* Q4 FFO shr $1.66, ex charges vs Street view $1.52
* Sees 2010 FFO shr $5.72 to $5.87 vs Street view $5.66
* Shares up more than 2 pct (Recasts, adds analysts quote and byline, updates stock price)
By Ilaina Jonas
NEW YORK, Feb 5 (Reuters) - Simon Property Group Inc (SPG.N) the largest U.S. mall owner, reported higher-than expected fourth-quarter results, and said it would return to an all-cash dividend but cautioned that 2010 will still be a challenge.
Its shares rose more than 2 percent.
"'09 was a challenging year in the retail real estate world," David Simon, chairman and chief executive, said during a conference call with analysts. "'10 is going to be challenging for, too."
The Indianapolis-based company owns or has an interest in 382 properties comprising 261 million square feet of leasable space in North America, Europe and Asia. It owns such well-trafficked malls such as Roosevelt Field, on New York's Long Island; Sawgrass Mills Circle, near Ft. Lauderdale, Florida; and outlet centers such as Woodbury Commons, north of New York City.
Simon, the largest U.S. real estate investment trust, said on Friday fourth-quarter funds from operations (FFO) fell to $485 million, or $1.40 per share, from $540.5 million, from $1.86 per share, in the year-earlier quarter.
Excluding $88.1 million of non-cash impairment charges, fourth-quarter FFO was $1.66 per share, ahead of the average forecast of analysts of $1.52 per share, according to Thomson Reuters I/B/E/S.
Simon, which had been one of the first to pay its dividend partly in stock as a response to the credit crisis, reinstated the full-cash portions of its dividend of 60 cents per share. The dividend is subject to board approval.
Simon shares were up $1.68 to $71.14 in afternoon trade on the New York Stock Exchange.
"It's a positive report," said Michael Torres, portfolio manager with Adelante Capital Management, which owns Simon shares. "The occupancy is down only modestly. The outlet center is really working. You've got that financing in place. The dividend is positive as well. The caution that's out that is that mall sales are down, which is going to pressure rents."
Simon forecast 2010 FFO of $5.72 to $5.87 per share, excluding a charge connected with last month's tender offer for some of its bonds. Analysts see $5.66 per share, according to Thomson Reuters I/B/E/S.
Including the charge, it forecast FFO of $5.25 to $5.40 per share.
FFO, a measure of performance, removes the profit-reducing effect of depreciation, a noncash accounting item.
During the quarter Simon's U.S. mall occupancy fell to 92.1 percent from 92.4 percent a year earlier. Average sales per square foot dropped 7.9 percent to $433.
For its outlet properties, occupancy slipped to 97.9 percent from 98.9 percent. Sales per square foot fell 1.8 percent to $500.
Simon also said that Simon Ivanhoe, a joint venture with Montreal-based Ivanhoe Cambridge that owns seven shopping centers in France and Poland, would sell itself to Unibail-Rodamco SA UNBP.PA for 715 million euros ($980 million). Simon expects to record a gain of $300 million for the sale, which is expected to close in the first half 2010.
It intends to focus its attention on its U.S. business and opportunities there. Simon ended the quarter with $7.4 billion of cash on hand or available under its credit facility.
Simon already has announced plans to buy the Prime Outlets Acquisitions Co's 22 outlet centers for $700 million, plus debt. That purchase is expected to close in the spring.
But the looming question is whether it will go after No. 2 U.S. mall operator General Growth Properties GGWPQ.PK, which is in bankruptcy. David Simon said the company is not in active negotiations with General Growth, but he declined to comment on reports that it has invested in General Growth's securities.
Simon has prided itself on its patience and discipline regarding its acquisitions.
"We'll be prudent in exploring the options that exist out there," David Simon said. "Rest assured, that cash certainly will not put us in the position where we will be reckless in how we treat it." (Editing by Derek Caney, Dave Zimmerman and Steve Orlofsky)