Coronavirus Challenges Simon Property In Q1

The Simon Property Group, a real estate investment trust that owns and operates shopping, dining, entertainment and mixed-use destinations, reported results for the quarter ended March 31 that reflected effects from the COVID-19 pandemic.

Net income in the quarter was $437.6 million, or $1.43 per diluted share, as compared to $548.5 million, or $1.78 per diluted share, in the year-before quarter.

Results for the first quarter of 2019 included a combined $83.6 million, or 24 cents per diluted share, of proceeds from an insurance settlement and a gain on the sale of interest in a multi-family residential property. The current year period includes a $19 million, or five cents per diluted share, unrealized loss in fair value of equity instruments compared to a gain of $5.3 million, or one cent per diluted share, in the 2019 quarter, from the company’s ownership of Washington Prime Group Inc. partnership units as part of the 2014 spin-off.

Simon posted total revenue of $1.35 billion versus $1.45 billion in the quarter a year previous.

Funds from operations came in at $980.6 million, or $2.78 per diluted share, versus $1.08 billion, or $3.04 per diluted share, in the prior-year period. Simon fell short of a Zacks Investment Research analyst consensus FFO estimate of $2.90 per diluted share for the quarter. The first quarter 2019 results also included the 24 cents per diluted share of proceeds from the insurance settlement and sale noted above. The current year period reflects a negative impact of about six cents per diluted share pre-tax from Simon’s investments in retailers primarily due to coronavirus-related store closures.

Operating statistics for the company’s combined U.S. malls and premium outlets portfolio were: occupancy at 94.%; base minimum rent per square foot at $55.76; leasing spread per square foot for the trailing 12 months was $2.80, up 4.6%; and reported retailer sales per square foot at $673 for the trailing 12 months up 2.1%.

The company’s temporary closure of its U.S. retail properties effective March 18 affected reported retailer sales per square foot, Simon maintained. Comparing the trailing 12 months ended February 29, when sales per square foot were $703, an increase of 6.5%, demonstrates the effect, Simon asserted.

“Our thoughts are with everyone affected by COVID-19 and we salute all of the individuals on the front lines fighting the pandemic,” said David Simon, the company’s chairman, president and CEO. “The Simon team is meeting these unprecedented challenges with unwavering commitment to the safety of our employees, shoppers, retailers and the communities we serve. We have successfully navigated challenging times throughout our company’s history, and we will endure and gain strength as we weather this disruption. The resilience of our people, our innovative business approach and our strong balance sheet with ample liquidity will serve us well.”