Simon Drops 3.2% Despite Q4 Earnings Beat

Shares of Simon Property Group (NYSE: SPG), an American real estate investment trust, fell 3.2% in Monday’s extended trading session, even though it reported better-than-expected earnings for the fourth quarter ended December 31, 2021.

Q4 Performance

Net income per share of $1.53 grew 77.9% year-over-year and exceeded analysts’ expectations of $1.44 per share. Funds from operations (FFO) came in at $3.09 per share compared to $2.17 in the last year’s quarter.

Revenues stood at $1.3 billion, up 17.2% from the same quarter last year, and remained in line with analysts’ estimates. The growth can be attributed to an 18.6% rise in lease income and a 10.9% higher management fees and other revenues.

Notably, net operating income from domestic and international properties increased 22.4% and 33.6%, respectively, from the year-ago period.

2021 Performance

The company has reported a net income per share of $6.84 in 2021, up from $3.59 in 2020. Further, it reported an FFO of $11.94 per share against $9.11 per share a year ago. 

Simon reported that U.S. Malls and Premium Outlets occupancy was 93.4% as of December 31, 2021, up from 91.3% as of December 31, 2020. Also, the base minimum rent per square foot was $53.91 at 2021-end.

The Chairman, CEO and President at Simon, David Simon, said, “We executed over 15 million square feet of leases, completed five significant domestic redevelopments, opened two new international shopping destinations, and substantially increased the profitability generated from our other platform investments during the year. Our Company is focused on unlocking value through unique and disciplined investment activities that will continue to deliver long-term growth in cash flow, FFO and dividends per share.”

Outlook

For 2022, the company anticipates net income per share in the range of $5.90 to $6.10. The company projects FFO to be between $11.50 and $11.70 per share. 

Stock Rating

Following the results, BMO Capital analyst Juan C. Sanabria reiterated a Hold rating on Simon with a price target of $180 (upside potential of 20.9% from current levels).

Sanabria noted, “We see potential upside as COVID-era and temp leases roll to market. Retail investments continue to perform well with new investments planned for ’22, but disclosure remains anemic. The return of international tourism remains a catalyst.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus based on 7 Buys and 4 Holds. The average Simon price target of $176.36 implies 18.4% upside potential from current levels.

Blogger Opinion

TipRanks data shows that financial blogger opinions are 95% Bullish on SPG, compared to the sector average of 73%.

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