PR Newswire | Aug 2, 2021 04:10PM EDT

Year 2021 Guidance And Raises Quarterly Dividend

08/02 15:10 CDT

Simon Property Group Reports Second Quarter 2021 Results And Increases Full Year 2021 Guidance And Raises Quarterly Dividend INDIANAPOLIS, Aug. 2, 2021

INDIANAPOLIS, Aug. 2, 2021 /PRNewswire/ -- Simon, a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations, today reported results for the quarter ended June 30, 2021.

"I am pleased with the profitability and substantial improvement in cash flow that were generated in the second quarter," said David Simon, Chairman, Chief Executive Officer and President. "We are encouraged by the increase in our shopper traffic, retailer sales and leasing activity. Based upon our results to date and expectations for the remainder of 2021, we are again increasing our full-year 2021 guidance and again raising our quarterly dividend."

Results for the Quarter

* Net income attributable to common stockholders was $617.3 million, or $1.88 per diluted share, as compared to $254.2 million, or $0.83 per diluted share in 2020. Results for the second quarter of 2021 include a non-cash gain of $118.4 million, or $0.32 per diluted share, because of the reversal of a deferred tax liability associated with an international investment. * Funds From Operations ("FFO") was $1.217 billion, or $3.24 per diluted share, as compared to $746.5 million, or $2.12 per diluted share, in the prior year period, a 52.8% increase. FFO for the second quarter 2021 includes the $0.32 per diluted share non-cash gain related to the deferred tax liability reversal, mentioned above. * Net operating income ("NOI") from domestic and international properties, combined, increased 16.6% compared to the prior year period. Portfolio NOI, which includes NOI from domestic properties, international properties and NOI from the Company's investment in Taubman Realty Group ("TRG"), increased 32.5% compared to the prior year period.

Results for the Six Months

* Net income attributable to common stockholders was $1.063 billion, or $3.24 per diluted share, as compared to $691.8 million, or $2.26 per diluted share in 2020. Results for the six months ended 2021 include the aforementioned non-cash gain related to the deferred tax liability reversal. * FFO was $2.151 billion, or $5.72 per diluted share, as compared to $1.727 billion, or $4.90 per diluted share, in the prior year period, a 16.7% increase. FFO for the six months ended 2021 includes the aforementioned non-cash gain related to the deferred tax liability reversal. * NOI from domestic and international properties, combined, increased 2.8% compared to the prior year period. Portfolio NOI increased 16.7% compared to the prior year period.

U.S. Malls and Premium Outlets Operating Statistics

* Occupancy was 91.8% at June 30, 2021. * Base minimum rent per square foot was $55.03 at June 30, 2021.

Development Activity

West Midlands Designer Outlet in England opened on April 12, 2021. The center includes 197,000 square feet of high-quality, name brand stores. Simon owns a 23% interest in this center.

During the quarter, construction restarted on Paris-Giverny Designer Outlet, a new 222,000 square foot upscale outlet center located in Normandie, France, projected to open in the first quarter of 2023. Simon owns 74% of this project.

Construction continues on redevelopments including Burlington Mall (Boston, MA) and Tacoma Mall (Tacoma, WA). These redevelopments, scheduled to be completed in 2021, will significantly benefit the communities in which they operate.

Progress continues on transformative mixed-use redevelopments of Northgate Station (Seattle, WA) and Phipps Plaza (Atlanta, GA). The dynamic redevelopment at Phipps Plaza is headlined by a Nobu Hotel and Nobu Restaurant, Citizens food hall, Life Time Athletic and Life Time Work and One Phipps Plaza, a LEED certified, 13-story Class A office building designed for the workplace of the future. These additions are scheduled to open in 2022. The transformation of Northgate Station will feature the National Hockey League's Seattle Kraken corporate offices and the Kraken Community Iceplex. This first phase of the Northgate Station transformation is scheduled to be completed in the fall of 2021.

Capital Markets and Balance Sheet Liquidity

The Company was active in both the unsecured and secured credit markets through the first six months of the year.

During the first six months, the Company closed on 13 non-recourse mortgage loans totaling approximately $2.2 billion (U.S. dollar equivalent), of which Simon's share is $1.3 billion. The weighted average interest rate on these loans is 2.90%.

As of June 30, 2021, Simon had more than $8.8 billion of liquidity consisting of $1.9 billion of cash on hand, including its share of joint venture cash, and $6.9 billion of available capacity under its revolving credit facilities, net of $500 million outstanding under its U.S. commercial paper program.

Dividends

The Company paid its second quarter 2021 common stock dividend of $1.40 per share, in cash, on July 23, 2021, a 7.7% increase sequentially and year-over-year.

Simon's Board of Directors declared a quarterly common stock cash dividend of $1.50 for the third quarter of 2021. This is a 15.4% increase year-over-year and a 7.1% increase compared to the second quarter 2021 dividend. The dividend will be payable on September 30, 2021 to shareholders of record on September 9, 2021.

Simon's Board of Directors declared the quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred Stock (NYSE: SPGPrJ) of $1.046875 per share, payable on September 30, 2021 to shareholders of record on September 16, 2021.

2021 Guidance

The Company currently estimates net income to be within a range of $5.47 to $5.57 per diluted share and FFO will be within a range of $10.70 to $10.80 per diluted share for the year ending December 31, 2021. The net income per diluted share and FFO per diluted share ranges include the $0.32 per diluted share non-cash gain related to the deferred tax liability reversal. The FFO per diluted share range is an increase from the $9.70 to $9.80 per diluted share range provided on May 10, 2021, or an increase of $1.00 per diluted share at the mid-point.

The following table provides the GAAP to non-GAAP reconciliation for the expected range of estimated net income attributable to common stockholders per diluted share to estimated FFO per diluted share:

For the year ending December 31, 2021

Low High

End End

Estimated net income attributable to common stockholders $5.47 $5.57 per diluted share

Depreciation and amortization including Simon's share

of unconsolidated entities 5.47 5.47

Unrealized losses in fair value of equity instruments 0.01 0.01

Gain on acquisition of controlling interest, sale or

disposal of, or recovery on, assets and interests in (0.25) (0.25)

unconsolidated entities and impairment, net

Estimated FFO per diluted share $10.70 $10.80

Conference Call

Simon will hold a conference call to discuss the quarterly financial results today at 5:00 p.m. Eastern Daylight Time, Monday, August 2, 2021. A live webcast of the conference call will be accessible in listen-only mode at investors.simon.com. An audio replay of the conference call will be available until August 9, 2021. To access the audio replay, dial 1-855-859-2056 (international 404-537-3406) passcode 7455849.

Supplemental Materials and Website

Supplemental information on our second quarter 2021 performance is available at investors.simon.com. This information has also been furnished to the SEC in a current report on Form 8-K.

We routinely post important information online on our investor relations website, investors.simon.com. We use this website, press releases, SEC filings, quarterly conference calls, presentations and webcasts to disclose material, non-public information in accordance with Regulation FD. We encourage members of the investment community to monitor these distribution channels for material disclosures. Any information accessed through our website is not incorporated by reference into, and is not a part of, this document.

Non-GAAP Financial Measures

This press release includes FFO, FFO per share and portfolio Net Operating Income growth which are financial performance measures not defined by generally accepted accounting principles in the United States ("GAAP"). Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release and in Simon's supplemental information for the quarter. FFO and Net Operating Income growth are financial performance measures widely used in the REIT industry. Our definitions of these non-GAAP measures may not be the same as similar measures reported by other REITs.

Forward-Looking Statements

Certain statements made in this press release may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained, and it is possible that the Company's actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to: uncertainties regarding the impact of the COVID-19 pandemic and governmental restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flow and liquidity and our ability to access the capital markets, satisfy our debt service obligations and make distributions to our stockholders; changes in economic and market conditions that may adversely affect the general retail environment; the potential loss of anchor stores or major tenants; the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; the intensely competitive market environment in the retail industry, including e-commerce; an increase in vacant space at our properties; the inability to lease newly developed properties and renew leases and relet space at existing properties on favorable terms; our international activities subjecting us to risks that are different from or greater than those associated with our domestic operations, including changes in foreign exchange rates; risks associated with the acquisition, development, redevelopment, expansion, leasing and management of properties; general risks related to real estate investments, including the illiquidity of real estate investments; the impact of our substantial indebtedness on our future operations, including covenants in the governing agreements that impose restrictions on us that may affect our ability to operate freely; any disruption in the financial markets that may adversely affect our ability to access capital for growth and satisfy our ongoing debt service requirements; any change in our credit rating; changes in market rates of interest; the transition of LIBOR to an alternative reference rate; our continued ability to maintain our status as a REIT; changes in tax laws or regulations that result in adverse tax consequences; risks relating to our joint venture properties, including guarantees of certain joint venture indebtedness; environmental liabilities; natural disasters; the availability of comprehensive insurance coverage; the potential for terrorist activities; security breaches that could compromise our information technology or infrastructure; and the loss of key management personnel. The Company discusses these and other risks and uncertainties under the heading "Risk Factors" in its annual and quarterly periodic reports filed with the SEC. The Company may update that discussion in subsequent other periodic reports, but except as required by law, the Company undertakes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

About Simon

Simon is a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company (Simon Property Group, NYSE: SPG). Our properties across North America, Europe and Asia provide community gathering places for millions of people every day and generate billions in annual sales.

Simon Property Group, Inc.Unaudited Consolidated Statements of Operations(Dollars in thousands, except per share amounts)

For the Three Months For the Six Months

Ended June 30, Ended June 30,

2021 2020 2021 2020

REVENUE:

Lease income $ 1,158,825 $ 1,013,510 $ 2,303,883 $ 2,275,742

Management fees and other revenues 26,061 21,035 51,358 50,201

Other income 69,260 27,496 138,856 89,458

Total revenue 1,254,146 1,062,041 2,494,097 2,415,401

EXPENSES:

Property operating 96,073 70,620 182,692 176,243

Depreciation and amortization 315,732 324,140 631,470 652,402

Real estate taxes 114,695 117,221 230,706 234,764

Repairs and maintenance 19,036 14,080 40,391 38,511

Advertising and promotion 19,565 12,689 49,050 46,216

Home and regional office costs 47,699 36,090 83,698 90,460

General and administrative 7,254 7,296 13,830 14,190

Other 29,369 29,037 52,926 56,878

Total operating expenses 649,423 611,173 1,284,763 1,309,664

OPERATING INCOME BEFORE OTHER ITEMS 604,723 450,868 1,209,334 1,105,737

Interest expense (200,419) (197,061) (402,435) (384,688)

Loss on extinguishment of debt - - (2,959) -

Income and other tax (expense) benefit (47,003) 62 (41,105) 5,845

Income from unconsolidated entities 348,545 44,322 363,614 94,787

Unrealized gains (losses) in fair value of equity 23 202 (3,177) (18,846)instruments

Gain (loss) on acquisition of controlling interest,sale or disposal of, or recovery on,

assets and interests in unconsolidated entities - (7,845) 93,057 (6,883)and impairment, net

CONSOLIDATED NET INCOME 705,869 290,548 1,216,329 795,952

Net income attributable to noncontrolling interests 87,778 35,501 151,543 102,465

Preferred dividends 834 834 1,669 1,669

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 617,257 $ 254,213 $ 1,063,117 $ 691,818

BASIC AND DILUTED EARNINGS PER COMMON SHARE:

Net income attributable to common stockholders $ 1.88 $ 0.83 $ 3.24 $ 2.26

Simon Property Group, Inc.Unaudited Consolidated Balance Sheets(Dollars in thousands, except share amounts)

June 30, December 31,

2021 2020

ASSETS:

Investment properties, at cost $ 37,938,181 $ 38,050,196

Less - accumulated depreciation 15,176,790 14,891,937

22,761,391 23,158,259

Cash and cash equivalents 1,290,799 1,011,613

Tenant receivables and accrued revenue, net 952,731 1,236,734

Investment in TRG, at equity 3,415,996 3,451,897

Investment in Kl?pierre, at equity 1,706,661 1,729,690

Investment in other unconsolidated entities, at equity 2,746,162 2,603,571

Right-of-use assets, net 508,371 512,914

Investments held in trust - special purpose acquisition company 345,000 -

Deferred costs and other assets 1,100,745 1,082,168

Total assets $ 34,827,856 $ 34,786,846

LIABILITIES:

Mortgages and unsecured indebtedness $ 26,231,704 $ 26,723,361

Accounts payable, accrued expenses, intangibles, and deferred revenues 1,230,595 1,311,925

Cash distributions and losses in unconsolidated entities, at equity 1,565,366 1,577,393

Dividend payable 527,508 486,922

Lease liabilities 511,211 515,492

Other liabilities 546,619 513,515

Total liabilities 30,613,003 31,128,608

Commitments and contingencies

Limited partners' preferred interest in the Operating Partnership andnoncontrolling

redeemable interests 507,414 185,892

EQUITY:

Stockholders' Equity

Capital stock (850,000,000 total shares authorized, $0.0001 par value,238,000,000

shares of excess common stock, 100,000,000 authorized shares of preferredstock):

Series J 8 3/8% cumulative redeemable preferred stock, 1,000,000 sharesauthorized,

796,948 issued and outstanding with a liquidation value of $39,847 41,927 42,091

Common stock, $0.0001 par value, 511,990,000 shares authorized, 342,907,608 and

342,849,037 issued and outstanding, respectively 34 34

Class B common stock, $0.0001 par value, 10,000 shares authorized, 8,000

issued and outstanding - -

Capital in excess of par value 11,193,774 11,179,688

Accumulated deficit (5,931,119) (6,102,314)

Accumulated other comprehensive loss (188,307) (188,675)

Common stock held in treasury, at cost, 14,296,445 and 14,355,621 shares, (1,884,511) (1,891,352)respectively

Total stockholders' equity 3,231,798 3,039,472

Noncontrolling interests 475,641 432,874

Total equity 3,707,439 3,472,346

Total liabilities and equity $ 34,827,856 $ 34,786,846

Simon Property Group, Inc.

Unaudited Joint Venture Combined Statements of Operations

(Dollars in thousands)

For the Three Months Ended June 30, For the Six Months Ended June 30,

2021 2020 2021 2020

REVENUE:

Lease income $ 681,349 $ 574,246 $ 1,334,103 $ 1,318,096

Other income 64,694 46,205 137,293 120,718

Total revenue 746,043 620,451 1,471,396 1,438,814

OPERATING EXPENSES:

Property operating 136,129 107,309 269,166 254,339

Depreciation and amortization 170,443 165,511 341,597 336,989

Real estate taxes 68,123 60,634 137,021 129,023

Repairs and maintenance 16,304 13,589 35,350 33,204

Advertising and promotion 14,797 10,016 34,241 32,768

Other 37,657 15,734 69,643 65,964

Total operating expenses 443,453 372,793 887,018 852,287

OPERATING INCOME BEFORE OTHER ITEMS 302,590 247,658 584,378 586,527

Interest expense (152,447) (152,409) (298,644) (309,050)

Gain on sale or disposal of, or recovery on, assets andinterests in 33,371 - 33,371 -

unconsolidated entities, net

NET INCOME $ 183,514 $ 95,249 $ 319,105 $ 277,477

Third-Party Investors' Share of Net Income $ 92,745 $ 53,989 $ 160,886 $ 146,848

Our Share of Net Income 90,769 41,260 158,219 130,629

Amortization of Excess Investment (A) (15,268) (20,761) (34,595) (41,601)

Our Share of Gain on Sale or Disposal of Assets and Interests in

Other Income in the Consolidated Financial Statements (14,941) - (14,941) -

Income from Unconsolidated Entities (B) $ 60,560 $ 20,499 $ 108,683 $ 89,028

Note: The above financial presentation does not include any information relatedto our investments in Kl?pierre S.A.

("Kl?pierre") and The Taubman Realty Group ("TRG"). For additionalinformation, see footnote B.

Simon Property Group, Inc.

Unaudited Joint Venture Combined Balance Sheets

(Dollars in thousands)

June 30, December 31,

2021 2020

Assets:

Investment properties, at cost $ 19,885,109 $ 20,079,476

Less - accumulated depreciation 8,157,942 8,003,863

11,727,167 12,075,613

Cash and cash equivalents 1,356,266 1,169,422

Tenant receivables and accrued revenue, net 571,652 749,231

Right-of-use assets, net 168,752 185,598

Deferred costs and other assets 387,285 380,087

Total assets $ 14,211,122 $ 14,559,951

Liabilities and Partners' Deficit:

Mortgages $ 15,430,065 $ 15,569,485

Accounts payable, accrued expenses, intangibles, and deferred revenue 840,432 969,242

Lease liabilities 172,281 188,863

Other liabilities 395,463 426,321

Total liabilities 16,838,241 17,153,911

Preferred units 67,450 67,450

Partners' deficit (2,694,569) (2,661,410)

Total liabilities and partners' deficit $ 14,211,122 $ 14,559,951

Our Share of:

Partners' deficit $ (1,150,296) $ (1,130,713)

Add: Excess Investment (A) 1,317,383 1,399,757

Our net Investment in unconsolidated entities, at equity $ 167,087 $ 269,044

Note: The above financial presentation does not include any information relatedto our investments in Kl?pierre

and TRG. For additional information, see footnote B.

Simon Property Group, Inc.

Unaudited Reconciliation of Non-GAAP Financial Measures (C)

(Amounts in thousands, except per share amounts)

Reconciliation of Consolidated Net Income to FFO

For the Three Months Ended For the Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Consolidated Net Income (D) $ 705,869 $ 290,548 $ 1,216,329 $ 795,952

Adjustments to Arrive at FFO:

Depreciation and amortization from consolidated

properties 313,572 321,707 627,147 647,745

Our share of depreciation and amortization from

unconsolidated entities, including Kl?pierre, TRG and other corporate 202,515 129,309 406,752 266,017 investments

(Gain) loss on acquisition of controlling interest, sale or disposal of, or recovery on,

assets and interests in unconsolidated entities and impairment, net - 7,845 (93,057) 6,883

Unrealized (gains) losses in fair value of equity instruments (23) (202) 3,177 18,846

Net loss attributable to noncontrolling interest holders in

properties 1,531 3,628 2,469 3,799

Noncontrolling interests portion of depreciation and amortization and gain on (5,259) (5,048) (9,348) (9,511) consolidation of properties

Preferred distributions and dividends (1,313) (1,313) (2,626) (2,626)

FFO of the Operating Partnership $ 1,216,892 $ 746,474 $ 2,150,843 $ 1,727,105

Diluted net income per share to diluted FFO per share reconciliation:

Diluted net income per share $ 1.88 $ 0.83 $ 3.24 $ 2.26

Depreciation and amortization from consolidated properties

and our share of depreciation and amortization from unconsolidated

entities, including Kl?pierre, TRG and other corporate investments, net of noncontrolling

interests portion of depreciation and amortization 1.36 1.27 2.72 2.57

(Gain) loss on acquisition of controlling interest, sale or disposal of, or recovery on,

assets and interests in unconsolidated entities and impairment, net - 0.02 (0.25) 0.02

Unrealized (gains) losses in fair value of equity instruments - - 0.01 0.05

Diluted FFO per share $ 3.24 $ 2.12 $ 5.72 $ 4.90

Details for per share calculations:

FFO of the Operating Partnership $ 1,216,892 $ 746,474 $ 2,150,843 $ 1,727,105

Diluted FFO allocable to unitholders (153,089) (98,537) (270,684) (228,166)

Diluted FFO allocable to common stockholders $ 1,063,803 $ 647,937 $ 1,880,159 $ 1,498,939

Basic and Diluted weighted average shares outstanding 328,594 305,882 328,555 306,193

Weighted average limited partnership units outstanding 47,281 46,528 47,301 46,608

Basic and Diluted weighted average shares and units outstanding 375,875 352,410 375,856 352,801

Basic and Diluted FFO per Share $ 3.24 $ 2.12 $ 5.72 $ 4.90

Percent Change 52.8% 16.7%

Simon Property Group, Inc.

Footnotes to Unaudited Financial Information

Notes:

Excess investment represents the unamortized difference of our(A) investment over equity in the underlying net assets of the related partnerships and joint ventures shown therein. The Company generally amortizes excess investment over the life of the related assets.

The Unaudited Joint Venture Combined Statements of Operations do not include any operations or our share of net income or excess investment amortization related to our investments in Kl?pierre and TRG. Amounts(B) included in Footnote D below exclude our share of related activity for our investments in Kl?pierre and TRG. For further information on Kl? pierre, reference should be made to financial information in Kl? pierre's public filings and additional discussion and analysis in our Form 10-K.

This report contains measures of financial or operating performance that are not specifically defined by GAAP, including FFO and FFO per share. FFO is a performance measure that is standard in the REIT business. We believe FFO provides investors with additional(C) information concerning our operating performance and a basis to compare our performance with those of other REITs. We also use these measures internally to monitor the operating performance of our portfolio. Our computation of these non-GAAP measures may not be the same as similar measures reported by other REITs.

We determine FFO based upon the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT") Funds From Operations White Paper - 2018 Restatement. Our main business includes acquiring, owning, operating, developing, and redeveloping real estate in conjunction with the rental of real estate. Gains and losses of assets incidental to our main business are included in FFO. We determine FFO to be our share of consolidated net income computed in accordance with GAAP, excluding real estate related depreciation and amortization, excluding gains and losses from extraordinary items, excluding gains and losses from the sale, disposal or property insurance recoveries of, or any impairment related to, depreciable retail operating properties, plus the allocable portion of FFO of unconsolidated joint ventures based upon economic ownership interest, and all determined on a consistent basis in accordance with GAAP. However, you should understand that FFO does not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income determined in accordance with GAAP as a measure of operating performance, and is not an alternative to cash flows as a measure of liquidity.

(D) Includes our share of:

Gains on land sales of $0.9 million and $1.1 million for the three- months ended June 30, 2021 and 2020, respectively, and $1.6 million and $6.3 million for the six months ended June 30, 2021 and 2020, respectively.

Straight-line adjustments (decreased) increased income by ($5.9)- million and ($2.6) million for the three months ended June 30, 2021 and 2020, respectively, and ($15.0) million and $9.4 million for the six months ended June 30, 2021 and 2020, respectively.

Amortization of fair market value of leases from acquisitions (decreased) increased income by ($0.2) million and $1.1 million for the- three months ended June 30, 2021 and 2020, respectively, and ($0.4) million and $2.4 million for the six months ended June 30, 2021 and 2020, respectively.

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SOURCE Simon