million in Q1 2011, up from $925.1 million in Q1 2010, reflecting strength in minimum rents, tenant reimbursements, and overage rents.
  • 3Same-store portfolio metrics improved, with total sales per square foot up 8.2% and ending occupancy rising to 92.9% as of March 31, 2011.
  • 4The company repaid $281.2 million of senior unsecured notes during the quarter, demonstrating active debt management.
  • 5Total assets decreased slightly to $24.6 billion from $24.9 billion, while total liabilities also decreased to $18.9 billion from $19.1 billion.
  • 6Cash and cash equivalents decreased by $160.7 million to $636.1 million, primarily due to debt reduction.

Frequently Asked Questions

The significant increase in diluted earnings per share from $0.03 in Q1 2010 to $0.61 in Q1 2011 was primarily due to a substantial loss on extinguishment of debt in the prior year ($165.6 million) that did not recur in the current period. Additionally, improved operating performance, including higher tenant sales and rents, along with a decrease in interest expense due to deleveraging and lower interest rates, contributed to the earnings growth.

Occupancy levels are showing positive momentum, with ending occupancy for the total U.S. portfolio at 92.9% as of March 31, 2011, up from 92.2% in the prior year. Average base minimum rent per square foot also saw a modest increase of 1.4% to $39.26. Releasing spreads remained positive, indicating the company can lease space at higher rents than expiring leases.

Simon Property Group maintains a significant level of debt, with total mortgages and other indebtedness at $17.17 billion as of March 31, 2011. However, the company is actively managing its debt, having repaid $281.2 million in senior unsecured notes during the quarter. The weighted average maturity of its consolidated indebtedness is approximately 5.7 years. The company believes it has sufficient cash and credit facilities to meet its debt maturities and capital needs through 2012.