Simon Property forecasts higher annual profit as rent collection improves

FILE PHOTO: Shoppers ascend and descend escalators at the King of Prussia Mall, owned by Simon Property Group, United State’s largest retail shopping space, in King of Prussia, Pennsylvania, U.S., December 8, 2018. Picture taken December 8, 2018. REUTERS/Mark Makela

(Reuters) – Simon Property Group Inc forecast a rise in its 2021 profit on Monday as the U.S. mall operator benefits from improving rent collection and a recovery in the retail industry, pushing its shares up 2% in extended trading.

Sales of some brick-and-mortar retailers have risen from the pandemic troughs plumbed last year thanks to the launch of online shopping options and government stimulus checks to support household income.

That has helped retailers meet their rental obligations, with Simon saying it had collected 90% of combined the second, third and fourth-quarter net billed rents as of Feb. 5. It had garnered only 85% of third-quarter net billed rents as of Nov. 6.

Simon forecast 2021 earnings per share of $4.60 to $4.85, compared with $3.59 per share in 2020.

However, the company wrote-off, abated or deferred about $850 million, or nearly 18%, of its contractual rents due from the second through fourth quarters of 2020 as some tenants held back on payments.

“We still, even to this day, have a handful of large tenants unfortunately, that have yet to resolve their receivables,” Chief Executive Officer David Simon said on a call with analysts.

“Are we completely out of the woods? Not yet, but we’re well on our way.”

Lease income slumped nearly 24% to $1.03 billion in the fourth quarter ended Dec. 31, missing analysts’ estimates of $1.08 billion, according to Refinitiv IBES data.

Funds from operation of $2.17 per share also missed estimates of $2.22.

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