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Simon Property Group Inc SPG
Q2 2013 Earnings Call Transcript

Transcript Call Date 07/29/2013

Operator: Good day, ladies and gentlemen, and welcome to the Second Quarter Simon Property Group Earnings Conference Call. My name is Allison, and I'll be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. As a reminder, this call is being recorded for replay purposes.

I would now like to turn the call over to Ms. Liz Zale, Senior Vice President of Corporate Affairs. Please proceed, ma'am.

Liz Zale - SVP, Corporate Affairs, Communications, and IR: Thank you. Good morning, everyone, and welcome to Simon Property Group's second quarter 2013 earnings conference call. I'm Liz Zale, Senior Vice President of Corporate Affairs. Joining me on today's call is David Simon, our Chairman and Chief Executive Officer; Rick Sokolov, our President and Chief Operating Officer; and Steve Sterrett, our Chief Financial Officer.

Before we begin, I'd like to remind everyone that statements made during this call may be deemed forward-looking statements within the meaning of the Safe Harbor of the Private Securities Litigation Reform Act of 1995 and actual results may differ materially due to a variety of risks, uncertainties, and other factors. We refer investors to today's earnings press release and our SEC filings for a detailed discussion of forward-looking statements.

Please note that this call does include information that may be accurate only as of today's date, July 29, 2013. And reconciliations of our non-GAAP financial measures to the most directly comparable GAAP measures are included within the earnings release or the Company's supplemental information, including in this morning's Form 8-K filing. The supplemental document is available on Simon.com in the Investors section.

With that, I would like to now introduce David Simon.

David Simon - Chairman and CEO: Good morning. It was another productive quarter. FFO was $2.11 per share, up 11.6% from the second quarter of '12. Our FFO exceeded the First Call consensus by $0.04. For malls and outlets, comparable property NOI growth was 5.9% driven by occupancy up 90 basis points to 95.1%, a growth in a re-leasing spread to $7.49 per square foot or 14.1%. Base minimum rent per square foot 3.6% higher than a year ago period and our tenant sales were up 4.2% to $577 per square foot.

Now, let me turn to just some deal activity, on May 30 we acquired a 390,000 square foot outlet center in Portland, Oregon for $147 million. This is a very productive center with sales in excess of $600 per square foot. It's 99% leased. It's a great tenant lineup. It fits terrific with our outlet portfolio and it's been rebranded Woodburn Premium Outlets. As you would expect, it's immediately accretive to FFO.

On June 3rd, we announced our JV with McArthurGlen to invest in certain of their designer outlets and become a partner in the property management and development companies. They have a terrific and one of the best performing portfolios of high quality retail real estate in Europe and a good, strong team of professionals. The transaction supports and extends our international Premium Outlet strategy. We completed the initial phase of this transaction and are now 50-50 partners in the management and development companies.

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