SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) : August 12, 1998
(August 11, 1998)
SIMON DeBARTOLO GROUP, INC.
(Exact name of registrant as specified in its charter)
Maryland 1-12618 35-1901999
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
115 WEST WASHINGTON STREET
INDIANAPOLIS, INDIANA 46204
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: 317.636.1600
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events
On August 11, 1998 the Registrant made available additional, in the
form of a press release, results through June 30, 1998 and certain other
information regarding current developments, a copy of which is
included as an exhibit to this filing.
Item 7. Financial Statements and Exhibits
Financial Statements:
None
Exhibits:
Exhibit No. Description
99 Press Release Dated August 11, 1998
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: August 12, 1998
SIMON DeBARTOLO GROUP, INC.
By: \s\ Stephen E. Sterrett
-------------------------
Stephen E. Sterrett,
Treasurer
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Simon DeBartolo Group Exhibit 99
CONTACTS:
Shelly Doran 317.685.7330 Investors
Billie Scott 317.263.7148 Media
FOR IMMEDIATE RELEASE
SIMON DeBARTOLO GROUP ANNOUNCES SECOND QUARTER RESULTS
13% Increase in Year-To-Date FFO Per Share
Indianapolis, Indiana - August 11, 1998...Simon DeBartolo Group, Inc.
(NYSE:SPG) today announced results for the quarter and six months ended June
30, 1998. The Company's share of diluted funds from operations ("FFO") for the
quarter increased 28.7% to $73.9 million as compared to $57.4 million in 1997.
The increase on a per share basis was 11.9%, to $0.66 per share in 1998 from
$0.59 per share in 1997. Total revenue for the quarter increased 26.6% to
$310.4 million as compared to $245.1 million in 1997.
The Company's share of diluted funds from operations for the six months
increased 28.4% to $143.0 million as compared to $111.4 million in 1997. The
increase on a per share basis was 13.2%, to $1.29 per share in 1998 from $1.14
per share in 1997. Total revenue for the six months increased 25.3% to $610.6
million as compared to $487.5 million in 1997.
Occupancy for mall and freestanding stores in the regional malls at June 30,
1998 increased 1.8% to 87.0%, as compared to 85.2% at June 30, 1997. Total
retail sales generated in the regional mall portfolio for the first six months
of 1998 increased 44.7% to $4.2 billion as compared to the prior year. Total
retail sales per square foot in the regional mall portfolio increased 8.5%, to
$318, over the same period in 1997 while comparable retail sales per square
foot increased 8.6%, to $328. Average base rents for mall and freestanding
stores in the regional mall portfolio were $23.10 per square foot at June 30,
1998, an increase of $2.16, or 10.3%, from $20.94 at June 30, 1997. The
average initial base rent for new leases signed in 1998 was $24.97, an increase
of $5.45, or 27.9% over the tenants who closed or whose leases expired.
"We're pleased to report another solid quarter of financial performance and
growth," said David Simon, Chief Executive Officer of SPG. "Our results
reflect the solid fundamentals in place in our business, with strong growth in
occupancy, base rents and retail sales. Our portfolio has been strengthened by
the acquisition of market dominant assets, the development of exciting new
retail projects and the aggressive redevelopment of existing properties."
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The CPI Merger
In February, SPG and Corporate Property Investors (CPI) announced their
agreement to merge. The merger is subject to shareholder approval and is
expected to be completed in September. In contemplation of the merger, on July
31, 1998, CPI, with the Company's assistance, completed the sale of its General
Motors office building in New York, New York to a joint venture comprised of
affiliates of Donald Trump and Conseco, Inc. for net proceeds of approximately
$800 million.
Development Activities
During the second quarter of 1998, the Company opened the first phase of
Lakeline Plaza in Austin, Texas. This 239,000 square foot power center is
anchored by Linens `N Things, TJMaxx, Old Navy, OfficeMax, and Party City.
Phase II of the project is scheduled to open in 1999. Lakeline Plaza
complements the Company's adjacent Lakeline Mall, which opened in October 1995.
Construction continues on The Shops at Sunset Place, a 510,000 square foot
specialty center located in South Miami, Florida. Scheduled to open in
December, this $150 million project will feature such tenants as AMC 24
Theatre, NIKETOWN, Virgin Megastore, Z Gallerie, Barnes & Noble, IMAX Theatre,
GameWorks and FAO Schwarz. The Shops at Sunset Place is over 93% leased and
committed.
Three additional new SPG projects are under construction or in the final stages
of predevelopment:
* Concord Mills, a 1.4 million square foot, value-oriented super regional mall
in Concord (Charlotte), North Carolina, is SPG's fourth project with The
Mills Corporation. Featured tenants include Books-A-Million, Bed Bath &
Beyond, TJMaxx, Off Rodeo Drive Beverly Hills, Bass Pro Outdoor World, AMC
Theatres, and Host Marriott Services. Concord Mills is under construction
and will open in the fall of 1999.
* Houston Premium Outlets in Houston, Texas, is the Company's first joint
venture with Chelsea GCA to develop premium manufacturers' outlet shopping
centers. This 462,000 square foot center will begin construction in August
with a projected completion of September 1999. Anchor tenants committed to
date include Last Call Neiman Marcus Clearance Center and Off 5th-Saks Fifth
Avenue Outlet.
* The Shops at North East Plaza is a 320,000 square foot power center in
Hurst, Texas, that will begin construction in the fall of 1998 for a fall
1999 opening. This center will be located adjacent to North East Mall, an
SPG property that is undergoing a major redevelopment to be completed in the
year 2000.
The Company continues its active asset redevelopment program, with activities
ranging from adding department stores, theatres and specialty retail space to
renovations updating the mall's physical facilities. Three major expansions
scheduled to open in late 1998 include:
* Castleton Square in Indianapolis, Indiana - addition of Galyan's, small
shops, food court, and Von Maur department store with L.S. Ayres expansion
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* Prien Lake Mall in Lake Charles, Louisiana - addition of Dillard's, Sears,
small shops and food court
* Richmond Town Square in Cleveland, Ohio - addition of Kaufmann's department
store (Barnes & Noble, Sony Theatre and food court to open in September
1999)
Disposition Activities
In June, two regional malls which did not meet the Company's long-term
operating strategy, The Promenade in Woodland Hills, California and Southtown
Mall in Ft. Wayne, Indiana, were sold.
European Investment
On June 4, 1998, SPG, Harvard Private Capital Group, and Argo II (an investment
fund established by J.P. Morgan and The O'Connor Group) announced their
commitment to acquire an initial 44 percent ownership position in Groupe BEG,
S.A., a fully integrated retail real estate developer, lessor and manager
headquartered in Paris, France. This combination provides an avenue for SPG to
explore future growth opportunities in the European marketplace through
development, ownership and management of retail properties in key markets,
while relying on BEG's specialized market knowledge and existing business
relationships (including a long-standing relationship with Carrefour, a
leading European hypermarket retailer). In addition, SPG's entry into Europe
enhances the Company's opportunities to provide international locations for
U.S.-based retailers.
Financing Activities
In June, the Company completed the private placement of $1.075 billion of
senior unsecured debt securities. The securities were issued at an average
interest rate of 6.8% with an average maturity of 9.3 years. The issue
included three tranches of senior unsecured notes totaling $875 million and
$200 million of 7.000% Mandatory Par Put Remarketed Securities ("MOPPRS"). Net
proceeds from the offering were used to repay existing indebtedness on the
Company's credit facilities.
Simon Brand Ventures
During the second quarter, Simon Brand Ventures (SBV), the strategic marketing
division of SPG, formed an alliance with DMX Inc. to launch DMX MallNet. More
than 100 SPG mall locations are scheduled to be in service soon, offering
retail tenants an array of programmable music platforms as well as other
communication services. The network is also capable of serving as a platform
for consumer brand marketers to deliver custom communications to SPG shoppers
in the mall environment.
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On July 20, SBV announced its alliance with Visa U.S.A. and the National
Football League (NFL) to promote Visa's new mall retail promotion - "Kickoff
98." The promotion includes a consumer promotion/gift-with-purchase and
interactive NFL events, as well as a national consumer sweepstakes. The
league's renowned NFL Experience will also visit SPG malls in 10 NFL markets
this season.
EITF Statement 98-9
Financial results reported reflect the Company's prospective adoption,
effective May 22, 1998, of the Emerging Issues Task Force Statement 98-9
regarding the recognition of certain percentage rents. The adoption of
Statement 98-9 did not have a material impact on reported results.
Company Name Change
On July 27, the Company announced the intent to change its corporate name to
Simon Property Group, Inc., effective upon completion of the CPI merger. The
new name will align with the Company's strategic direction of leveraging a
national branding initiative to drive shopper loyalty and provide value-added
services to its portfolio.
SPG, headquartered in Indianapolis, Indiana, is a self-administered and self-
managed real estate investment trust which, through its subsidiary
partnerships, is engaged primarily in the ownership, development, management,
leasing, acquisition and expansion of income-producing properties, primarily
regional malls and community shopping centers. It currently owns or has an
interest in 216 properties containing an aggregate of 139 million square feet
of gross leasable area in 34 states. Together with its affiliated management
company, SPG owns or manages approximately 154 million square feet of gross
leasable area in retail and mixed-use properties. Additional SPG information
is available on the Company's website at www.simon.com.
SPG is the largest publicly traded retail real estate company in North America
as measured by market capitalization and currently has approximately 178
million shares and partnership units outstanding.
Supplemental Materials
A copy of SPG's June 30, 1998, Form 10-Q and supplemental information package
will be made available upon written request to: Shelly J. Doran - Director of
Investor Relations, Simon DeBartolo Group, P.O. Box 7033 Indianapolis, IN
46207.
Note: Statements in this press release which are not historical may be deemed
forward-looking statements within the meaning of the federal securities laws.
Although the Company believes the expectations reflected in any forward-looking
statements are based on reasonable assumptions, it can give no assurance that
its expectations will be attained. The reader is directed to the Company's
various filings with the Securities and Exchange Commission, including
quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form
10-K for a discussion of such risks and uncertainties.
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SIMON DeBARTOLO GROUP, INC.
Financial Highlights
Unaudited
(In thousands, except as noted)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
1998 1997 1998 1997
-------- -------- -------- --------
Minimum Rent $186,474 $149,354 $370,934 $297,373
Overage Rent 10,701 10,049 20,483 17,564
Tenant Reimbursements 91,811 74,208 181,971 150,031
Other Income 21,389 11,444 37,244 22,501
-------- -------- -------- --------
Total Revenue 310,375 245,055 610,632 487,469
Operating Expenses 106,836 86,471 215,121 173,825
Depreciation and Amortization 58,313 44,129 116,618 87,483
-------- -------- -------- --------
Operating Income before Interest
Expense 145,226 114,455 278,893 226,161
Interest Expense 92,510 67,076 184,420 134,994
-------- -------- -------- --------
Income before Minority Interest 52,716 47,379 94,473 91,167
Minority Interest (2,154) (741) (3,596) (2,225)
Gain (Loss) on Sales of Assets (7,219) (17) (7,219) 20
-------- -------- -------- --------
Income before Unconsolidated Entities 43,343 46,621 83,658 88,962
Income from Unconsolidated Entities 171 1,792 4,980 2,513
-------- -------- -------- --------
Income of the Operating Partnership
before Extraordinary Items 43,514 48,413 88,638 91,475
Extraordinary Items (A) 7,024 (1,467) 7,024 (24,714)
-------- -------- -------- --------
Income of the Operating Partnership 50,538 46,946 95,662 66,761
Less: Limited Partners' Interest in
Operating Partnership (15,737) (15,588) (29,579) (20,764)
-------- -------- -------- --------
Net Income 34,801 31,358 66,083 45,997
Preferred Dividends (7,334) (6,407) (14,668) (12,813)
Net Income Available to Common -------- -------- -------- --------
Shareholders $27,467 $24,951 $51,415 $33,184
======== ======== ======== ========
Basic Income per Common Share:
Before Extraordinary Items $0.21 $0.27 $0.42 $0.50
Extraordinary Items 0.04 (0.01) 0.04 (0.16)
Net Income Available to Common -------- -------- -------- --------
Shareholders $0.25 $0.26 $0.46 $0.34
======== ======== ======== ========
Diluted Income per Common Share:
Before Extraordinary Items $0.21 $0.27 $0.42 $0.50
Extraordinary Items 0.04 (0.01) 0.04 (0.16)
Net Income Available to Common -------- -------- -------- --------
Shareholders $0.25 $0.26 $0.46 $0.34
======== ======== ======== ========
(A) 1998 amount relates to mortgage loan restructuring for one of the
portfolio properties. 1997 amount represents costs related to the termination
of lender's participation in future cash flow for four of the portfolio
properties ($21,000) and net charges incurred with prepayment of debt ($3,714).
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SIMON DeBARTOLO GROUP, INC.
Financial Highlights - Continued
Unaudited
(In thousands, except as noted)
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS ("FFO")
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Income of the Operating Partnership
before Extraordinary Items $43,514 $48,413 $88,638 $91,475
Plus: Depreciation and Amortization
from Consolidated Properties 58,082 43,774 116,161 87,086
Less: Minority Interest Portion of
Depreciation and Amortization (1,828) (1,664) (3,594) (2,514)
Plus: Simon's Share of
Depreciation, Amortization and
Extraordinary Items from
Unconsolidated Affiliates 16,304 9,152 31,108 18,010
Plus: (Gain) Loss on Sales of Assets 7,219 17 7,219 (20)
Less: Preferred Dividends (7,334) (6,407) (14,668) (12,813)
Funds from Operations (FFO) of the -------- ------- -------- --------
Operating Partnership $115,957 $93,285 $224,864 $181,224
=============================================================================
FFO of the Operating Partnership $115,957 $93,285 $224,864 $181,224
Basic FFO per Share:
Basic FFO Allocable to the Company 73,719 57,416 142,734 111,408
Basic Weighted Average Common Shares
and Partnership Units Outstanding 176,099 158,494 174,600 158,222
Basic Weighted Average Common Shares
Outstanding 111,955 97,520 110,826 97,248
Basic FFO per Common Share of the
Company $0.66 $0.59 $1.29 $1.15
Diluted FFO per Share:
Diluted FFO Allocable to the Company 73,857 57,362 142,961 111,438
Diluted Weighted Average Common Shares
and Partnership Units Outstanding 176,441 158,338 174,989 158,597
Diluted Weighted Average Common Shares
Outstanding 112,382 97,364 111,215 97,623
Diluted FFO per Common Share of the
Company $0.66 $0.59 $1.29 $1.14
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SIMON DeBARTOLO GROUP, INC.
Financial Highlights - Continued
Unaudited
(In thousands, except as noted)
SELECTED BALANCE SHEET INFORMATION
June 30, December 31,
1998 1997
Cash and Cash Equivalents $103,365 $109,699
Investment Properties, Net $6,505,117 $6,405,562
Mortgages and Other Indebtedness $5,228,015 $5,077,990
SELECTED REGIONAL MALL OPERATING STATISTICS
June 30,
1998 1997
Occupancy(B) 87.0% 85.2%
Average Rent per Square Foot(B) $23.10 $20.94
Total Sales Volume (millions)(C) $4,200 $2,902
Total Sales per Square Foot(C) $318 $293
Comparable Sales per Square Foot(C) $328 $302
(B) Includes mall and freestanding stores.
(C) Based on the standard definition of sales for regional malls adopted by
the International Council of Shopping Centers, which includes only mall
and freestanding stores.
