Simon Property Group, Inc. SPG reported third-quarter funds from operations (FFO) per share of $2.84, missing the Zacks Consensus Estimate of $3. The figure decreased from $3.20 reported in the year-ago period.

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Results reflect higher interest expenses on a year-over-year basis. However, an increase in revenues, backed by a rise in the base minimum rent per square foot and occupancy levels, supported the results to some extent. SPG raised its fourth-quarter 2024 dividend.

Simon Property generated revenues of $1.48 billion in the quarter, which surpassed the Zacks Consensus Estimate of $1.46 billion. The reported figure increased 4.9% year over year.

According to David Simon, the chairman, CEO and president of Simon Property Group, "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.”

Behind the Headlines

SPG reported revenues from lease income of $1.34 billion, 3.2% higher than the prior-year period’s figure. Our estimate was pegged at $1.31 billion.

As of Sept. 30, 2024, the occupancy for the U.S. Malls and Premium Outlets portfolio came in at 96.2%, up 100 basis points from 95.2% as of Sept. 30, 2023. We projected the metric to be 95.6%.

The base minimum rent per square foot for the U.S. Malls and Premium Outlets portfolio was $57.71 as of Sept. 30, 2024, rising from $56.41 as of Sept. 30, 2023, reflecting an increase of 2.3%.

The domestic property net operating income (NOI) increased 5.4% year over year, and the portfolio NOI ascended 5%.

However, quarterly interest expenses of $226.4 million marked an increase of 6.7% year over year. Our estimate was pegged at $222.4 million.

Balance Sheet Position

Simon Property exited the third quarter of 2024 with $11.1 billion of liquidity. This comprised $3 billion of cash on hand, including its share of joint-venture cash and $8.1 billion of available capacity under the company’s revolving credit facilities.

Outlook

For 2024, Simon Property projects FFO per share in the range of $12.66-$12.76, down from the $12.80-$12.90 range guided earlier. The Zacks Consensus Estimate of $12.85, stands above the guided range.

Dividend Update

Concurrent with its third-quarter earnings release, Simon Property announced a quarterly common stock dividend of $2.10 for the fourth quarter of 2024, marking a 2.4% hike from the prior quarter and 10.5% year over year. The dividend will be paid out on Dec. 30 to shareholders of record as of Dec. 9.

Currently, SPG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Simon Property Group, Inc. Price, Consensus and EPS Surprise

Simon Property Group, Inc. price-consensus-eps-surprise-chart | Simon Property Group, Inc. Quote

Performance of Other Retail REITs

SITE Centers Corp. SITC reported a third-quarter 2024 operating FFO per share of 81 cents, which missed the Zacks Consensus Estimate of 87 cents. The figure fell 31.1% year over year.

SITC’s results reflected a fall in revenues and base rent per square foot on a year-over-year basis.

Federal Realty Investment Trust’s FRT third-quarter 2024 FFO per share of $1.71 narrowly missed the Zacks Consensus Estimate of $1.72. However, this marked a rise of 3.6% from the year-ago quarter’s tally of $1.65.

Results reflected healthy leasing activity and significant occupancy gains at its properties. FRT has also tightened and increased its guidance for 2024 FFO per share.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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