Simon Property Group (SPG) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

August 2, 2023 4:30 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Simon Property Group's Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce to your host, Mr. Tom Ward, Senior Vice President of Investor Relations. Thank you. Mr. Ward, you may begin.

Tom Ward

Thank you, Camilla, and thank you for joining us today. Presenting on today's call is David Simon, Chairman, Chief Executive Officer and President. Also on the call are Brian McDade, Chief Financial Officer; and Adam Reuille, Chief Accounting Officer.

A quick reminder that statements made during this call may be deemed forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995 and actual results may differ materially due to variety of risks, uncertainties, and other factors. We refer you to today's press release and our SEC filings for a detailed discussion of the risk factors relating to those forward-looking statements. Please note that this call includes information that may be accurate only as of today's date.

Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included within the press release and the supplemental information in today's Form 8-K filing. Both the press release and the supplemental information are available on our IR website at investors.simon.com.

Our conference call today will be limited to one hour. For those who would like to participate in the question-and-answer session, we ask that you please respect our request to limit yourself to one question.

I'm pleased to introduce, David Simon.

David Simon

Good afternoon. I'm pleased to report our second quarter results. Second quarter funds from operation were $1.08 billion or $2.88 per share. I'll walk through some variances for this quarter compared to Q2 of 2022. Domestic and international operations had a very good quarter and contributed $0.08 of growth, primarily driven by higher rental income. Higher interest income, and other income of $0.04. Higher interest expense cost us $0.08 in the quarter-over-quarter comparison, a $0.05 lower contribution from our other platform investments and publicly held securities compared to Q2 2022.

FFO from our real estate business was $2.81 per share in the second quarter compared to $2.78 per share in the prior year period and year-to-date that comparison is $5.65 per share in 2023 compared to $5.58 in 2022. Our real estate business is performing ahead of our plan and overcoming the headwinds from higher interest expense and we are also pleased with our OPI results in the quarter and continue to expect the business to meet our original 2023 guidance we provided at the beginning of the year.