5 Best Commercial Real Estate Stocks To Buy According To Hedge Funds

3. Simon Property Group, Inc. (NYSE:SPG)

Number of Hedge Fund Holders: 35

Simon Property Group, Inc. (NYSE:SPG) is a real estate investment trust that focuses on investing in shopping malls, outlet centers, and community/lifestyle centers. It is one of the best commercial real estate stocks to monitor. Simon Property Group, Inc. (NYSE:SPG) reported higher earnings and revenue in the first quarter of 2023 compared to the same period last year, which positively influenced its outlook for the upcoming year. Consequently, the company’s board of directors announced an increased quarterly dividend of $1.85 per share, up from the previous dividend of $1.80.

On May 26, Haendel St. Juste, an analyst at Mizuho, assigned a Neutral rating to Simon Property Group, Inc. (NYSE:SPG) stock but revised down the price target from $116 to $106. The analyst maintains an Equal-weight stance on shopping centers overall but anticipates the possibility of higher earnings if bad debt remains low and transaction activity improves in the latter half of 2023.

According to Insider Monkey’s first quarter database, 35 hedge funds were bullish on Simon Property Group, Inc. (NYSE:SPG), compared to 33 funds in the preceding quarter. Jeffrey Furber’s AEW Capital Management is a prominent stakeholder of the company, with 495,805 shares worth $55.5 million. 

Baron Real Estate Income Fund made the following comment about Simon Property Group, Inc. (NYSE:SPG) in its Q4 2022 investor letter:

“Simon Property Group, Inc. (NYSE:SPG) is the world’s largest mall operator. Led by CEO David Simon, the company has assembled a well-located portfolio of retail malls, outlets, and community centers. Management has a long track record of solid capital allocation decisions.

Simon’s dividend yield of 6% and valuation of only 10.6 times earnings (AFFO) versus a long-term average of 15 times earnings is, in our opinion, compelling.

Though we are mindful of the headwinds to certain retail real estate–excess supply of retail real estate, e-commerce headwinds, large capital requirements to repurpose retail real estate to higher and better alternative uses–we believe Simon Property is well positioned given the strong location and high quality of its real estate portfolio. We are managing the Fund’s investment in the company with possible retail headwinds in mind.”