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Indianapolis-based mall owner Simon Property Group beat analysts' expectations Thursday, reporting a 16.8 percent increase in funds from operations, a key industry measure, for the second quarter.
Funds from operations, a measure of cash flow used by real estate investment trusts, rose to $1.18 a share from $1.01 a share a year ago. That's 6 cents higher than analysts expected.
Net income more than doubled to $173.2 million, or 70 cents a share. Revenue climbed 28 percent to $756.3 million.
The company recorded a gain of $119.7 million from the sale of five office buildings in Chicago. It also generated more revenue throught its rents.
"The mall landlords have more pricing power today because of the strong performance from the retailers," said Lisa Kaufman, managing director at LaSalle Investment Management in Baltimore, where she helps manage about $5 billion in assets, including about 3 million shares of Simon Property.
The company upgraded its outlook for 2005, saying it expects funds from operations this year of $4.80 to $4.85 a share. That's higher than April forecast of $4.75 to $4.82.
Calling the results robust, Chief Executive Officer David Simon noted that during the quarter the company announced several international expansion projects.
Earlier this week, it said that it would be a partner in the development of Wal-Mart- anchored malls in China.
Simon also has a partnership with Seoul-based Shinsegae Co. Ltd. and Shinsegae International Co. Ltd. to jointly develop Premium Outlet centers in South Korea.
It also has opened a regional office in Hong Kong to oversee the mall giant's growth in Asia.
Simon Property shares closed Thursday at $79.56, up 87 cents.