Simon Property Beats, Raises Dividend

(Updated with analyst commentary and additional background information.)

INDIANAPOLIS ( TheStreet) -- Simon Property Group ( SPG) shares jumped 2.6% Monday morning after the shopping mall owner beat quarterly earnings expectations and increased its dividend.

"It increased guidance," noted Sandler O'Neill analyst Alexander Goldfarb. "We saw a very hefty growth of the dividend, which is constant with Simon, a very good, well-oiled machine."

Simon Property's improved performance was due in part to a 10.6% year-over-year increase in sales by the REIT's mall tenants.

Mall-owning REIT peers General Growth Properties ( GGP) and Taubman Centers ( TCO) also recently reported that its shopping center tenants enjoyed double-digit sales gains in the recent quarter.

>>11 REIT Earnings: Behind the Numbers

Real estate investment trust Simon Property raised its quarterly dividend by 33% to 80 cents per share. The new payout will be available Nov. 30 to shareholders of record on Nov. 16.

The mall owner updated its guidance for 2010 and now expects to post full-year adjusted funds from operations in a range of $5.90 to $5.95 per share, increasing the high end of its prior estimate by 8 cents per share. Funds from operations, or FFO, is a performance figure generally used by REITs to define cash flow from operations.

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Net FFO should be in a range of $4.90 to $4.95 per share next year. Diluted net income is expected to be within a range of $2.03 to $2.08 per share for 2010.

For the recent quarter, Simon Property posted net income of $230.6 million, or 79 cents per share, compared with $105.5 million, or 38 cents per diluted share, in the year-earlier period. Total revenue improved 5.9% to $979.3 million, topping expectations.

Adjusted FFO was $503.6 million, or $1.43 per diluted share, compared with year-earlier adjusted FFO of $473.1 million, or $1.38 per diluted share. Net FFO was $318.5 million, or 90 cents per diluted share.

Occupancy pushed up to 93.6%, from 92.8%. Average rent per square foot improved to $38.69, from $38.35.

Earlier this year Simon Property failed in its attempts to acquire fellow mall owner General Growth Properties.

>>Simon Property Drops General Growth Bid

Simon had been in a bidding war with Brookfield Asset Management ( BAM) for General Growth as the acquisition target headed into bankruptcy.

Simon's final offer valued General Growth at $6.5 billion, or $20 per share. It had also offered a recapitalization plan for General Growth at $11 a share, in which it would have bought 227.3 million shares for a total of $2.5 billion.

Brookfield and its investment partners offered an additional $500 million in equity to a $7 billion offer and agreed to the issue of warrants -- which Simon had refused to agree to -- to be issued over time, with only 40% due immediately on the bankruptcy court resolution.

General Growth said last week it expects to emerge from bankruptcy on or around Nov. 8th.

-- Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here: Miriam Reimer.

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