Consistent with its winning streak, Simon Property came up with a solid operating performance during the second quarter and easily outpaced funds from operations (:FFO) estimates. Quarterly FFO per share was up 11.6% year over year and beat the Zacks Consensus Estimate by 1.93%, primarily due to an increase in minimum rent, overage rent and occupancy.
In particular, significant portfolio restructuring activity has been steering Simon Property to strengthen its footprint on national and international levels. It has been active in capitalizing on growth opportunities in some of the top global markets, with a focus on enhancing its Premium Outlets portfolio. As part of this strategy to expand in upscale locations across the world, recently Simon Property opened its first Premium Outlet Centre in Toronto, Canada.
Prompted by its strong fundamentals, Simon Property raised its FFO growth outlook for the second time in the year. The upward revision of the guidance also boosts investors’ confidence.
The stronger-than-anticipated results triggered an uptrend in the Zacks Consensus Estimates, as analysts became more constructive on the stock’s future performance. This is evident from the movement witnessed in the Zacks Consensus Estimate that rose 0.7% to $8.73 for 2013 and 0.3% to $9.36 per share for 2014 in the past 30 days.
Additionally, the long-term earnings growth forecast for the company is 6.88%. Hence, the favorable estimate revisions, driven by positive second-quarter results and expansion efforts made way for the upgrade in the rank.
In their latest quarterly filings with the Securities and Exchange Commission (:SEC), both PNC Financial and SunTrust revealed that they face mortgage-related investigations from various regulators.
PNC Financial disclosed that the Department of Justice (:DOJ) and the Consumer Financial Protection Bureau (:CFPB) are probing into the mortgage pricing practices of the company as well as National City Corporation – acquired by PNC Financial in 2008. The allegations include discrimination against protected borrowers. Under the federal law, lenders can be prosecuted for practices that discriminate based on race, color and religion, among others.
Additionally, PNC Financial revealed that it has received a subpoena for information related to foreclosures from the U.S. Attorney's Office for the Southern District of New York. The primary information being sought is claims for foreclosure expenses related to the loans insured or guaranteed by Fannie Mae or Freddie Mac.
For SunTrust, the investigation relates to processing of mortgage-modification applications under the Home Affordable Modification Program (HAMP). The Office of the Special Inspector General for the Troubled Asset Relief Program (:SIGTARP) and the U.S. Attorney's Office for the Western District of Virginia are together probing the company’s loan-modification procedures during 2008–2009.
These regulators allege that SunTrust failed to properly process loan modification applications of mortgages owned by Fannie Mae and Freddie Mac. These agencies accuse the company of misleading borrowers with regard to timelines and other features of the HAMP modification procedure.
Notably, these are among several other lawsuits that PNC Financial and SunTrust face related to their conduct preceding the financial crisis. Given this, at the end of second-quarter 2013, both these companies anticipate legal losses of $400 million each, exceeding their existing litigation reserves.
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