2024-01-23 13:30:00 ET
Summary
- Investors in Simon Property Group have experienced a dramatic revival in their fortunes over the past three months, as it bottomed out in October 2023.
- The surge has normalized Simon Property Group's valuation closer to its 10-year average, suggesting a significantly less enticing risk/reward. However, the REIT still isn't expensive.
- Simon's third-quarter earnings indicate that the company has not been impacted by struggles seen in typical office landlords. Its Class A high-quality asset portfolio has remained resilient.
- I argue why Simon's attractive forward dividend yield should get more robust valuation support as the Fed potentially cuts rates this year.
- While Simon is looking primed for a near-term pullback, I urge investors to embrace weakness and capitalize on such an opportunity.
Investors in leading high-quality retail landlord Simon Property Group, Inc. ( SPG ) have experienced a dramatic revival in their fortunes over the past three months. I urged SPG investors to capitalize on its steep pullback in September 2023, although SPG bottomed out decisively only in early October 2023. Accordingly, dip buyers loaded up and sent SPG surging over the past three months, registering a 1Y total return of almost 25%. Relative to SPG's 5Y and 10Y total return CAGR of 1.6% and 3.8%, respectively, I believe it's clear that pouncing when the market reaches peak pessimism has proved to be a winning game plan....
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Simon Property: Leading Retail Landlord Still Cheap Despite Remarkable Recovery