Newspaper article THE JOURNAL RECORD

DeBartolo Group Earnings Rise on Higher Rates

Newspaper article THE JOURNAL RECORD

DeBartolo Group Earnings Rise on Higher Rates

Article excerpt

INDIANAPOLIS (Bloomberg) -- Simon DeBartolo Group second quarter earnings rose 86 percent, as the company benefited from the August purchase of rival DeBartolo Realty and higher rental and occupancy rates.

The largest U.S. mall and shopping-center developer, which operates as a real estate investment trust, posted funds from operations rose to $57.4 million, or 59 cents a share, up from $30.9 million, or 53 cents, a year earlier. Per-share results reflect an increase in the number of shares outstanding to 97.6 million from 58.6 million.

Wall Street was expecting earnings of 60 cents a share, according to a survey of three analysts by Nelson Publications.

The Indianapolis-based company's revenue rose 70 percent to $245.1 million from $143.8 million.

The results suggest that business conditions are starting to turn in the favor of developers as a strong economy prompts retailers to add space. This comes after years of sluggish retail sales and falling occupancy rates.

"All the mall developers are reporting very strong leasing trends," said John Roberts, an analyst at Louisville-based securities firm J.J.B. Hilliard.

"We are beginning to see the benefits from the aggressive redevelopment and leasing of the former DeBartolo portfolio," Chief Executive David Simon said in a statement.

Funds from operations is a measure of cash flow, considered the best measure of a REIT's performance because it's used to calculate dividends. It's defined as net income plus amortization and depreciation, and before extraordinary items.

A REIT is exempt from corporate income taxes if, among other requirements, it distributes at least 95 percent of its net income to shareholders as a dividend.

Net income for the quarter rose to $31.4 million, or 26 cents share, from $15.4 million, or 23 cents. The per-share results reflect the increased number of shares and payment of preferred dividends. …

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