Simon 2019 Annual Report
FROM THE CHAIRMAN, CEO & PRESIDENT
As I was drafting my letter to you, tragically a novel coronavirus (Covid-19) was traveling rapidly from China throughout the world, resulting in the World Health Organization (WHO) declaring a pandemic, the President of the United States declaring a national emergency, and Europe moving to a virtual lockdown. With this happening, and events changing hour by hour, my initial letter certainly felt out of context. Predictions of how this pandemic will affect the world vary widely and I am certainly not in a position to know precisely how it will affect your company, Simon Property Group (“SPG,” “Simon,” or the “Company”), however, I do know we will endure and gain strength. I assure you that your Simon management team will be focused, prudent, level-headed and compassionate. Safety is our number one priority and we will listen to the feedback from the experts and our government as we learn more. DEAR FELLOW SHAREHOLDERS,
• We have paid more than $32 billion in dividends over our history as a public company. • Our dividend is well covered, and our payout ratio is less than 70%. BALANCE SHEET • Prudent balance sheet management is a fundamental strength of our Company and is central to our ability to execute our long-term strategy. • We have reduced the weighted average interest rate of our debt from 4.39% at the beginning of 2015 to 3.33% at the end of 2019, and increased the duration from 6.1 years to 6.7 years over this same period of time. • Our balance sheet is the strongest in our industry and we have the highest investment grade credit ratings of A/A2 in the REIT sector. • We continued to demonstrate balance sheet leadership in 2019 with the issuance of a three tranche senior notes offering totaling $3.5 billion at a weighted average interest rate of 2.61% and a weighted average term of 15.9 years. • Net debt to NOI was 5.2 times–the lowest in our sector. • Interest coverage ratio was 5.3 times. • Our liquidity was more than $7 billion at year-end. REDEVELOPMENT, INCLUDING RECAPTURE OF DEPARTMENT STORES, AND NEW DEVELOPMENT • We completed more than 25 redevelopment projects across all of our platforms in the U.S. and internationally. • Our total investment in redevelopment projects completed in 2019 was more than $500 million with an average yield of approximately 8%. • Redevelopments and expansions were completed at Burlington Mall in Burlington (Boston), Massachusetts; King of Prussia in King of Prussia (Philadelphia), Pennsylvania; Orland Minnesota; and Woodbury Common Premium Outlets in Central Valley (New York), New York, to name just a few. • We opened 40 anchor/specialty tenants in 2019 and expect to open more than 50 in 2020. • The recapture and redevelopment of former department store sites is a Square in Orland Park (Chicago), Illinois; Southdale Center in Edina (Minneapolis),
• Comparable property NOI increased 1.4% for our North American Malls, Premium Outlets® and The Mills®. • Generated over $1.3 billion in excess cash flow, after dividends. OPERATING METRICS We again delivered strong operational results: • Occupancy for our U.S. Malls and Premium Outlets® ended the year at 95.1% and The Mills® occupancy ended the year at 97.0%. • Our U.S. Malls and Premium Outlets® occupancy has been over 95% for the last eight years. • Reported retailer sales for U.S. Malls and Premium Outlets® were $693 per square foot (record), an increase of 5% year-over-year. • Retailer sales productivity has increased each quarter for the last three years. This productivity further reinforces the importance of high-quality brick-and- mortar locations to a retailer’s strategy. RETURNING CAPITAL TO SHAREHOLDERS • Capital returned to shareholders in 2019 totaled over $3.3 billion, comprised of more than $2.9 billion in dividends and $360 million in share buybacks. • Common stock dividends paid in 2019 were $8.30 per share, an increase of 5.1% from 2018.
I want to thank you in advance for your support and patience as we navigate this national emergency. My colleagues and I are hard at work and are extremely confident that SPG will bounce back stronger than ever. I also want to thank our Board of Directors for their counsel and, without a doubt, all my colleagues across SPG for their tireless efforts.
HIGHLIGHTS FROM 2019
FINANCIAL RESULTS We continued our track record of posting record and sector-leading financial results in 2019, including: • Consolidated revenues increased 2% to $5.755 billion (record). • Net income was $2.098 billion, or $6.81 per diluted share. • Comparable Funds From Operations (“FFO”) was $4.389 billion, or $12.37 per diluted share, an increase of 4.4% year- over-year (record). • Achieved a compound annual FFO per share growth rate of 7% over the last five years. • Total portfolio net operating income (“NOI”), including international comparable properties on a constant currency basis, grew 1.7%, or approximately $110 million year-over- year, to $6.473 billion (record).
2019 ANNUAL REPORT
i
Made with FlippingBook HTML5