Simon Property Group Reports Third Quarter 2021 Results; Increases Full Year 2021 Guidance And Raises Quarterly Dividend
11/01/2021 - 04:10 PM
INDIANAPOLIS , Nov. 1, 2021 /PRNewswire/ -- Simon, a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations, today reported results for the quarter ended September 30, 2021 .
"We produced impressive third quarter results," said David Simon , Chairman, Chief Executive Officer and President. "Demand for our space from a broad spectrum of tenants is growing. Occupancy gains continued, retailer sales accelerated, including our owned brands, and cash flow increased. Based upon results to date and expectations for the remainder of 2021, we are once again increasing full-year 2021 guidance and raising our quarterly dividend."
Results for the Quarter
Net income attributable to common stockholders was $679.9 million $2.07 per diluted share, as compared to $145.9 million $0.48 per diluted share in 2020. As previously announced, results for the third quarter of 2021 include $28.6 million $0.08 per diluted share, for a loss on extinguishment of debt related to the optional redemption of certain senior notes of Simon Property Group, L.P. and a non-cash after-tax gain of $111.9 million $0.30 per diluted share, associated with the contribution of the Company's interests in the Forever 21 and Brooks Brothers intellectual property licensing ventures in exchange for additional ownership interests in Authentic Brands Group. Funds From Operations ("FFO") was $1.176 billion $3.13 per diluted share, as compared to $723.2 million $2.05 per diluted share, in the prior year period, a 52.7% increase. FFO for the third quarter of 2021 includes the loss on extinguishment of debt and the non-cash gain mentioned above. Domestic property net operating income ("NOI") increased 24.5% compared to the prior year period. Portfolio NOI, which includes NOI from domestic properties, international properties and NOI from the Company's investment in Taubman Realty Group, increased 34.3% compared to the prior year period. Results for the Nine Months
Net income attributable to common stockholders was $1.743 billion $5.30 per diluted share, as compared to $837.7 million $2.74 per diluted share in 2020. Results for the nine months ended 2021 include the loss on extinguishment of debt, and the non-cash contribution gain associated with the licensing ventures recorded in the third quarter, as well as the $118.4 million $0.32 per diluted share, non-cash gain recorded in the second quarter 2021 from the reversal of a deferred tax liability associated with an international investment. FFO was $3.327 billion $8.85 per diluted share, as compared to $2.45 billion $6.95 per diluted share, in the prior year period, a 27.3% increase. FFO for the nine months ended 2021 includes the aforementioned loss on extinguishment of debt and the non-cash gains associated with the contribution of licensing ventures and the deferred tax liability reversal. Domestic property NOI increased 8.8% compared to the prior year period. Portfolio NOI increased 18.7% compared to the prior year period. U.S. Malls and Premium Outlets Operating Statistics
Occupancy was 92.8% at September 30, 2021 . Base minimum rent per square foot was $53.91 at September 30 , 2021. Development Activity
The first phase of the transformation of Northgate Station (Seattle, WA ), featuring the National Hockey League's Seattle Kraken corporate offices and the Kraken Community Iceplex, opened in September. This first phase is part of a multi-year development that will evolve Northgate Station into a mixed-use, transit-oriented community.
The redevelopment of Burlington Mall (Boston, MA ) opened during the quarter including an exciting line-up of premier dining and innovative retailers, as well as an outdoor gathering green space, including amenities for seasonal programming and community events.
During the quarter, construction started on Fukaya-Hanazono Premium Outlets ®, the tenth Premium Outlet® Center in Japan. The 292,500 square foot upscale outlet located in Fukaya City (Tokyo ), is projected to open in October 2022. Simon owns 40% of this project.
On October 15, 2021 , Jeju Premium Outlets (Jeju Island, South Korea ) opened with 92,000 square feet of high-quality, name brand stores. Jeju Premium Outlets is the fifth Premium Outlet® Center in South Korea. Simon owns a 50% interest in this center.
Capital Markets and Balance Sheet Liquidity
The Company was active in both the secured and unsecured credit markets through the first nine months of the year.
During the first nine months, the Company closed on 21 non-recourse mortgage loans totaling approximately $2.6 billion $1.6 billion 2.97% .
During the quarter, the Company completed a two tranche senior notes offering totaling $1.25 billion 1.87% .
The Company also retired three series of senior notes totaling $1.65 billion 2.57% . A $28.6 million
Subsequent to the end of the quarter, the Company amended and extended its $3.5 billion January 31, 2026 and at our sole option, can be extended for an additional year to January 31 , 2027. Based upon the Company's current credit ratings, the interest rate on the new revolver for U.S. Dollar borrowings is SOFR plus 72.5 points, plus a spread adjustment to account for the transition from LIBOR to SOFR.
As of September 30, 2021 , Simon had approximately $8.0 billion $1.1 billion $6.9 billion $500 million
Dividends
The Company paid its third quarter 2021 common stock dividend of $1.50 per share, in cash, on September 30, 2021 , a 15.4% increase year-over-year and 7.1% increase sequentially.
Simon's Board of Directors declared a quarterly common stock dividend of $1.65 in cash on November 1, 2021 , for the fourth quarter of 2021. This is a 26.9% increase year-over-year and a 10.0% increase compared to the third quarter 2021 dividend. The dividend will be payable on December 31, 2021 to shareholders of record on December 10 , 2021.
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 31, 2021 to shareholders of record on December 17 , 2021.
2021 Guidance
The Company currently estimates net income to be within a range of $6.61 to $6.71 per diluted share and FFO will be within a range of $11.55 to $11.65 per diluted share for the year ending December 31 , 2021. The FFO per diluted share range is an increase of $0.85 per share from the $10.70 to $10.80 per diluted share range provided on August 2 , 2021.
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 estimated FFO per diluted share:
For the year ending December 31, 2021
Low
High
End
End
Estimated net income attributable to common stockholders
per diluted share
$6.61
$6.71
Depreciation and amortization including Simon's share
of unconsolidated entities
5.47
5.47
Unrealized losses in fair value of equity instruments
0.01
0.01
Gain on acquisition of controlling interest, sale or
disposal of, or recovery on, assets and interests in
unconsolidated entities and impairment, net
(0.54)
(0.54)
Estimated FFO per diluted share
$11.55
$11.65
Conference Call
Simon will hold a conference call to discuss the quarterly financial results today from 5:00 p.m. to 6:00 p.m. Eastern Daylight Time , Monday, November 1 , 2021. 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 , 2021. To access the audio replay, dial 1-844-512-2921 (international 1-412-317-6671) passcode 13722912.
Supplemental Materials and Website
Supplemental information on our third quarter 2021 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 Measures
This press release includes FFO, FFO per share and portfolio Net Operating Income growth which are financial performance measures not defined by generally accepted accounting principles in the United States ("GAAP"). 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 Net Operating Income 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 Statements
About Simon Simon is a global leader 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,
2021
2020
2021
2020
REVENUE:
Lease income
$ 1,207,923
$ 993,831
$ 3,511,806
$ 3,269,572
Management fees and other revenues
27,024
21,345
78,381
71,545
Other income
61,607
45,498
200,465
134,957
Total revenue
1,296,554
1,060,674
3,790,652
3,476,074
EXPENSES:
Property operating
108,556
91,236
291,248
267,479
Depreciation and amortization
311,381
333,755
942,851
986,157
Real estate taxes
117,094
112,311
347,800
347,075
Repairs and maintenance
21,735
18,971
62,126
57,482
Advertising and promotion
38,635
14,751
87,685
60,967
Home and regional office costs
48,667
39,960
132,365
130,420
General and administrative
6,909
3,016
20,739
17,206
Other
31,253
42,650
84,180
99,527
Total operating expenses
684,230
656,650
1,968,994
1,966,313
OPERATING INCOME BEFORE OTHER ITEMS
612,324
404,024
1,821,658
1,509,761
Interest expense
(199,772)
(201,858)
(602,207)
(586,545)
Loss on extinguishment of debt
(28,593)
-
(31,552)
-
Gain on exchange of equity interests
159,828
-
159,828
-
Income and other tax (expense) benefit
(67,262)
(2,779)
(108,367)
3,065
Income from unconsolidated entities
198,524
61,823
562,138
156,610
Unrealized losses in fair value of equity instruments
(4,944)
(1,279)
(8,121)
(20,125)
Gain (loss) on acquisition of controlling interest, sale or disposal of, or recovery on,
assets and interests in unconsolidated entities and impairment, net
108,543
(91,285)
201,600
(98,168)
CONSOLIDATED NET INCOME
778,648
168,646
1,994,977
964,598
Net income attributable to noncontrolling interests
97,878
21,886
249,421
124,351
Preferred dividends
834
834
2,503
2,503
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS
$ 679,936
$ 145,926
$ 1,743,053
$ 837,744
BASIC AND DILUTED EARNINGS PER COMMON SHARE:
Net income attributable to common stockholders
$ 2.07
$ 0.48
$ 5.30
$ 2.74
Simon Property Group, Inc.
Unaudited Consolidated Balance Sheets
(Dollars in thousands, except share amounts)
September 30,
December 31,
2021
2020
ASSETS:
Investment properties, at cost
$ 37,984,645
$ 38,050,196
Less - accumulated depreciation
15,410,030
14,891,937
22,574,615
23,158,259
Cash and cash equivalents
438,423
1,011,613
Tenant receivables and accrued revenue, net
935,053
1,236,734
Investment in TRG, at equity
3,396,169
3,451,897
Investment in Klépierre, at equity
1,672,858
1,729,690
Investment in other unconsolidated entities, at equity
2,972,049
2,603,571
Right-of-use assets, net
506,236
512,914
Investments held in trust - special purpose acquisition company
345,000
-
Deferred costs and other assets
1,105,736
1,082,168
Total assets
$ 33,946,139
$ 34,786,846
LIABILITIES:
Mortgages and unsecured indebtedness
$ 25,584,372
$ 26,723,361
Accounts payable, accrued expenses, intangibles, and deferred revenues
1,324,603
1,311,925
Cash distributions and losses in unconsolidated entities, at equity
1,573,563
1,577,393
Dividend payable
1,452
486,922
Lease liabilities
509,071
515,492
Other liabilities
525,361
513,515
Total liabilities
29,518,422
31,128,608
Commitments and contingencies
Limited partners' preferred interest in the Operating Partnership and noncontrolling
redeemable interests
553,025
185,892
EQUITY:
Stockholders' Equity
Capital stock (850,000,000 total shares authorized, $0.0001 par value, 238,000,000
shares of excess common stock, 100,000,000 authorized shares of preferred stock):
Series J 8 3/8% cumulative redeemable preferred stock, 1,000,000 shares authorized,
796,948 issued and outstanding with a liquidation value of $39,847
41,845
42,091
Common stock, $0.0001 par value, 511,990,000 shares authorized, 342,907,608 and
342,849,037 issued and outstanding, respectively
34
34
Class B common stock, $0.0001 par value, 10,000 shares authorized, 8,000
issued and outstanding
-
-
Capital in excess of par value
11,201,333
11,179,688
Accumulated deficit
(5,789,329)
(6,102,314)
Accumulated other comprehensive loss
(191,274)
(188,675)
Common stock held in treasury, at cost, 14,296,445 and 14,355,621 shares, respectively
(1,884,511)
(1,891,352)
Total stockholders' equity
3,378,098
3,039,472
Noncontrolling interests
496,594
432,874
Total equity
3,874,692
3,472,346
Total liabilities and equity
$ 33,946,139
$ 34,786,846
Simon Property Group, Inc.
Unaudited Joint Venture Combined Statements of Operations
(Dollars in thousands)
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2021
2020
2021
2020
REVENUE:
Lease income
$ 719,723
$ 601,522
$ 2,053,826
$ 1,919,618
Other income
67,630
94,630
204,923
215,349
Total revenue
787,353
696,152
2,258,749
2,134,967
OPERATING EXPENSES:
Property operating
151,008
129,024
420,174
383,363
Depreciation and amortization
170,568
175,716
512,165
512,705
Real estate taxes
66,221
68,464
203,242
197,487
Repairs and maintenance
18,274
16,457
53,625
49,661
Advertising and promotion
18,238
9,901
52,479
42,669
Other
43,400
41,857
113,042
107,822
Total operating expenses
467,709
441,419
1,354,727
1,293,707
OPERATING INCOME BEFORE OTHER ITEMS
319,644
254,733
904,022
841,260
Interest expense
(154,501)
(154,579)
(453,145)
(463,629)
Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities, net
-
-
33,371
-
NET INCOME
$ 165,143
$ 100,154
$ 484,248
$ 377,631
Third-Party Investors' Share of Net Income
$ 82,639
$ 46,785
$ 243,525
$ 193,633
Our Share of Net Income
82,504
53,369
240,723
183,998
Amortization of Excess Investment (A)
(15,199)
(20,543)
(49,794)
(62,144)
Our Share of Gain on Sale or Disposal of Assets and Interests in
Other Income in the Consolidated Financial Statements
-
-
(14,941)
-
Income from Unconsolidated Entities (B)
$ 67,305
$ 32,826
$ 175,988
$ 121,854
Note: The above financial presentation does not include any information related to our investments in Klépierre S.A.
("Klépierre") and The Taubman Realty Group ("TRG"). For additional information, see footnote B.
Simon Property Group, Inc.
Unaudited Joint Venture Combined Balance Sheets
(Dollars in thousands)
September 30,
December 31,
2021
2020
Assets:
Investment properties, at cost
$ 19,867,502
$ 20,079,476
Less - accumulated depreciation
8,287,531
8,003,863
11,579,971
12,075,613
Cash and cash equivalents
1,368,859
1,169,422
Tenant receivables and accrued revenue, net
567,034
749,231
Right-of-use assets, net
161,758
185,598
Deferred costs and other assets
415,768
380,087
Total assets
$ 14,093,390
$ 14,559,951
Liabilities and Partners' Deficit:
Mortgages
$ 15,311,572
$ 15,569,485
Accounts payable, accrued expenses, intangibles, and deferred revenue
854,603
969,242
Lease liabilities
165,334
188,863
Other liabilities
405,134
426,321
Total liabilities
16,736,643
17,153,911
Preferred units
67,450
67,450
Partners' deficit
(2,710,703)
(2,661,410)
Total liabilities and partners' deficit
$ 14,093,390
$ 14,559,951
Our Share of:
Partners' deficit
$ (1,161,814)
$ (1,130,713)
Add: Excess Investment (A)
1,300,242
1,399,757
Our net Investment in unconsolidated entities, at equity
$ 138,428
$ 269,044
Note: The above financial presentation does not include any information related to our investments in Klépierre
and TRG. For additional information, see footnote B.
Simon Property Group, Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures (C)
(Amounts in thousands, except per share amounts)
Reconciliation of Consolidated Net Income to FFO
For the Three Months Ended
For the Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Consolidated Net Income (D)
$ 778,648
$ 168,646
$ 1,994,977
$ 964,598
Adjustments to Arrive at FFO:
Depreciation and amortization from consolidated
properties
309,199
331,252
936,346
978,998
Our share of depreciation and amortization from
unconsolidated entities, including Klépierre, TRG and other corporate investments
202,519
136,471
609,271
402,488
(Gain) loss on acquisition of controlling interest, sale or disposal of, or recovery on,
assets and interests in unconsolidated entities and impairment, net
(108,543)
91,285
(201,600)
98,168
Unrealized losses in fair value of equity instruments (E)
-
1,279
3,177
20,125
Net loss attributable to noncontrolling interest holders in
properties
405
753
2,875
4,551
Noncontrolling interests portion of depreciation and amortization and gain on consolidation of properties
(5,005)
(5,154)
(14,354)
(14,665)
Preferred distributions and dividends
(1,313)
(1,313)
(3,939)
(3,939)
FFO of the Operating Partnership
$ 1,175,910
$ 723,219
$ 3,326,753
$ 2,450,324
Diluted net income per share to diluted FFO per share reconciliation:
Diluted net income per share
$ 2.07
$ 0.48
$ 5.30
$ 2.74
Depreciation and amortization from consolidated properties
and our share of depreciation and amortization from unconsolidated
entities, including Klépierre, TRG and other corporate investments, net of noncontrolling
interests portion of depreciation and amortization
1.35
1.30
4.08
3.87
(Gain) loss on acquisition of controlling interest, sale or disposal of, or recovery on,
assets and interests in unconsolidated entities and impairment, net
(0.29)
0.26
(0.54)
0.28
Unrealized losses in fair value of equity instruments (E)
-
0.01
0.01
0.06
Diluted FFO per share
$ 3.13
$ 2.05
$ 8.85
$ 6.95
Details for per share calculations:
FFO of the Operating Partnership
$ 1,175,910
$ 723,219
$ 3,326,753
$ 2,450,324
Diluted FFO allocable to unitholders
(147,864)
(95,426)
(418,548)
(323,591)
Diluted FFO allocable to common stockholders
$ 1,028,046
$ 627,793
$ 2,908,205
$ 2,126,733
Basic and Diluted weighted average shares outstanding
328,619
305,913
328,576
306,099
Weighted average limited partnership units outstanding
47,263
46,507
47,289
46,574
Basic and Diluted weighted average shares and units outstanding
375,882
352,420
375,865
352,673
Basic and Diluted FFO per Share
$ 3.13
$ 2.05
$ 8.85
$ 6.95
Percent Change
52.7%
27.3%
Simon Property Group, Inc.
Footnotes to Unaudited Financial Information
Notes:
(A)
Excess investment represents the unamortized difference of our investment over equity in the underlying net assets of the related partnerships and joint ventures shown therein. The Company generally amortizes excess investment over the life of the related assets.
(B)
The Unaudited Joint Venture Combined Statements of Operations do not include any operations or our share of net income or excess investment amortization related to our investments in Klépierre and TRG. Amounts included in Footnote D below exclude our share of related activity for our investments in Klépierre and TRG. For further information on Klépierre, reference should be made to financial information in Klépierre's public filings and additional discussion and analysis in our Form 10-K.
(C)
This report contains measures of financial or operating performance that are not specifically defined by GAAP, including FFO and FFO per share. FFO is a performance measure that is standard in the REIT business. We believe FFO provides investors with additional information concerning our operating performance and a basis to compare our performance with those of other REITs. We also use these measures internally to monitor the operating performance of our portfolio. Our computation of these non-GAAP measures may not be the same as similar measures reported by other REITs.
We determine FFO based upon the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT") Funds From Operations White Paper - 2018 Restatement. Our main business includes acquiring, owning, operating, developing, and redeveloping real estate in conjunction with the rental of real estate. Gains and losses of assets incidental to our main business are included in FFO. We determine FFO to be our share of consolidated net income computed in accordance with GAAP, excluding real estate related depreciation and amortization, excluding gains and losses from extraordinary items, excluding gains and losses from the sale, disposal or property insurance recoveries of, or any impairment related to, depreciable retail operating properties, plus the allocable portion of FFO of unconsolidated joint ventures based upon economic ownership interest, and all determined on a consistent basis in accordance with GAAP. However, you should understand that FFO does not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income determined in accordance with GAAP as a measure of operating performance, and is not an alternative to cash flows as a measure of liquidity.
(D)
Includes our share of:
-
Gains on land sales of $4.8 million and $1.8 million for the three months ended September 30, 2021 and 2020, respectively, and $6.4 million and $8.1 million for the nine months ended September 30, 2021 and 2020, respectively.
-
Straight-line adjustments decreased income by ($5.7) million and ($13.7) million for the three months ended September 30, 2021 and 2020, respectively, and ($20.7) million and ($4.3) million for the nine months ended September 30, 2021 and 2020, respectively.
-
Amortization of fair market value of leases from acquisitions (decreased) increased income by ($0.2) million and $1.1 million for the three months ended September 30, 2021 and 2020, respectively, and ($0.6) million and $3.5 million for the nine months ended September 30, 2021 and 2020, respectively.
(E)
Amount of unrealized gain/loss in FFO reconciliation relates to retail real estate investments with readily determinable fair values.
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SOURCE Simon
