Simon Property Group, Inc. SPG, a retail real estate investment trust (“REIT”), reported first-quarter 2014 comparable funds from operations (“FFO”) of $2.28 per share, which beat the Zacks Consensus Estimate of $2.23. The bottom line comfortably beat the prior-year quarter figure of $2.14 per share.

The year-over-year improvement was primarily driven by growth in comparable net operating income (“NOI”) as well as occupancy rates.

Total revenue in the quarter increased 5.1% year over year to $1.22 billion. However, it came almost in line with the Zacks Consensus Estimate.

Quarter in Detail

For the U.S. Malls and Premium Outlets portfolio, occupancy rose 30 basis points (bps) year over year to 95.8% at the end of the first quarter. Total sales per square foot moved 7.8% up to $621. Encouragingly, base minimum rent per square feet rose 11.3% year over year to $47.59, while releasing spread decreased 60 bps to 18.9%.

During the quarter, Simon Property completed a 265,000-square feet expansion at Yeoju Premium Outlets, in Seoul, Korea. Construction is also underway at other significant expansion projects including Roosevelt Field, Del Amo Fashion Center, King of Prussia, The Galleria in Houston, Woodbury Common Premium Outlets, Las Vegas North Premium Outlets, San Francisco Premium Outlets and Chicago Premium Outlets.

At the end of the first quarter, Simon Property had redevelopment and expansion projects in progress at 24 assets across the U.S. and Asia.

Moreover, construction activities are going on at three premium outlets and one designer outlet, all of which are scheduled to open this year

In Jan 2015, Simon Property acquired two properties, Jersey Gardens in Elizabeth, NJ and University Park Village in Fort Worth, TX for an aggregate price of $1.09 billion.

Simon Property exited first-quarter 2015 with cash and cash equivalents of $833.7 million, compared with $612.3 million at the end of fourth-quarter 2014.

2015 Outlook

Simon Property raised both the lower and upper ends of 2015 FFO per share by 5 cents to $9.65–$9.75. The Zacks Consensus Estimate for the same is currently pegged at $9.75.

Dividend Update

Concurrent with its earnings release, Simon Property declared a quarterly dividend of $1.50 per share. Marking a 7.1% sequential and 15.4% year-over-year increase, the latest dividend will be paid on May 29, 2015 to shareholders of record as of May 15.

Our Viewpoint

Strong financial and operational performances are expected to drive the company’s growth, going forward. With the U.S. economy showing signs of recovery, spending power of richer consumers is improving and the company seems keen on leveraging this trend.

Simon Property currently carries a Zacks Rank #3 (Hold).

Presently, we look forward to the results of other REITs such as General Growth Properties, Inc GGP, Avalonbay Communities Inc. AVB and Plum Creek Timber Co. Inc. PCL which are scheduled to report next week.

Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.