Simon Property Group Inc. (NYSE:SPG) Q4 2014 Earnings Conference Call - Final Transcript

Jan 30, 2015 • 11:00 am ET


Simon Property Group Inc. (NYSE:SPG) Q4 2014 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the Q4 2014 Simon Property Group Earnings Conference Call. My name is Towanda, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) And as a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Tom Ward, VP of Investor Relations. Please proceed sir.

Tom Ward

Thank you Towanda. Good morning, and welcome to Simon Property Group's fourth quarter and full year 2014 earnings conference call. Presenting on today's call is David Simon, Chairman and Chief Executive Officer. Also on the call are Rick Sokolov, President and Chief Operating Officer; Andy Juster, Chief Financial Officer; and Steve Broadwater, Chief Accounting Officer. (Forward-Looking Cautionary Statement)

For our prepared remarks, I'm pleased to introduce David Simon.

David Simon

Good morning, we had strong results to wrap up in exceptional 2014. We open Premium Outlets Montreal, started construction on two new Premium Outlets in strong and growing markets of Tampa and Tucson. We announced our first new full-price development project in the last several years with The Shops at Clearfork in Ft. Worth, Texas, anchored by Neiman Marcus and most importantly we continue to produce strong operating and financial performance.

Results in the quarter, were highlighted by FFO of $2.47 per share. On a comparable basis, excluding the operating results from WPG properties in the prior year period, our FFO per diluted share increased 12.3% for the quarter or $0.27 year-over-year. As a reminder, our FFO per diluted share is calculated strictly in accordance with the NAREIT white paper. We encourage the industry

David Simon

to acknowledge the importance of using this long standing measure without modification. Our fourth quarter FFO per diluted share was impacted by approximately $0.04 from our share of Klepierre's costs related to both their bond tender offer and their tender offer for Corio, as well as unfavorable effects of foreign currency devaluations.

For the year, on a comparable basis excluding the operating results from the WPG properties, the spin-off transactions and the debt extinguishment charge FFO per diluted share increased 13.9% after taking into account this spin-off and debt charge, we beat our initial guidance of 2014 that we provided to you by an impressive $0.40. We continue to record strong key operating metrics and cash flow. Occupancy increased across the portfolio and our malls and premium outlets combined occupancy ended at the year at record 97.1%. Leasing activity is healthy. The malls and premium outlets recorded releasing spreads of $9.59 per square foot, an increase of 16.6%.

Comp NOI increased 4% in the fourth quarter of 2014, compared to an increase of 6.1% in the fourth quarter of 2013 and an increase in total of 5.1%. So we had an increase of 4%, over an increase of 6.1% last year. And as a reminder, approximately 95% of our domestic property NOI is included in our comp NOI calc.