Simon Property Group: Record figures thanks to booming rental demand!

Simon Property Group: Record figures thanks to booming rental demand!

Simon Property Group (SPG) on Monday reported an increase in operating revenue in the first quarter of 2025. This increase was fueled by high demand for rental space in shopping centers. SPG, a commercial real estate investment trust (REIT), has leases with well-known business companies such as LVMH, the owner of brands such as Louis Vuitton, Christian Dior and Tiffany & Co.

Real estate FFO (funds from operations) was $2.95 per share in the first quarter, compared to $2.91 a year ago. Rental income for the first quarter was $1.37 billion, beating analysts' forecasts of $1.36 billion.

Strong performance in the first quarter

Occupancy at U.S. malls and premium shopping outlets was 95.9% as of March 31, up from 95.5% a year ago. Additionally, the minimum base rent per square foot increased by 2.4% to $58.92. The FFO target for 2025 remains at $12.40 to $12.65 per share.

Additionally, SPG's performance shows that total sales in 2024 were approximately $5.96 billion, an increase of +5.39% compared to $5.66 billion in 2023. FFO of $12.99 per diluted share was reported for 2024, also up from $12.51 in 2023.

Financial stability and future prospects

In 2024, key profitability margins included a gross profit margin of 84.27%, an operating income margin of 51.86% and an EBITDA margin of 73.08%. The occupancy level of SPG's portfolio of U.S. Malls and Premium Outlets was 96.5% as of December 31, 2024, an increase from 95.8% in 2023. Additionally, the minimum base rent per square foot increased to $58.26, an increase of 2.5% from $56.82 in 2023.

SPG reported total assets of $32.41 billion and liabilities of $28.81 billion at year-end 2024. Overall, the debt load was $24.78 billion, with about 91% of the debt being fixed-rate, which protects SPG against rising interest rates. In addition, the company had a liquidity position of approximately $10.1 billion as of December 31, 2024.

A dividend of $2.10 per share was declared for the first quarter of 2025, representing an increase of 7.7% compared to the previous year. The trailing twelve-month dividend per share is $8.25, with a yield of approximately 5.49%. The FFO-based payout ratio is around 62%, indicating that the dividend is well covered by operating cash flow.

SPG also completed 16 significant development projects in 2024 and opened a new premium outlet center in the US. To improve buyers' experiences, the company pursues strategic alliances and technological integrations. The upcoming Q1 2025 financial results will be released on May 12, 2025 and will provide updated performance metrics and guidance.

In summary, SPG's solid financial position and positive market conditions demonstrate that the company is well positioned to meet future challenges and continue to grow in the shopping center space. Further details on these developments can be found in the reports from Reuters and Monexa.