New Position - Simon Property Group $SPG:
• 73% Discount to NAV
• 18% Dividend Yield (LTM)
• 26% FFO Yield (70% payout ratio)
• 35% LTV
• Interest coverage ratio: 5.8
$SPG is a REIT owning premier shopping, dining, entertainment, and mixed use properties across North America, Europe and Asia.
Simon is a very stable business (in normal times).
To be clear, there will be substantial consolidation in malls. Simon is widely considered the top player. Much of the portfolio is the top malls in the top locations. IMO Simon will benefit relatively from this locations. Bad malls disappear, top malls become stronger.
Today, investors pay an average price per SQM of <$2000.
Real estate is all about the highest and best use. If they shut down malls, they can build something else.
$SPG owns 370 acres of land for future development in the US and Canada.
Will retailers, ie. Simon’s tenants survive? Today, this is definitely in doubt. My intuition is that we will find a way they can survive, and if not, someone else will take their place.
If we experience a total retail apocalypse and everyone exclusively orders online from their sofa...than that’s a world in which I don’t need strong portfolio returns - a natural hedge ;-).
If you always wanted to own some prime real estate, but could never afford it...$SPG may be the steal of a lifetime
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