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INDIANAPOLIS-Simon Property Group Inc. achieved increases in FFO and net income, driving the REIT to raise its earnings guidance for the year to diluted FFO of $5.25 to $5.33 per share.

The news pleased Wall Street analysts. For example, Bank of America analyst Russ Nussbaum wrote in a research brief: “Simon remains our top pick in the mall sector. The stock trades essentially in line with its mall peers on forward annual FFO and in line with forward net asset value. A premium valuation is justified, in our view, however, given the growth profile, high-quality portfolio, above-average geographic and asset diversification, strong balance sheet, clear earnings visibility and large development pipeline.”

During the first quarter, the REIT posted a 12.3% increase in FFO, bringing the total to $358.9 million from $319.6 million in the first quarter of 2005. On a diluted per share basis, the increase was 12.5% to $1.26 from $1.12 in 2005.

Net income available to common stockholders increased 82.1% to $104 million from $57.1 million in the first quarter of 2005. On a diluted per share basis, the increase was 80.8% to 47 cents from 26 cents in 2005.

At the end of the first quarter, mall occupancy had increased to 91.6% from 91.5%, while its Premium Outlet Centers posted an occupancy increase of 30 basis points to 99.3% and community/lifestyle centers occupancy decreased 130 basis points to 90.3%.

Similarly, sales per sf increased across the board. Regional mall sales per sf increased 5.5% to $461, while sales per sf at outlet centers increased 5% to $444 and community/lifestyle centers increased slightly to $216 per sf. Average rents increased from 2.7% to 3.9%.

Simon continues construction on six new centers across the US totaling more than 3.5 million sf. Leasing activity at the centers is proceeding at a level that is inline with or above Simon’s expectations, according to Rick Sokolav, president and COO. Moreover, the REIT has an additional nine centers in pre-development that will commence construction in the next 24 months, he said during its earnings conference call.

The REIT is moving ahead on several renovations and expansions at SouthPark in Charlotte, NC; Smith Haven Mall in Lake Grove (Long Island), NY; Lenox Square in Atlanta; Edison Mall in Fort Myers, FL; and Northgate Mall in Seattle.

During the quarter, Simon finished the addition of a Barneys New York flagship store at Copley Place in Boston and a phase II expansion of Seattle Premium Outlets in Tulalip, WA.

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