UPDATE 4-Simon raises dividend, sales at properties improve

* Q3 FFO shr $0.90 vs Wall St view $0.90

* Raises outlook

* Raises dividend

* Shares up 2 percent
(Adds CEO comments, updates stock activity)

By Ilaina Jonas

NEW YORK, Nov 1 (BestGrowthStock) – Simon Property Group Inc
(SPG.N: ) said third-quarter results fell on debt-related
charges, but sales by its tenants jumped more than 10 percent,
and the largest owner of U.S. malls raised its outlook and
quarterly dividend.

U.S. malls are recovering from a slump as shoppers slowly
return and retailers cautiously plan new store openings. Simon
was one of several mall owners that said sales at its
properties rose by double-digit percentage rates in the
quarter, joining rivals General Growth Properties Inc (GGP.N: )
and Taubman Centers Inc (TCO.N: ).

Simon said on Monday that funds from operations, a key
measure for real estate investment trusts, fell to $318.5
million, or 90 cents per share, in the quarter. That’s down
from $473.1 million or $1.38 per share, a year earlier.

Excluding charges for the extinguishment of debt, FFO was
$1.43 per share.

FFO removes the profit-reducing effect of depreciation.

The results were in line with the analysts’ average
forecast, according to Thomson Reuters I/B/E/S.

“I think it’s about what people expected,” said Jeung Hyun,
portfolio manager with Adelante Capital Management, which owns
Simon shares. “The numbers are pretty good.”

Simon shares rose 2 percent to $97.98 around midday in New
York Stock Exchange trading, more than double the increase in
the benchmark MSCI U.S. REIT Index (.RMZ: ).

Indianapolis-based Simon raised its quarterly dividend by
20 cents per share, to 80 cents. It may raise the dividend
again at the end of next year, Chief Executive David Simon said
in a conference call with analysts.

Simon owns or has an interest in 393 retail properties
comprising 264 million square feet of leasable space in North
America, Europe and Asia. Its malls include Roosevelt Field on
New York’s Long Island and Sawgrass Mills Circle near Fort
Lauderdale, Florida, and its outlet centers include Woodbury
Commons, north of New York City.

After falling last year, sales at its tenants’ stores began
to pick up in the second quarter of 2010. In the third quarter,
tenant sales rose 10.6 percent from a year earlier.

“However, we’re more focused on growing our own revenues
and I’m pleased to report that our third-quarter consolidated
revenues grew $54 million or 5.9 percent over the prior year,”
David Simon said.

Hyun said a sharp increase in sales would eventually
translate to higher rent the company could charge its tenants.

“Of course, it’s fairly easy comps, but that’s part of the
bottoming process,” Hyun said.

Occupancy also increased, although mall occupancy remains
100 to 150 percentage points below peak levels in 2007. Average
rent was about flat. Although Simon no longer breaks out the
performance of its malls and outlets separately, most of the
company’s growth has come from its outlet centers.

Simon focused all of its development activity on outlet
centers during the quarter. During the quarter it also closed
on a $1.1 billion acquisition of 21 outlet centers from Prime
Outlets Acquisition Co.

Simon this year lost its battle to buy General Growth, the
No. 2 U.S. mall owner that is set to emerge from bankruptcy
next week, losing to a group led by Brookfield Asset Management
Inc (BAMa.TO: ).

At the end of the quarter, Simon sat on $1.3 billion of
cash and had access to an additional $3 billion under its
credit facility.

Since the beginning of the year, and increasingly after the
General Growth deal failed to materialize, Simon has used
nearly $3 billion of cash to repay unsecured and mortgage debt
as well as for acquisitions.

Simon has been focused on expanding in Asia and plans to
open 11 outlet centers there by the end of 2011.

“I’m not discouraged in the U.S. at this moment but it’s
not like it was a year ago,” David Simon said.

The company lifted its forecast for full-year FFO per share
to $5.90 to $5.95, excluding $1 a share from debt-related
charges. Its prior FFO view was $5.77 to $5.87.

The new forecast is roughly in line with Wall Street’s
estimate of $4.93 per share, including the debt charges.
(Reporting by Ilaina Jonas; Editing by Lisa Von Ahn and Gerald
E. McCormick)

UPDATE 4-Simon raises dividend, sales at properties improve