It was a banner fourth quarter for many U.S. mall owners, who reported both domestic and overseas growth.
International expansion and domestic re-development have long been the growth engines of Simon Property Group, but they’re not the only tactics the company is banking on. Last week, Simon bid on the Mills Corp., which would add 47 million square feet of full-price, outlet and entertainment space to its already massive retail reach. Mills is considering the offer, which Wall Street lauded as the most logical option for the company, despite its agreement to merge with Brookfield Asset Management.
Still, the company is not relying entirely on acquisition — buoyed by a 7.5 percent jump in funds from operations in the fourth quarter and strong sales throughout the portfolio, it is plowing ahead with several international developments slated to open in the next two years. It plans to open four centers in Italy, four centers in China, and one center each in Japan and South Korea, in addition to six new developments in the U.S.
In the fourth quarter, Simon reported a jump in net income of 76.9 percent on an $81 million one-time gain from the disposal of two shopping centers. The company earned $204.7 million, or 92 cents per diluted share, up from $115.7 million, or 52 cents, a year prior. For the 12 months ended Dec. 31, net earnings increased 21 percent, to $486.1 million, or $2.19 per share, up from $401.9 million, or $1.82 per share in 2005.
Taubman Centers is investing $327 million in redevelopments domestically, and preparing for the October 2007 opening of its $155 million Mall at Partridge Creek, in Michigan. In South Korea, the company plans to break ground on the retail component of New Songdo City sometime this year.
There is still no forward movement on the lawsuit-hampered Oyster Bay, N.Y., mall development, but the company had strong enough growth in the fourth quarter to raise its earnings guidance for 2007 to the range of 70 cents to 88 cents per share.
Net income for Taubman in the quarter was down 68.9 percent, to $17.2 million, or 32 cents per diluted share, from $55.4 million, or 93 cents, due to a major sale in the fourth quarter of 2005, which accounted for a one-time gain of $52.8 million. For the year, the company’s net earnings were down 51.5 percent, to $21.4 million, or 40 cents, from $44.1 million, or 87 cents per share.
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