Yahoo Finance Can SPG Maintain Its Revenue Growth Momentum in 2016?
Simon Property Group Reported Lackluster 4Q15 Earnings
Revenue growth
Simon Property Group’s (SPG) total revenue for 4Q15 stood at $1.38 billion, up by 6.4% over 4Q14. Minimum rent witnessed a year-over-year growth of 7.9% in 4Q15 to $832.4 million. Tenant reimbursement, which is also a major source of income for the company, experienced a gain of 6.9% in 4Q15 to $367.9 million over 4Q14.
Other income for the company grew by 6.6% in 4Q15 to $64.9 million. The rise in other income was due to 29.9% gain in the interest and dividend income in 4Q15 over 4Q14.
Revenue contribution
Minimum rent contributed 60.3% to the total revenue of the company in 4Q15 compared to 59.4% in 4Q14. The tenant reimbursement’s share to total revenue remained almost unchanged at around 26.6%. On the other hand, the share of overage rent to the company’s total revenue declined from 6.5% in 4Q14 to 5.1% in 4Q15.
Revenue drivers
Simon Property Group’s (SPG) healthy revenue growth in 4Q15 was primarily driven by the rise in total sales per square foot and the base minimum rent. The total portfolio sales per square foot increased from $619 in 4Q14 to $620 in 4Q15 while the base minimum rent increased from $47.01 in 4Q14 to $48.96 in 4Q15.
On the other hand, the company’s revenue growth was offset by the decline in occupancy rate. Its occupancy rate declined from 97.1% in 4Q14 to 96.1% in 4Q15. The company is expected to maintain its revenue growth in 1Q16 as well, buoyed by higher base rent and increase in properties.
Other major companies in the retail REIT segments like Macerich (MAC), General Growth Properties (GGP), and CBL & Associates (CBL) are also releasing their 4Q15 earnings this week. The SPDR DJ Wilshire REIT ETF (RWR) invests 10.3% of its portfolio in Simon Property Group.
Continue to the next part of the series for a discussion of Simon Property Group’s (SPG) operating metrics.
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