10-QPeriod: Q2 FY2013

SIMON PROPERTY GROUP INC. Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 7, 2013For Securities:SPGSPG-PJ

Summary

Simon Property Group, Inc. (SPG) reported its financial results for the quarter and six months ended June 30, 2013. The company demonstrated solid operational performance, with an increase in total revenue to $1.24 billion for the quarter and $2.45 billion for the six months. Key drivers of this growth included higher minimum rents, overage rents, and tenant reimbursements. The company also reported a slight increase in diluted earnings per share to $1.10 for the quarter, although it saw a decrease for the six-month period to $2.01, largely due to a significant gain recorded in the prior year's comparable period related to asset acquisitions. SPG maintained a strong balance sheet with total assets of $32.02 billion and total liabilities of $25.03 billion as of June 30, 2013. The company's strategy continues to focus on enhancing profitability through property enhancements, strategic acquisitions, and efficient operations. The report highlights improvements in key operating metrics such as increased occupancy rates and higher sales per square foot in its U.S. malls and Premium Outlets. The company also provided an update on its development pipeline and financing activities, indicating a stable liquidity position and continued access to capital markets.

Financial Highlights

28 data points
Beta

Revenue

$1.08B

Net Income

$339.94M

31.3% Net Margin

EPS (Diluted)

$1.10

Total Assets

$32.02B

Cash & Equivalents

$1.10B

Free Cash Flow

$682.44M

Financial Statements
Beta
Revenue$1.08B
Operating Expenses$575.05M
Operating Income$509.94M
Interest Expense$266.23M
Net Income$339.94M
EPS (Basic)$1.10
EPS (Diluted)$1.10
Shares Outstanding (Basic)310.26M
Shares Outstanding (Diluted)310.26M

Key Highlights

  • 1Total revenue increased to $1.237 billion for the three months ended June 30, 2013, up from $1.188 billion in the prior year period.
  • 2Diluted Earnings Per Common Share (EPS) for the three months ended June 30, 2013 was $1.10, an increase from $0.71 in the prior year period.
  • 3For the six months ended June 30, 2013, diluted EPS decreased to $2.01 from $2.87 in the prior year period, primarily due to a large gain in the prior year.
  • 4Total assets stood at $32.02 billion, with total liabilities at $25.03 billion as of June 30, 2013.
  • 5Occupancy rates for U.S. Malls and Premium Outlets increased to 95.1% as of June 30, 2013, from 94.2% in the prior year.
  • 6Average base minimum rent per square foot for U.S. Malls and Premium Outlets increased by 3.6% to $41.41.
  • 7The company has a substantial development pipeline with ongoing projects in the U.S. and internationally.

Frequently Asked Questions

The decrease in diluted EPS for the six months ended June 30, 2013, to $2.01 from $2.87 in the prior year, was primarily attributable to a significant gain of $494.8 million recorded in the six months ended June 30, 2012. This gain was related to the acquisition of a controlling interest, sale or disposal of assets, and an impairment charge on investments in unconsolidated entities. Without this prior-year gain, the operational performance in 2013 showed improvement.

Simon Property Group experienced positive trends in its U.S. Malls and Premium Outlets. Ending occupancy increased to 95.1% as of June 30, 2013, compared to 94.2% in the prior year. Additionally, the average base minimum rent per square foot rose by 3.6% to $41.41. Releasing spreads remained positive, indicating the company's ability to lease available space at higher rents.

As of June 30, 2013, Simon Property Group maintained a strong liquidity position with $1.1 billion in cash and cash equivalents. The company had approximately $4.6 billion in aggregate available borrowing capacity under its two credit facilities. The weighted average interest rate on its debt decreased to 4.99% from 5.22% a year prior, and the company is in compliance with all debt covenants. The company's financing strategy primarily relies on long-term fixed-rate debt.

Yes, during the first six months of 2013, the company acquired a 390,000 square foot outlet center near Portland, Oregon for $146.7 million. It also made an initial investment of $38.7 million as part of an agreement to form joint ventures with McArthurGlen in Europe. The company also disposed of interests in several retail properties, recognizing an aggregate gain of approximately $61.5 million.