Simon Property Group

  • Simon Property Group, the largest mall owner in the United States, saw foot traffic   bounce back to pre-pandemic levels in the second quarter as Americans flocked   to malls for on-site retail therapy.

  • Retail sales at its properties in June 2021 were in line with June   2019 levels, and up 80% from a year earlier. Parts of the United States even   saw sales higher than 2019 levels. Occupancy rates are down to 91.8% from   92.9% a year ago and 94.4% two years prior. Simon has been trying to fill   spaces that were vacated by brands that either went bankrupt or had to close   stores. The company says it continues to see improving demand for space   across their portfolio, from tenants and entrepreneurs to mixed-use demand –   but it cautioned that it still has a hole to dig out of because of pandemic   bankruptcies.

  • Revenue rose 14.3% to $1.16 billion for the three months to June   30th 2021. Funds From Operations (FFO), a figure used by real estate   investment trusts (REITs) to define the cash flow from their operations as a   measure of performance, increased 52.8% to $1.22 billion, or $3.24 per   diluted share, compared to $746.5 million, or $2.12 per diluted share, in the   prior year period.

  • Portfolio net operating income, which includes NOI from domestic   properties, international properties and NOI from the Company's investment in   Taubman Realty Group, increased 32.5% compared to the prior year period.

  • Net income attributable to common stockholders was $617.3 million,   or $1.88 per diluted share, compared to $254.2 million, or $0.83 per diluted   share in 2020. These figures include a non-cash gain from the reversal of a   deferred tax liability associated with an international investment.

  • As of June 30 2021, Simon had more than $8.8 billion of liquidity   consisting of $1.9 billion cash on hand, and $6.9 billion of available   capacity under its revolving credit facilities.

  • The Company paid a second quarter dividend of $1.40 per share, a   7.7% year-on-year. A third quarter dividend of $1.50 was declared. This is a   15.4% increase year-over-year and a 7.1% increase compared to the Q2 2021   dividend.

  • Simon is projecting net income in a range of $5.47 to $5.57 per   diluted share and FFO within a range of $10.70 to $10.80 per diluted share   for the year ending December 31, 2021 – around 10% better than previous forecasts.

  • Simon property is a high quality business which was hit hard by the pandemic but looks to be recovering. The company is projected to grow earnings 4.7% per annum and is reliable dividend payer, currently yielding 4.5%. It has a return on equity (ROE) metric of over 40% but this is skewed due to its high levels of debt. Simon Property is currently trading at a 36% discount to fair value based on a discounted cash flow valuation and is reasonably priced relative the average valuation of the US REIT’s industry. The company will benefit from the easing of lockdown rules and a reopening of the economy as consumers spend and socialize away from home.

Simon Property Group