With the U.S. economy expanding at a steady clip in the second half and bond yields affably low despite the looming Fed meeting and the prospect of interest rate hike, REITs – known for their high dividend yields – look to be one of the most promising sectors.
While this rate-sensitive corner of the investing world face a bump when the Fed enacts a lift-off, a healthy economy and busy activities should back the REIT space over the longer term (read:Â Can REIT ETFs Withstand Higher Rates?).
This was more so given the decent earnings profile. On July 24, two REIT companies Simon Property Group Inc. (SPG) and Ventas Inc.’s (VTR) reported impressive earnings before the bell and gave cues for an uptrend in the REIT space (read:REIT ETFs for Income and Diversification).
Inside Simon’s Q2 Earnings
The retail REIT Simon Property’s second-quarter 2015 funds from operations (FFO) of $2.63 per share breezed past the Zacks Consensus Estimate of $2.35 and the prior-year quarter figure of $2.16 per share. Growth in comparable net operating income led the bottom line outperformance.
Total revenue in the quarter increased 14.1% year over year to $1.34 billion. Further, it sailed past the Zacks Consensus Estimate of $1.21 billion. Total sales per square feet moved up 2% despite a 40 bps decline in occupancy rate.
The guidance was also upbeat as Simon Property ticked up both the lower and upper ends of its 2015 FFO per share guidance to $10.02–$10.07 from $9.65 to $9.75 per share. This is the second time; the company has lifted its 2015 FFO per share guidance. Prior to the Q2 earnings release, the Zacks Consensus Estimate for the same was pegged at $9.77 which spells another around of optimism around the stock.
Simultaneously with its earnings release, Simon Property declared a quarterly dividend of $1.55 per share indicating a 3.3% sequential and 19.2% year-over-year increase. The latest dividend will be paid on Aug 31, 2015 to shareholders of record as of Aug 17.
The enthusiastic numbers have spread bullishness not only on this REIT giant but also in the broad space. SPG shares added about 1.8% on Friday after this decent announcement.
Ventas Q2 Earnings in Detail
