Published on 3 May 2023 on Zacks via Yahoo Finance

Simon Property (SPG) Misses on Q1 FFO, Raises '23 Outlook

Simon Property Group, Inc.’s SPG first-quarter 2023 funds from operations (FFO) per share of $2.74 missed the Zacks Consensus Estimate of $2.80. The figure, however, compared favorably with the year-ago quarter’s $2.70.  Results reflect better-than-anticipated revenues on healthy leasing activity and a rise in base rent per square foot and occupancy levels. However, higher operating expenses were a woe. This retail behemoth also raised its 2023 FFO per share outlook and dividend.Simon Property generated revenues of $1.35 billion in the quarter, surpassing the Zacks Consensus Estimate of $1.34 billion. The reported figure increased 4.2% year over year.Per David Simon, chairman, CEO, and president of the company, “We continue to strengthen our company through disciplined investments and proactive capital markets activities, further enhancing our already strong financial flexibility. Given our current view for the remainder of 2023, today we raised our quarterly dividend and are increasing the mid-point of our full-year 2023 guidance.”

Behind the Headlines

SPG reported revenues from lease income of $1.25 billion, higher than the prior-year period’s $1.21 billion. Our estimate for the same was pegged at $1.19 billion.As of Mar 31, 2023, the occupancy for the U.S. Malls and Premium Outlets portfolio came in at 94.4%, up from 93.3% as of Mar 31, 2022. We projected the same to be 94.2%.The base minimum rent per square foot for the U.S. Malls and Premium Outlets portfolio was $55.84 as of Mar 31, 2023, rising from $54.14 as of Mar 31, 2022, reflecting an increase of 3.1%. The figure also surpassed our estimate of $55.18.Simon Property’s total operating expenses in the first quarter came in at $688.1 million, increasing 1.9% from the prior-year quarter. The domestic property net operating income (NOI) increased 4% year over year, whereas the portfolio NOI climbed 3.9%.