10-Q/APeriod: Q3 FY2015

SIMON PROPERTY GROUP INC. Quarterly Report (Amendment) for Q3 Ended Sep 30, 2015

Filed January 13, 2016For Securities:SPGSPG-PJ

Summary

Simon Property Group, Inc. (SPG) filed an amended quarterly report on Form 10-Q/A for the period ending September 30, 2015. The primary purpose of this amendment was to reflect a non-cash gain of $206.9 million recognized in the first quarter of 2015. This gain stemmed from an equity method investment in Klépierre SA, which experienced a reduction in SPG's ownership percentage due to Klépierre's acquisition of Corio N.V. and subsequent share issuance. Operationally, the company demonstrated solid performance with increases in minimum rents and tenant reimbursements for the nine months ended September 30, 2015, compared to the prior year. Diluted earnings per share saw a significant increase, partly driven by this non-cash gain and other financial activities like a gain on the sale of marketable securities and reduced interest expense. Despite a slight decrease in overall U.S. mall and Premium Outlet occupancy, key metrics such as average base minimum rent per square foot and total sales per square foot showed positive trends.

Financial Highlights

28 data points
Beta

Revenue

$1.32B

Net Income

$420.01M

31.8% Net Margin

EPS (Diluted)

$1.36

Total Assets

$30.85B

Cash & Equivalents

$856.86M

Free Cash Flow

$735.52M

Financial Statements
Beta
Revenue$1.32B
Operating Expenses$662.55M
Operating Income$657.59M
Interest Expense$229.65M
Net Income$420.01M
EPS (Basic)$1.36
Shares Outstanding (Basic)309.42M

Key Highlights

  • 1Simon Property Group restated its Q1 2015 financial results to include a non-cash gain of $206.9 million related to its investment in Klépierre SA.
  • 2Total revenue for the nine months ended September 30, 2015, increased to $3.89 billion from $3.57 billion in the prior year period.
  • 3Diluted earnings per common share for the nine months ended September 30, 2015, rose to $4.62 from $3.22 in the comparable period of 2014.
  • 4The company reported an ending occupancy rate of 96.1% for its U.S. Malls and Premium Outlets as of September 30, 2015, a slight decrease from 96.9% in the prior year.
  • 5Average base minimum rent per square foot for U.S. Malls and Premium Outlets increased by 4.9% to $48.57 as of September 30, 2015.
  • 6Total consolidated debt stood at $22.6 billion as of September 30, 2015, with an effective weighted average interest rate of 4.11%.
  • 7The company repurchased approximately $2.0 billion of its common stock under an authorized program as of September 30, 2015.

Frequently Asked Questions

The primary reason for the amendment is to correct the financial statements to reflect a non-cash gain of $206.9 million that should have been recognized in the first quarter of 2015. This gain relates to Simon Property Group's equity method investment in Klépierre SA, which was impacted by Klépierre's acquisition of Corio N.V. and a resulting change in SPG's ownership percentage.

The $206.9 million non-cash gain increased the consolidated net income for the nine months ended September 30, 2015, and subsequently increased diluted earnings per common share by $0.57 for the same period. The gain is recognized within 'Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net'.

As of September 30, 2015, the ending occupancy for Simon Property Group's U.S. Malls and Premium Outlets was 96.1%. This represents a decrease of 80 basis points from 96.9% as of September 30, 2014, primarily due to tenant bankruptcies.

Key non-GAAP financial measures highlighted include Funds from Operations (FFO), diluted FFO per share, Net Operating Income (NOI), and comparable property NOI. For the nine months ended September 30, 2015, diluted FFO per share was $7.46, and total NOI of the portfolio increased by 7.3% compared to the prior year period. Comparable property NOI for U.S. Malls, Premium Outlets, and The Mills increased by 3.8%.