Higher rents boost Simon margins for 3Q 2008

By Norm Heikens, The IBJ

nheikens@ibj.com

Simon Property Group today reported a 10.8-percent increase in third-quarter funds from operations.

Funds rose to $463.9 million, or $1.61 per share - 4 cents per share more than expected by analysts surveyed by Thomson Financial.

Mall occupancy dipped slightly. However, the company pushed up rents at a time when retailers are suffering and expecting a dour holiday shopping season.

Rent at its regional malls increased by an average of 6.3 percent to $39.26 per square foot. At premium outlet centers, rent increased 6.6 percent to $27.12 per square foot.

At properties open at least a year, Simon said rent increased 0.4 percent at its regional malls and 4.2 percent at its premium outlet centers.

Funds from operations is a common measurement of real estate investment trusts like Simon. The figure excludes depreciation and amortization.

Simon shares closed Friday at $67.03, up from a recent low of $51.81 reached a week earlier. The stock hit a high of $118.22 in February last year.