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SPG Group Falls After Hours on Q2 Misses

By Eric Volkman – Aug 10, 2020 at 10:15PM

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A complete closure of the company's U.S. properties significantly drove down revenue and profitability.

Now is not the ideal time to be invested deeply in the retail sector. Yet another piece of evidence supporting that outlook came after hours on Monday, with the top mall operator in the U.S. delivering a set of quarterly results that missed analyst estimates.

For its Q2 of fiscal 2020, retail real estate investment trust (REIT) Simon Property Group (SPG 1.91%) experienced a 24% year-over-year decline in its revenue to $1.06 billion.

An empty shopping mall.

Image source: Getty Images.

Much of this decline was attributable the loss of almost 10,500 shopping days when spread throughout the company's considerable portfolio, as coronavirus-related shutdowns kept Simon's stores closed; from March 18 to April 30, all of the company's U.S. properties were shuttered. Another factor was a round of rent abatements the REIT provided for a number of its tenants.

On the bottom line, the company's net income fell more steeply, declining 49% to just over $254 million ($0.83 per share). Funds from operations -- considered a more revealing profitability metric for REITs -- declined by 30% to $746.5 million, or $2.12 per share.

Analysts, on average, were expecting a per-share net profit of $0.98, on revenue of $1.14 billion.

In disseminating the results, Simon didn't hesitate to point out that it produced "solid" profitability for the quarter, and its cash flow from operations was positive.

The company did not provide any indication of the immediate future of its common stock dividend (REITs must pay out the bulk of their net profits as shareholder distributions). It said it will declare its next quarterly payout on or before Sept. 30. The company's most recently declared dividend was $1.30 per share.

Following the earnings release, Simon's shares dipped by 1.3% in after-hours trading.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Simon Property Group, Inc. Stock Quote
Simon Property Group, Inc.
SPG
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