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Shoppers Boost Simon Property

The mall REIT's funds from operations rise 9% and beat analysts' forecast.

In another sign of the recent strength of the U.S. consumer,

Simon Property Group

,

(SPG) - Get Simon Property Group, Inc. Report

, the country's largest mall owner, said its funds from operations rose 9% in the fourth quarter.

The Indianapolis-based real estate investment trust, which is the first mall owner to report fourth-quarter results, also increased its quarterly dividend 8.6% to 76 cents a share.

Simon said its funds from operations, a common REIT performance metric, totaled $433.2 million, or $1.47 a share, in the quarter, up from $397.6 million, or $1.36 a share, a year earlier. Analysts expected FFO of $1.44 a share, according to Thomson First Call.

The results were boosted by improved leasing and healthy retail sales. Occupancy at Simon's malls stood at 93.1% at the end of 2005, up from 92.7% a year earlier. Comparable sales per square foot in the mall portfolio rose 5.4% year over year to $450. The sales number is important: Simon and other mall owners collect base rents from tenants and also grab "percentage rents," or small portions of retailers' sales.

During the quarter, Simon sold 13 of its "non-core" properties for $105.1 million, resulting in a net gain of $8.2 million. The company also bought two properties, paying $103.5 million for the Springfield Mall in Springfield, Pa., and $37 million for a 50% interest in Coddingtown Mall in Santa Rosa, Calif.

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Simon also opened its Firewheel Town center development, a 785,000-square foot open-air shopping center outside of Dallas. The project cost $132 million.

For 2006, Simon projected FFO of $5.20 to $5.32 a share. Analysts have an average estimate for FFO of $5.30 a share.

During the company's earnings call Monday afternoon, investors will look for more information about the recently announced joint venture between Simon and two homebuilders,

Toll Brothers

(TOL) - Get Toll Brothers, Inc. Report

and

Meritage Homes

(MTH) - Get Meritage Homes Corporation Report

, to develop a 5,485-acre land parcel in Phoenix into a master-planned community.

Simon shares recently traded up 22 cents to $81.69.