Simon Property Group Inc. (SPG): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

Summary:
Simon Property’s third-quarter 2014 comparable FFO per share came 14.2% above the year-ago quarter figure. But on a reported basis, the company’s FFO per share fell year over year as the results were affected by loss on extinguishment of debt. Notably, the year-over-year improvement in quarterly comparable FFO per share was primarily driven by a substantial rise in base minimum rent and occupancy levels. Recently, Simon Property revealed its accumulation of 3.6% stake in Macerich and expressed its intention to further seek a waiver for excess share provision that could pave the way for raising its Macerich stake, which is a positive for the stock. With the economy showing signs of recovery, spending power of richer consumers is improving and the company seems to leverage this trend. It has undertaken prudent initiatives like re-launching its brand and adopting several marketing programs, which are expected to drive more traffic at its malls and aid its top line. Yet, a large development pipeline increases the company’s operational risk while anticipation of interest rate hikes in the medium-to-long run remains a concern for its financing costs.

Overview:

Headquartered in Indianapolis, IN, Simon Property Group Inc. is a leading publicly traded retail real estate company in the U.S., which is engaged in acquiring, owning and leasing a diverse portfolio of shopping malls. The company’s real estate platforms in the U.S. consist of Malls, Premium Outlets, The Mills and other properties. Moreover, the company has ownership interests in properties outside the U.S. These properties are mainly owned through joint venture (JV) arrangements.

As of Sep 30, 2014, Simon Property owned or had interests in 208 properties 112 malls, 68 Premium Outlets, 13 Mills and 15 other shopping centers or outlet centers positioned across 37 states and Puerto Rico. Moreover, the company has a global reach and as of the same date, it had ownership stake in 9 Premium Outlets in Japan, 3 Premium Outlets in South Korea, 1 Premium Outlet in Canada, 1 Premium Outlet in Mexico and 1 Premium Outlet in Malaysia. Additionally, the company had 28.9% interest in Kl pierre, a publicly traded French real estate company that owns or has interest in shopping centers in 13 countries of Europe.

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