Morningstar Rating

Stock Research and Analysis

by Todd Lukasik, CFA

Bulls Say

Simon recently tapped unsecured debt and mortgage markets on some of the most favorable terms we've seen among REITs.
Our cash flow model suggests that Simon has the financial capacity to meaningfully increase its dividend over the medium term, driven partly by in-place rents we estimate to be roughly 5% below current market rates.
Simon's solid balance sheet and access to capital markets position it to take advantage of any attractive acquisition opportunities that become available, including opportunities overseas. Read more 

Bears Say

If online commerce continues to win share of the consumer wallet, traditional brick-and-mortar malls could suffer.
As the largest mall operator in the U.S., Simon will be challenged to find external growth opportunities domestically and will have to look overseas instead, which entails more risk.
In the recent low-rate environment, investors may have bid up prices of other sources of yield, such as REITs. There is risk that capital will flow out of REITs should interest rates rise, pressuring asset values. Read more 

Management

We view Simon's stewardship as exemplary.
Simon Property Group has done well by shareholders over the years, delivering shareholder returns that far outpace returns on the market in general. One blemish on its record is a cut to its dividend in 2009   Read more 

Profile

Simon is the largest retail U.S. real estate investment trust, with distinct platforms for regional malls, premium outlet centers, and international properties, among others.  Read more 

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