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Simon Reports Another Record Quarter With Tenant Demand Increasing

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“We’re pleased to report another record quarter with operating and financial results. Demand from tenants from space in our highly productive centers is increasing.” Those thoughts are according to David Simon, chairman and CEO of Simon Property Group Inc., during the REIT’s Q2 earnings call.

“We continue to redevelop our irreplaceable real estate with new exciting dynamic ways to live work, plays, stay and shop that will further enhance the customer experience,” he said. “We continued identifying new unique and strategic development opportunities globally that will extend our geographic reach and create a new generation of world-class destinations on a accretive basis.”

As for the Q2 results for the company, which were highlighted by funds from operation FFO of $1.0 6 billion or $2.98 per share, an increase of 20.6% compared to the prior year, the company continues to grow its cash flow and report solid key operating metrics.

“Total portfolio NOI increased four 4.5% or approximately $135 million year-to-date. Comp NOI increased 2.3% for the year-to-date period. Leasing activity remains solid and continues to improve. Average base rent was $53.84, up 3.3% compared to last year. The mall and Premium Outlets recorded leasing spreads of $7.32 per square foot, and an increase of 10.7%.”

He also revealed on the call that retail sales momentum continue to pick up in the second quarter. “Reported retailer sales per square foot for malls and outlets was $646 per foot compared to $618 million in the prior year period, an increase of 4.6%, which is a large increase – largest actually over the last four years.”

Retail sales were strong across the portfolio with sales productivity increasing each month throughout the quarter, he added. “Our mall – Premium Outlets occupancy ended the quarter at 94.7%, an increase of 10 basis points compared to the occupancy at the end of the quarter this year. Importantly on an NOI awaited basis our operating metrics were as follows.” Reported retail sales on an NOI awaited basis is 813 compared to 646. Occupancy is 95.6% compared to 94.7%. Average base minimum rent is $70.70 cents – $70.77 compared to $53.84, he explained.

Turning to a new development, the REIT opened the Premium Outlet collection in Edmonton, Canada making its fourth outlet center in Canada. “It’s a terrific opening. It’s the only outlet center in Edmonton and so far locals and tourists have really appreciated the new project,” he said on the call.

Construction also continues on several additional new outlets. “Denver, Colorado which will open in September, Queretaro, Mexico, which will open in December, Malaga, Spain will open in the spring of ’19. During the quarter, we also announced a new joint venture with Siam Piwat, a world class retail and real estate developer to bring our internationally renowned Premium Outlet experience to Thailand.

This will be our first outlet in Thailand adding to our already successful joint ventures in Japan, Korea and Malaysia. Our center in Bangkok is projected to begin construction later this year and will be a destination of choice for the 50 million metro area locals and obviously the country’s very strong tourism with over 32 million visitors per year.”

Overall, he said, it was “a very good quarter and we continue to grow our cash flow with our good earnings momentum.”