ICSC: International Council of Shopping Centers

REIT-owned malls had a profitable second quarter

Publish Date: August 07, 2013

Category: SCT Newswire Articles
Topics: cbl & associates, general growth, macerich, mall, reit, simon

U.S. mall REITs boosted profitability at their properties during the second quarter thanks to increased occupancy and higher leasing spreads. “This is the highest second quarter ending occupancy we’ve ever had,” said Taubman Centers chairman, president and CEO Robert S. Taubman on the firm’s earnings call, noting that occupancy in the firm’s portfolio grew to 90.7 percent in the second quarter, a 60 basis-point increase from a year ago. Leasing spreads were a strong 22 percent, he said, contributing to Taubman’s same-store NOI growth of 3.9 percent for the quarter.

Meanwhile Macerich said same-center NOI grew 4.6 percent for the second quarter. “This strong increase was driven by increased occupancy, positive re-leasing spreads in 2012 that are now rolling through 2013 revenues, and CPI increases on leases,” CFO Thomas O’Hern told investors. “This is the strongest increase we’ve seen since before the recession.” Macerich increased its expectations for full-year 2013 same-store NOI growth to the 3.75-4.25 percent range, up from the previously expected 2.75-3.25 percent range.

Similarly, General Growth Properties raised its expectation for full-year 2013 same-store NOI growth to the 5-6 percent range, up from 4.4 percent a quarter ago. The Chicago–based REIT said same-center NOI grew by 6.8 percent during the quarter.

For its part CBL & Associates Properties posted a 1.8 percent increase in same-center NOI in the second quarter, thanks in part to the landlord’s strategy to bring in more new, higher end tenants, CEO Stephen Lebovitz told investors on the firm’s earnings call. New leases signed during the quarter at the company’s malls were about 12.1 percent higher than the firm’s prior average gross rent per square foot, he added.

And Simon Property Group, the largest U.S. owner of malls, boosted its full-year FFO outlook for 2013 after seeing same-store NOI growth of 5.9 percent during the second quarter. The firm said its average leasing spread was up 14.1 percent, with base minimum rent per square foot up 3.6 percent from a year ago. The Indianapolis–based firm now expects to generate 2013 FFO per share in the $8.60-$8.70 range, up from $8.50-$8.60.

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