Simon® Reports Third Quarter 2024 Results, Affirms Full Year 2024 Guidance and Raises Quarterly Dividend
INDIANAPOLIS, Nov. 1, 2024 /PRNewswire/ -- 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, 2024.
"We are pleased with our quarterly results highlighted by strong financial and operational performance, the very successful openings of Tulsa Premium Outlets and the expansion of Busan Premium Outlets," said David Simon, Chairman, Chief Executive Officer and President. "Today we are pleased to raise our dividend for the fourth consecutive quarter, to $2.10 per share, a year-over-year increase of 10.5%."
Results for the Quarter
Net income attributable to common stockholders was $475.2 million, or $1.46 per diluted share, as compared to $594.1 million, or $1.82 per diluted share in 2023.
Net income for the third quarter of 2024 includes a non-cash net loss of $49.3 million, or $0.13 per diluted share, due to a mark-to-market in fair value adjustment of the Klépierre exchangeable bonds the Company issued in November 2023.
Net income for the third quarter of 2023 included non-cash after-tax gains of $118.1 million, or $0.32 per diluted share primarily due to the partial sale of the Company's ownership interest in its SPARC Group joint venture ("SPARC").
Real Estate Funds From Operations ("Real Estate FFO") was $1.144 billion, or $3.05 per diluted share as compared to $1.091 billion, or $2.91 per diluted share in the prior year, an increase of 4.8% year-over-year.
Funds From Operations ("FFO") was $1.067 billion, or $2.84 per diluted share as compared to $1.201 billion, or $3.20 per diluted share in the prior year, inclusive of the $0.13 per diluted share loss in the current period and the $0.32 per diluted share gains in the prior year period mentioned above.
Domestic property Net Operating Income ("NOI") increased 5.4% and portfolio NOI increased 5.0% compared to the prior year period.
Results for the Nine Months
Net income attributable to common stockholders was $1.700 billion, or $5.22 per diluted share, as compared to $1.532 billion, or $4.68 per diluted share in 2023.
Net income for the nine months of 2024 includes an after-tax gain of $311.1 million, or $0.83 per diluted share from the sale of the Company's remaining ownership interest in Authentic Brands Group in the first quarter and a non-cash net loss of $54.1 million, or $0.14 per diluted share due to a mark-to-market in fair value adjustments of the Klépierre exchangeable bonds.
Net income for the nine months of 2023 included non-cash after-tax gains of $145.5 million or $0.39 per diluted share due to the gain in SPARC referenced above and a dilution of our ownership interest in Authentic Brands Group.
Real Estate FFO was $3.335 billion, or $8.90 per diluted share as compared to $3.201 billion, or $8.55 per diluted share in the prior year, an increase of 4.1% year-over-year.
FFO was $3.488 billion, or $9.30 per diluted share as compared to $3.304 billion, or $8.82 per diluted share in the prior year, inclusive of the items referenced above.
Domestic property NOI increased 4.8% and portfolio NOI increased 4.6% compared to the prior year period.
U.S. Malls and Premium Outlets Operating Statistics
Occupancy at September 30, 2024 was 96.2%, a 1.0% increase compared to 95.2% at September 30, 2023.
Base minimum rent per square foot was $57.71 at September 30, 2024, compared to $56.41 at September 30, 2023, an increase of 2.3%.
Reported retailer sales per square foot was $737 for the trailing 12 months ended September 30, 2024.
Development ActivityOn August 15th, Tulsa Premium Outlets (Jenks, Oklahoma) opened with 338,000 square feet featuring a dynamic mix of merchandise, amenities and experiences. Simon owns 100% of this center.
On September 12th, the 184,000 square-foot, phase two expansion of Busan Premium Outlets (Busan, South Korea) opened featuring new fashion and sports brands, in vogue food and beverage brands and ample gathering and green spaces. Simon owns 50% of this center.
Capital Markets and Balance Sheet LiquidityDuring the quarter, the Company completed a senior notes offering totaling $1.0 billion with a term of 10 years and 4.75% coupon.
The Company also amended and extended its $3.5 billion unsecured multi-currency revolving credit facility. The facility will initially mature on January 31, 2029 and at our sole option, can be extended for an additional year to January 31, 2030. Based upon the Company's current credit ratings, the interest on the new revolver for U.S. Dollar borrowings is unchanged at SOFR plus 82.5 basis points (inclusive of a 10 basis point SOFR spread adjustment).
During the first nine months, the Company completed 14 non-recourse mortgage loans totaling approximately $1.3 billion (U.S. dollar equivalent), of which Simon's share was $651 million. The weighted average interest rate on these loans was 6.13%.
As of September 30, 2024, Simon had approximately $11.1 billion of liquidity consisting of $3.0 billion of cash on hand, including its share of joint venture cash, and $8.1 billion of available capacity under its revolving credit facilities.
DividendsToday, Simon's Board of Directors declared a quarterly common stock dividend of $2.10 for the fourth quarter of 2024. This is an increase of $0.20, or 10.5% year-over-year. The dividend will be payable on December 30, 2024 to shareholders of record on December 9, 2024.
Simon's Board of Directors declared the quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred Stock (NYSE:SPGPRJ) of $1.046875 per share, payable on December 30, 2024 to shareholders of record on December 16, 2024.
2024 GuidanceThe Company currently estimates net income to be within a range of $7.18 to $7.28 per diluted share and FFO to be within a range of $12.80 to $12.90 per diluted share, excluding the $0.14 per diluted share of unrealized losses in fair value adjustments of the Klépierre exchangeable bonds and publicly traded equity instruments, net for the year ending December 31, 2024.
The following table provides the GAAP to non-GAAP reconciliation for the expected range of estimated net income attributable to common stockholders per diluted share to FFO per diluted share:
For the year ending December 31, 2024
Low
High
End
End
Estimated net income attributable to common stockholders
per diluted share
$7.18
$7.28
Depreciation and amortization including Simon's share
of unconsolidated entities
5.50
5.50
Gain on acquisition of controlling interest, sale or
disposal of, or recovery on, assets and interest in
unconsolidated entities and impairment, net
(0.02)
(0.02)
Estimated FFO per diluted share
$12.66
$12.76
Unrealized losses in fair value adjustments
of the Klépierre exchangeable bonds and
publicly traded equity instruments, net
0.14
0.14
Estimated FFO per diluted share, excluding unrealized
losses in fair value adjustments of the
Klépierre exchangeable bonds and
publicly traded equity instruments, net
$12.80
$12.90
Conference CallSimon will hold a conference call to discuss the quarterly financial results today from 10:00 a.m. to 11:00 a.m. Eastern Time, Friday, November 1, 2024. 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 8, 2024. To access the audio replay, dial 1-844-512-2921 (international +1-412-317-6671) passcode 13749300.
Supplemental Materials and WebsiteSupplemental information on our third quarter 2024 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 MeasuresThis press release includes FFO, FFO per share, Real Estate FFO, Real Estate FFO per share and portfolio NOI growth which are financial performance measures not defined by generally accepted accounting principles in the United States ("GAAP"). Real estate FFO is FFO of the operating partnership less other platform investments and gain on disposal, exchange, or revaluation of equity interests, in each case, net of tax; and unrealized losses (gains) in fair value of publicly traded equity instruments and derivative instrument, net. 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 NOI 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.
Forward-Looking StatementsCertain statements made in this press release may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained, and it is possible that the Company's actual results may differ materially from those indicated by these forward–looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to: changes in economic and market conditions that may adversely affect the general retail environment, including but not limited to those caused by inflation, recessionary pressures, wars, escalating geopolitical tensions as a result of the war in Ukraine and the conflicts in the Middle East, and supply chain disruptions; the inability to renew leases and relet vacant space at existing properties on favorable terms; the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; the potential loss of anchor stores or major tenants; an increase in vacant space at our properties; the potential for violence, civil unrest, criminal activity or terrorist activities at our properties; natural disasters; the availability of comprehensive insurance coverage; the intensely competitive market environment in the retail industry, including e-commerce; security breaches that could compromise our information technology or infrastructure; reducing emissions of greenhouse gases; environmental liabilities; our international activities subjecting us to risks that are different from or greater than those associated with our domestic operations, including changes in foreign exchange rates; our continued ability to maintain our status as a REIT; changes in tax laws or regulations that result in adverse tax consequences; risks associated with the acquisition, development, redevelopment, expansion, leasing and management of properties; the inability to lease newly developed properties on favorable terms; the loss of key management personnel; uncertainties regarding the impact of pandemics, epidemics or public health crises, and the associated governmental restrictions on our business, financial condition, results of operations, cash flow and liquidity; changes in market rates of interest; the impact of our substantial indebtedness on our future operations, including covenants in the governing agreements that impose restrictions on us that may affect our ability to operate freely; any disruption in the financial markets that may adversely affect our ability to access capital for growth and satisfy our ongoing debt service requirements; any change in our credit rating; risks relating to our joint venture properties, including guarantees of certain joint venture indebtedness; and general risks related to real estate investments, including the illiquidity of real estate investments.
The Company discusses these and other risks and uncertainties under the heading "Risk Factors" in its annual and quarterly periodic reports filed with the SEC. The Company may update that discussion in subsequent other periodic reports, but except as required by law, the Company undertakes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.
About SimonSimon® is a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company ((Simon Property Group, NYSE:SPG). Our properties across North America, Europe and Asia provide community gathering places for millions of people every day and generate billions in annual sales.
Simon Property Group, Inc.Unaudited Consolidated Statements of Operations(Dollars in thousands, except per share amounts)
For the Three Months
For the Nine Months
Ended September 30,
Ended September 30,
2024
2023
2024
2023
REVENUE:
Lease income
$ 1,339,824
$ 1,298,737
$ 3,958,236
$ 3,801,880
Management fees and other revenues
33,461
30,055
96,103
92,511
Other income
107,425
82,156
327,227
237,007
Total revenue
1,480,710
1,410,948
4,381,566
4,131,398
EXPENSES:
Property operating
141,114
136,541
398,520
366,553
Depreciation and amortization
320,365
315,259
937,749
941,851
Real estate taxes
93,999
115,456
299,848
338,452
Repairs and maintenance
23,019
22,660
73,272
67,837
Advertising and promotion
34,138
28,809
101,046
86,713
Home and regional office costs
53,351
47,679
164,556
154,505
General and administrative
9,171
9,070
29,141
28,235
Other
37,784
41,240
120,384
132,369
Total operating expenses
712,941
716,714
2,124,516
2,116,515
OPERATING INCOME BEFORE OTHER ITEMS
767,769
694,234
2,257,050
2,014,883
Interest expense
(226,424)
(212,210)
(678,382)
(629,725)
Gain on disposal, exchange, or revaluation of equity interests, net
-
158,192
414,769
194,629
Income and other tax expense
(2,605)
(43,218)
(55,170)
(40,252)
Income from unconsolidated entities
58,504
95,480
66,375
207,835
