Simon Property Group Just Raised FFO Guidance, Could Raise It Again This Year

Simon Property Group Inc SPG reported its 2Q revenue and FFO ahead of expectations, and raised its full-year FFO guidance. “We would not be surprised to see guidance raised again this year,” Argus’s Jacob Kilstein said in a report. He maintained a Buy rating on the company, while raising the price target from $235 to $245.

Simon Property reported its quarterly FFO per diluted share at $2.63, beating the consensus expectation of $2.62. Minimum rental revenue came in at $822 million, up 7 percent, while total revenue was down 3 percent to $1.32 billion.

Projections Raised

The company raised its 2016 FFO per share guidance from $10.72-$10.82 to $10.77-$10.85, reflecting 10 percent annual FFO growth at the midpoint. “Management tends to provide conservative guidance and to raise its forecasts as the year progresses,” analyst Kilstein noted. He raised the FFO per share and revenue estimates for 2016 from $10.82 to $10.85 and from $5.55 billion to $5.57 billion, respectively.

Simon Property had continued to acquire and develop properties in 2Q. The company acquired The Shops at Crystals in Las Vegas for $1.1 billion and also began development work on six outlet malls that are scheduled to open in 2017. The company has strong credit, which allows it to finance acquisitions and development work at a relatively low cost, Kilstein mentioned.

“We expect the company’s $2.1 billion development pipeline, along with new joint venture investments, to drive FFO growth going forward,” the analyst wrote.

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