Simon's Q2 Hurt by $141M Impairment Charge

CEO David Simon told investors this morning during an earnings call that the company was not happy with the charge. When asked about the possibility of purchasing the rest of Liberty, Simon declined to comment on the potential sale but did tell investors Simon could purchase other real estate investment trusts in the future to create value. Whether Liberty is in the running remained unclear as Simon says he is reluctant to talk about potential value of Liberty.

Beyond the impairment charge, Simon faired well during Q2. "Our operating fundamentals remained sound, which resulted in a solid second quarter in the face of a difficult retail environment," Simon says. "Our 2009 capital activity, including the issuance of 40.25 million shares of common stock and $1.25 billion of unsecured notes, strengthened one of the industry's leading balance sheets and resulted in a current liquidity position of approximately $6 billion, including $2.9 billion of cash. The cash raised through these transactions demonstrated the company's ability to access capital and positions SPG for future growth."

Simon told investors today that its Board of Directors approved a quarterly stock dividend of $0.60 per share, which would be a combination of stock and cash. The cash portion will not be more than $0.12 per share and is payable on September 18, 2009.

Overall Simon's core assets are 91% occupied, a number that according to executives does not include the retailers whose leases will end within the next year. Simon says the company now has 19 empty big-box anchor facilities, 12 of which are in lease negotiations now.

Throughout the portfolio, H&M, Zara and Forever21 are each opening a number of new stores in the year ahead. Simon says the company is looking more and more at the teen retailers to fill space.

The REIT was also proud to announce that of the two first retail stores Microsoft plans to open soon, one of them will be located in a Simon property.

Lease renewals through the first half of 2010 are moving forward quickly, although Simon executives say they are holding off on leases set to expire in the second half of 2010 as it is too difficult to predict the retail market a year out at this point in time. "The holiday season is going to be important for the psyche of the retail community for 2010," Simon says. He went on to tell investors that while some property types have begun to experience a slight uptake, retail is lagging in that area. "We haven't seen that pick up."