Simon Property Group revised its annual funds from operations (FFO) forecast upwards due to robust leasing demand. Demand for rental spaces in commercial real estate investment trusts (REITs) remained strong, supported by a diverse tenant portfolio. Peers at Federal Realty Trust, Regency Centers, and Kimco reported steady traffic at their shopping centers. Simon Property expects FFO per share between USD 12.75 and USD 12.90. Visits to U.S. indoor malls fell by 5% in March, while open-air shopping centers saw a 1.6% increase. First-quarter FFO was USD 3.56 per share, surpassing estimates. The company's base rent per square foot rose to USD 57.53. Total revenue for the quarter was USD 1.44 billion.
Last week, Simon Property Group raised its annual forecast for funds from operations (FFO), attributing the adjustment to the robust leasing demand it witnessed across its network of malls and shopping centers. The commercial real estate investment trusts (REIT) under Simon's portfolio have sustained significant demand for rental spaces, buoyed by a diverse tenant mix comprising prominent apparel brands, large-scale retailers, dining establishments, and luxury labels. Despite the prevailing inflationary pressures, consumers have demonstrated a penchant for indulging in affordable luxuries, further strengthening the demand for commercial rental spaces.
Simon Property's industry counterparts, including Federal Realty Trust, Regency Centers, and Kimco, also reported stable foot traffic levels at their respective shopping destinations in recent weeks. With an optimistic outlook, Simon Property anticipates its FFO per share to range between USD 12.75 and USD 12.90, marking a substantial increase from the previously forecasted range of USD 11.85 to USD 12.10 per share. According to data compiled by Placer.ai, visits to indoor malls in the United States registered a 5% decline in March compared to the 8.5% drop observed in the corresponding period last year. Contrastingly, in the same month, visits to open-air shopping centers rose by 1.6%, while they declined by 3.9% last year.
In the first quarter of the fiscal year, Simon Property reported an impressive FFO of USD 3.56 per share, surpassing analysts' average estimates of USD 2.81 per share, as per data provided by the London Stock Exchange Group (LSEG). Additionally, the company noted a commendable 3% increase in its base minimum rent per square foot, which stood at USD 57.53 as of March 31, compared to USD 55.84 in the corresponding period last year. In the quarter ending March 31, Simon Property generated revenue amounting to USD 1.44 billion, surpassing analysts' average projections of USD 1.29 billion.
David Simon, the esteemed Chairman, CEO, and President of Simon Property Group, underscored the persistent momentum in leasing activities and cash flow growth. Furthermore, he highlighted the successful divestment of the company's remaining stake in Authentic Brands Group, which yielded total gross proceeds amounting to USD 1.45 billion, inclusive of partial interest sales made during the fourth quarter of 2023.
Simon Property Group Inc. (Simon Property) is a leading real estate investment trust (REIT) specializing in retail properties worldwide. It owns, develops, and manages a diverse portfolio of shopping, entertainment, dining, and mixed-use destinations, including premium outlets, malls, lifestyle centers, and other retail properties in the US, Puerto Rico, Asia, Europe, and Canada. With ownership interests in premium outlets across Japan, South Korea, Canada, Malaysia, Thailand, and Mexico, as well as international designer outlets in Australia, Italy, the Netherlands, the UK, Germany, France, and Spain, Simon Property is a key player in the global retail real estate market.
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