UBS’ Top Quant Stocks In AI, IT, Healthcare & Other Sectors: Top 33 Stocks In All Sectors

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

Number of Hedge Fund Investors In Q2 2024: 38

Sector: Real Estate

Simon Property Group, Inc. (NYSE:SPG) is a mid-sized REIT that invests in retail and hospitality properties such as restaurants and malls. Since nearly 90% of its revenue is based on lease income, the firm depends heavily on economic activity for its fortunes. However, within its lease income of $2.6 billion as of H1 2024, nearly 81% came from fixed leases. These are less susceptible to market downturns and insulate Simon Property Group, Inc. (NYSE:SPG) against cyclical shocks of a weak retail real estate industry. As a whole, the firm’s shares depend on consumer spending and discretionary income. These, in turn, are dependent on economic growth and lower inflation. Simon Property Group, Inc. (NYSE:SPG) also benefits from a well-developed real estate portfolio, which includes several malls capable of generating $100 million or more net operating income (NOI).

During the Q2 2024 earnings call, Simon Property Group, Inc. (NYSE:SPG)’s management commented on the trends that it’s observing in the retail real estate space:

“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.

We hosted our third Annual National Outlet Shopping Day in June, and it was very successful for shoppers and for participating retailers. More than 3 million shoppers visit our premium outlets and mill centers over the shopping weekend. Feedback from shoppers and retailers following the event has been great. Since launching this unique event three years ago, participating retailer and shopping momentum has built each year with more than 475 retailers this year, and we look forward to an even bigger event next year. Our occupancy cost at the end of the second quarter was 12.7%.”