7. Simon Property Group Inc. (NYSE:SPG)
Number of Hedge Fund Investors: 38
Simon Property Group, Inc. (NYSE:SPG) is a leading global retail real estate investment trust (REIT) known for its high-quality portfolio of shopping centers and premium outlets. Jim Cramer highlights Simon Property Group Inc. (NYSE:SPG) as a strong investment. Despite a period of flat performance, Simon Property Group, Inc. (NYSE:SPG) recently surged 13% after reporting strong earnings on August 5th.
“This mall owner and operator has been a consistent recommendation of mine for years. The stock is currently trading at its highest level since 2021. Despite the stock trading sideways from December until early this month, it recently broke out of that range, gaining 13% since reporting an excellent beat-and-raise quarter on August 5th.
The bull thesis for SPG is twofold: First, while many proclaim that malls are dead, the reality is that high-end malls like those owned by Simon Properties are doing just fine. Their latest quarter showed a 95.6% occupancy rate, up 90 basis points year-over-year, with domestic property net operating income increasing by 4.5%. In plain terms, Simon’s malls are full and growing earnings.
Second, during the pandemic, Simon partnered with Authentic Brands Group to buy struggling retailers, which kept those brands in business and preserved Simon’s rent base. Many of these investments turned out to be very profitable as they were bought at fire-sale prices and have since increased in value. Simon is starting to monetize these investments, boosting their numbers.
Additionally, Simon has a portfolio of outlet malls in Asia, which are performing well but are often overlooked. Simon’s dividend is almost back to pre-pandemic levels, and in many respects, the business is in the best position it has ever been. This makes it a great dividend stock to own in anticipation of lower interest rates.”
Simon Property Group Inc. (NYSE:SPG)’s recent performance underscores its promising growth potential, making it a strong investment candidate. Simon Property Group Inc. (NYSE:SPG)’s third Annual National Outlet Shopping Day was a major success, drawing over 3 million shoppers and featuring more than 475 retailers. This event’s growing popularity highlights Simon Property Group Inc. (NYSE:SPG)’s expanding influence in retail.
Looking ahead, Simon Property Group Inc. (NYSE:SPG) is poised for further growth with new ventures like the fully leased Tulsa Premium Outlets and the upcoming Busan Premium Outlets expansion in South Korea. Additionally, the development of luxury residences at Northgate Station and ongoing international projects bolster its market position.
On the financial front, Simon Property Group Inc. (NYSE:SPG) has demonstrated robust health, having refinanced $1.1 billion in property mortgages and maintaining $11.2 billion in liquidity. The 7.9% increase in the third-quarter dividend, along with an upward revision of its full-year earnings guidance, reflects its solid financial stability and dedication to shareholder returns.
Simon Property Group Inc. (NYSE:SPG)’s Chief Financial Officer, Brian McDade, has this to say in their latest earnings call:
Second quarter funds from operations were $1.09 billion or $2.90 per share compared to $1,800 million or $2.88 per share last year. FFO from our real-estate business was $2.93 per share in the second quarter compared to $2.81 in the prior year, a 4.3% growth. Domestic and international operations had a very good quarter and contributed $0.12 of growth. As a reminder, the prior year included a non-cash gain of $0.07 from investment activity related to ABG. Domestic NOI increased 5.2% year-over-year for the quarter. Continued leasing momentum, resilient consumer spending and operational excellence delivered results exceeding our plan for the quarter. Portfolio NOI, which includes our international properties at constant currency, grew 4.8% for the quarter.
Malls and outlet occupancy at the end of the second quarter was 95.6%, an increase of 90 basis points compared to the prior year. The mills occupancy was 98.2%. Average base minimum rent for malls and outlets increased 3% year-over-year and the mills increased 3.9%. As David mentioned, leasing momentum continued across the portfolio. We signed more than 1,400 leases for approximately 4.8 million square feet in the quarter. Approximately 30% of our leasing activity in the second quarter was new deal volume. Our traffic in the second quarter was up 5% compared to last year. And importantly, total sales volumes increased approximately 2% year-over-year. Reported retailer sales per square foot in the second-quarter was $741 for the mall and premium outlets combined.” (Click here to see more…)
