Dive Brief:
-
Simon Property Group burnished its full-year forecast, saying Tuesday it expects 2016 earnings between $6.01 to $6.11 per share, up from previous guidance between $5.95 and $6.05. The property management firm said it now expects funds from operations to reach between $10.72 and $10.82 per share, compared to previous guidance of $10.70 to $10.80.
-
Funds from operations, an important measure to investors and other observers, rose to $2.63 per share from $2.28 per share a year ago as Simon Property Group has boosted occupancy rates and per-foot rates.
-
In a Tuesday conference call with analysts, Simon Property Group Chairman and CEO David Simon also pushed back against the widely-held notion that American malls are dying, saying “Our business is as solid as it’s ever been... Our earnings grew 15.4% per year."
Dive Insight:
Even as the media was reporting on the latest Green Street Advisors analysis suggesting that department stores will have to close hundreds of additional locations in order to recapture previous levels of productivity—something that could decimate malls—Simon Property Group was preparing a healthy first-quarter report and outlook suggesting that reports of the American mall's demise have been greatly exaggerated.
While fielding questions during Tuesday’s conference call, Simon seemed exasperated with the suggestion that the American mall is doomed. “If it were up to the media, malls would have already been extinct,” he said. “Demand is fine. Properties are getting better. We've got supply and demand in our favor.”
Simon did point to some headwinds, including the strong dollar and what he called a “flat-line” U.S. economy—conditions that make Simon Property Group’s results all that much more impressive, he implied.
Simon also dismissed the threat posed by e-commerce, saying “The Internet is not the panacea.”
Simon is the U.S.'s largest real estate investment trust. The company owns or controls an interest in more than 325 properties at home and abroad.
