Key Highlights

● The company reports third-quarter results Thursday after the close, with a call that evening.

● Its last report showed rising base rents and tenant sales per square foot.

● Occupancy stayed near 96% and full-year guidance was raised in the prior report.

● The quarterly Dividend was lifted by roughly 5% in the last reported quarter.

Simon Property Group (NYSE:SPG), the largest owner of enclosed malls and premium outlet centers in the United States, is scheduled to report third-quarter results on Thursday after the market closes. The company will run a listen-only conference call and webcast that evening, and a replay will remain available for about a week afterward on its website.

The release lands against a specific backdrop. When the company reported the previous quarter in August, it posted higher funds from operations, rising rents per square foot, stable occupancy near the top of its historical range and a second increase to its full-year guidance. That earlier document is the most recent full set of reported figures, so it sets the baseline against which the new report will be read.

No third-quarter figures have been published yet, so none are included here.

When does Simon report and how can the results be followed?

The company announced in early October that it would release its third-quarter results for the period ended in September after the close of trading on Thursday. A conference call and webcast follow in the early evening, running about an hour, with a listen-only audio feed available through the company section of its website and by telephone.

A replay is scheduled to be available from late Thursday night until the following week, and the call is archived on the website for roughly 90 days. The company typically files its Earnings release with the U.S. securities regulator on a current report the same day, which makes the primary document available to anyone who wants the full tables. The supplemental package that accompanies the release usually adds property-level detail, Debt schedules and development tables that do not fit in the press release itself.

Because the release comes after the close, any market reaction will show up in trading on Friday rather than Thursday. Readers who track the stock should keep in mind that price moves around results often reflect expectations that are not published in the filing, so the numbers alone rarely tell the whole story.

What did the last report show on funds from operations?

In the second-quarter report issued in August, the company recorded real estate funds from operations of just over $3.29 per diluted share, up by close to 8% from the year-earlier figure. Total real estate funds from operations were about $1.25 billion for the quarter.

The broader funds from operations figure, which includes certain gains and losses, was slightly lower per share than a year earlier at about $3.12. The reason is that the prior-year quarter included a sizable non-cash gain, which made the comparison harder and is why the company highlights the real estate measure that excludes such items.

Net earnings attributable to common stock were about $1.49 per diluted share, down from about $1.70 a year earlier for the same reason. For the first half, real estate funds from operations rose by about 7.5% per share, so the quarter was consistent with the trend in the opening months. The first quarter had included a one-time charge for accelerated stock compensation, which is a reminder that single quarters can carry items unrelated to leasing.

How are rents and tenant sales moving?

Base minimum rent per square foot in the U.S. malls and premium outlets rose by more than 6% to a little over $62 at the end of June. That is the average contractual rent on the space and it reflects the rent that new and renewing tenants pay, as well as scheduled increases in existing leases.

Reported retailer sales per square foot over the Trailing 12 Months rose by nearly 14% to about $838. Sales productivity matters to landlords because it indicates how much room tenants have to absorb higher rent, and because the company's leases often contain clauses that link some payments to sales.

Domestic property net operating earnings, the rent and recoveries left after property-level costs, rose by about 8.5% in the quarter. Portfolio-wide growth was similar. The chief executive attributed the result to broad-based Demand for space, rising traffic, strong retailer sales and contributions from acquisitions completed over the past year.

How full are the properties?

Occupancy in the U.S. malls and premium outlets stood at about 96% at the end of June, unchanged from a year earlier. For a portfolio of this size, keeping that level steady while pushing rents higher is the combination the company has been trying to demonstrate, since occupancy gains are hard to find when the base is already so high.

The portfolio described in the release includes more than 250 properties covering roughly 206 million square feet across North America, Asia and Europe. The majority of earnings come from the American malls and outlets, while international Assets and a stake in a European mall owner add Diversification of geography and some currency exposure. Management has often described the mix of enclosed malls, premium outlets and international assets as a way to spread exposure across shopping formats and geographies.

The company also owns a stake of about one-fifth in the European mall operator Klepierre, which it lists separately. That stake is not part of the same-store property statistics, but it appears in the company's broader earnings and can affect reported results when markets or exchange rates move.

What happened to full-year guidance?

The company raised its range for full-year real estate funds from operations per diluted share to between $13.20 and $13.30, up from a prior range that started at $13.10 and ended at $13.25. The midpoint therefore rose by $0.08.

The release also gave a range for net earnings per diluted share, although the upper end of that range as published appears to be inconsistent with the lower end and the earlier range. The real estate measure is the one the company and most readers focus on.

A third raise would extend a pattern, but guidance is a management estimate rather than a promise, and the company states the assumptions behind it. Thursday's report will show whether the first nine months have tracked those assumptions, and whether the range is moved again for the final quarter. The release also states that the company met every financial covenant in its senior notes, which is a separate matter from the guidance but one that rating agencies track closely.

What is the dividend situation?

The board declared a third-quarter common dividend of $2.25 per share, higher by $0.10, or roughly 4.7%, than the amount a year earlier. It was payable at the end of September to owners of record in early September.

Dividends declared in the first half of the year totaled $4.45 per share, compared with $4.20 in the same period of the prior year. A preferred series also paid its regular quarterly amount, which appears in the same table and is unrelated to the common payout. Preferred stock has its own fixed terms, so its payment does not move when the common dividend changes.

The company usually announces its dividend alongside quarterly results, so Thursday's release will also carry the declaration for the final quarter if the board follows its normal timetable. Whether the amount changes is a board decision that will be disclosed only when it is made.

How active has the company been in retiring its own shares?

During the second quarter the company retired nearly 800,000 common shares and a little under 240,000 limited Partnership units, at an average price of roughly $205 each, for a combined sum of about $211 million. These figures come from the company's disclosure of its Capital activity.

Such activity is one of several ways a real estate trust can deploy cash, alongside development, acquisitions and dividends. The company has traditionally balanced these uses against its Leverage and liquidity, and the quarterly tables show how much it used in each period.

Readers comparing quarters should note that retirement activity varies with market conditions and that the company does not commit in advance to a fixed pace, and the amount retired in a quarter can differ greatly from the one before it. The third-quarter tables will show whether the program continued, slowed or paused during the period. The company also states its share and unit counts, so the effect of any retirement on per-share results can be seen directly in the tables.

How strong is the Balance Sheet for Simon Property Group?

At the end of June, consolidated mortgages and unsecured debt were about $28.7 billion, carrying a weighted average Interest Rate a little under 4% and an average Maturity of nearly seven years. Unsecured debt was a bit over $20 billion of that total.

Liquidity was stated at roughly nine and one-third billion dollars, made up of cash including the company's share of joint venture cash and available capacity on its revolving Credit facility, net of commercial paper. During the quarter it closed several secured loans, issued euro-denominated senior notes with a coupon in the mid-three-percent range and arranged a term Loan to repay a draw on the revolver.

Credit ratings were in the single-A range from the two agencies named in the filing, with a stable view from one and a positive view from the other. Covenant tests in the senior notes were met with room to spare, including a debt-to-assets ratio of about 37% against a limit of 65%.

Where does the company fit among real estate stocks?

Simon is the largest retail real estate trust in the country and a long-standing constituent of the S&P 500, where it sits alongside data center, tower and healthcare landlords. Readers following Infrastructure and Real Estate Stocks will notice that its fortunes are tied to consumer spending, traffic and the health of department stores and specialty retailers in a way that other real estate categories are not.

The company is often discussed alongside other mall owners, though few operate at its scale. Its premium outlet centers, where brand-name tenants offer goods directly to shoppers, form a second leg of the Business that tends to behave differently from enclosed regional malls, particularly during periods of tourism or promotional intensity.

The company has also been active in acquisitions over the past year, which its chief executive cited as a contributor to growth. Because acquired properties add to earnings without being part of the same-property comparison, the gap between total growth and same-property growth is a useful number for readers to track in the new report. Management usually discusses that split on the call.

Retail real estate has been through a long period of store closures and bankruptcies, and the company's results in recent quarters show that the best-located centers have fared much better than the average. That divergence is a central feature of the sector, and it explains why a landlord can post rising rents while headlines still mention store closings elsewhere. It also means that portfolio averages hide wide differences from one property to another.

What will matter in Thursday's report?

Several measures will be read first. Occupancy tells readers whether the company has kept space full, base minimum rent per square foot shows pricing power, and retailer sales per square foot indicate tenant health. Domestic property net operating earnings growth shows how much of the leasing strength is reaching the bottom of the statement.

The second group of items is financial. The tables will show funds from operations on both definitions, the change in guidance, the dividend declaration and the state of liquidity. Any acquisitions, joint ventures or financing completed since June will be described in the text and in the supplemental package filed with the release.

The call is also where management usually discusses leasing activity, holiday-season preparation, tenant bankruptcies and redevelopment projects. The company said in August that it expected to spend a modest net sum on development and redevelopment this year, with a larger cumulative amount across two years, and updates to those plans may appear on the call. Redevelopment typically involves adding residential, hotel, office or entertainment space around existing malls, a strategy intended to draw more visits and to put land to additional use.

What are the uncertainties?

Consumer spending is the first. Retail sales per square foot can move quickly when families change habits, and a company with a large tenant base is exposed to the strength of that spending as well as to the finances of individual retailers. The August report showed strong sales, but those are trailing figures.

Interest rates and Capital Markets are the second. The company refinances debt regularly, and the interest rate on new borrowing relative to the average on maturing loans affects interest expense. Currency movements add another variable for its European and Asian assets, which are reported in dollars.

The third is the reliability of comparisons. Gains, losses and acquisitions can distort year-over-year figures, as the August report itself showed, so the real estate measure and same-property statistics are the cleaner guides. None of this signals what the report will show; it only outlines what the numbers are likely to be read against. The release itself, not commentary around it, remains the authoritative source for every figure.