Expenditures in 2010 will be less than $50 million, said David Simon, chairman and chief executive officer. "We currently do not plan to begin construction on any major projects in 2009," Simon said.
Simon reiterated a previous statement that "the new development business is dead for a decade. Maybe I'm overdramatizing, but there's going to be little new development for some time to come."
Construction is under way domestically on: Cincinnati Premium Outlets, a 400,000-square-foot upscale manufacturers' outlet center scheduled to open in August, and a 600,000 square foot expansion of The Domain in Austin, Texas, opening in November; a 220,000-square-foot expansion of Camarillo Premium Outlets, opening in April; and the addition of Nordstrom to South Shore Plaza, opening in 2010.
Internationally, construction continues on: the 225,000-square-foot Ami Premium Outlets, located northeast of central Tokyo, opening in July; and centers opening in Argine (outside Naples, Italy), Catania (Sicily, Italy); and three projects in China. All but the Catania project (which opens in June 2010) are scheduled for 2009 openings.
Leasing also remains relatively healthy, though the company acknowledged that it has been renegotiating with some tenants.
"Where we have a tenant in extreme distress we are working with them to find a mutually acceptable way to maintain their presence," said Richard S. Sokolov, president and Chief Operating Officer. The diversity and strength of the company's portfolio, Sterrett added, gives the firm the breathing room to create innovative solutions to maintain occupancy.
In addition, Sokolov said, a number of retailers, including Forever 21, H&M, Zara, Coach, Express, Sephora and the Buckle are expanding.
"Long-term, we're more concerned about bigger boxes than short-term tenants," Simon added.
Discussing the industry, Simon also noted that he expects some malls will close. He also added that he had "no" interest in acquiring any of struggling General Growth Properties' projects in Las Vegas.
Yet there are opportunities. While most financing is non-existent, pension funds are increasingly looking at investment, said Stephen E. Sterrett, executive vice president and chief financial officer.
"The only market out there with some sense of normalcy is the life companies," Sterrett said. "The opportunity they have is to significantly upgrade their portfolio, not just in terms of properties but in terms of sponsors."
Funds from operations ("FFO") for the quarter increased 6.5% to $540.5 million from $507.7 million in the fourth quarter of 2007. Net income available to common stockholders was $145.2 million, up 28.6% from the fourth quarter of 2007.
For the year, FFO was $1.852 billion, up 9.5% from 2007. Net income available to common stockholders was $422.5 million, down 3.1% from $436.2 million in 2007. Regional mall occupancy was 92.4% at year-end, down 110 basis points from yearend 2007. Premium outlet center occupancy was 98.9%, down 80 basis points from the previous year. Regional mall sales per square foot declined 4.3% from the previous year to $470, while outlet center sales per square foot rose 1.8% over 2007 to $513.
Simon currently owns or has an interest in 386 properties comprising 263 million square feet of gross leasable area in North America, Europe and Asia.
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