company background image
SPG

Simon Property Group NYSE:SPG Stock Report

Last Price

US$114.07

Market Cap

US$42.6b

7D

7.8%

1Y

-14.8%

Updated

11 Aug, 2022

Data

Company Financials +
SPG fundamental analysis
Snowflake Score
Valuation5/6
Future Growth1/6
Past Performance3/6
Financial Health1/6
Dividends6/6

SPG Stock Overview

Simon is a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company (Simon Property Group, NYSE: SPG).

Simon Property Group Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Simon Property Group
Historical stock prices
Current Share PriceUS$114.07
52 Week HighUS$171.12
52 Week LowUS$93.06
Beta1.51
1 Month Change16.88%
3 Month Change-2.32%
1 Year Change-14.78%
3 Year Change-22.87%
5 Year Change-27.44%
Change since IPO406.98%

Recent News & Updates

Aug 01

Simon Property raises dividend by 6% to $1.75

Simon Property (NYSE:SPG) declares $1.75/share quarterly dividend, 6.1% increase from prior dividend of $1.65. Forward yield 6.44% Payable Sept. 30; for shareholders of record Sept. 9; ex-div Sept. 8. See SPG Dividend Scorecard, Yield Chart, & Dividend Growth.

Jul 18

Simon Property Group: Pessimism Has Gone Too Far

Simon Property Group is performing well fundamentally. Simon Property's forward growth rate is about 7% annually. SPG's multiple is inappropriately cheap for its strength. Simon Property Group (SPG) has fallen substantially more than the market in the 2022 downdraft and yet its fundamentals have outperformed. It has gotten unreasonably cheap and I see it as a great buying opportunity. The Buy Thesis At 8X forward FFO and 9.2X forward AFFO compared to a REIT average of about 15X and 17X, respectively, SPG is priced for either declining earnings or extreme risk. In analyzing the fundamentals, however, I don’t see either of those in the base case scenario. In fact, I see significant growth to FFO per share due to a series of fundamental tailwinds creating a highly favorable leasing environment which is allowing SPG to significantly improve occupancy and start to ratchet up lease rates. Balance sheet and debt pricing imply lower than normal risk, and the retail environment is generally stable to good. Overall, I view the multiple as far too low relative to the fundamental strength and see significant upside. Mismatch between debt pricing and equity pricing When a company is in trouble it will often be reflected in debt pricing before equity pricing. Equity investors have a wide range of factors to focus on whereas debt investors have fixed upside and are thereby laser focused on the risk. SPG debt investors do not seem to see abnormal risk. We can measure this in two ways: The rate investors demand at issuance Credit default swap movement since issuance SPG has consistently been able to issue debt at very low coupons and long maturities. Shown below is their senior debt with coupons ranging from 1.91% to 3.8%. The 3.8% debt is a bit higher because it has a maturity date in 2050. S&P Global Market Intelligence Even in the post-COVID world, SPG has been able to issue debt via its subsidiaries at very favorable terms with the latest issuance in January of 2022 with a 2.65% coupon and 10-year maturity. S&P Global Market Intelligence One should note, however, that SPG’s common market price declines largely occurred since January of 2022, so perhaps something happened recently that made it suddenly much riskier. Well, if we examine credit default swap pricing, we can see that SPG’s CDS measured risk spiked up during the initial COVID lockdown because nobody knew what would happen to malls but has since come back down and now sits quite tight with investment grade consumer discretionary. S&P Global Market Intelligence Basically, SPG’s debt investors are showing SPG as having risk commensurate of a company with a fairly strong balance sheet. If SPG is not particularly risky, that leaves two potential reasons why it might trade at such a low FFO multiple: Weak/declining earnings or mispricing. My money is on the latter, but let us examine the earnings outlook. Overall retail environment Retail is broadly performing well. I know there are all sorts of headlines about supply chain issues. A few months ago the challenge was that they couldn’t get enough inventory in stock and now it appears to have all arrived at once and there's talk of increased discounting to try to unload the glut of inventory. It's not that retail is without challenges, but rather that there are always challenges and retail finds ways to adapt to them. The events that truly hurt retail are those that happen so quickly that it's hard to adapt fast enough with the most recent such event being the pandemic. Over long stretches of time roughly 30 retailers go bankrupt each year with new companies coming in to replace them. The pandemic increased bankruptcies to 52 in 2020, but it seems to have pulled forward bankruptcies of retailers that were already weak rather than creating additional bankruptcies. S&P Global Market Intelligence The result is that the remaining retailers are strong leading to only 21 bankruptcies in 2021 and just four in 2022. Note that a majority of retailer bankruptcies happen in the first half of the year, so 2022 full year is very likely to come in below 10 which would be lower than it has been in over a decade. There are six factors influencing the supply and demand dynamic: Standing inventory Supply growth Supply churn Existing demand New demand Demand churn I will go over each briefly so as to get a picture of the overall leasing environment. Supply - Standing inventory, development and churn It has long been known that the U.S. is over-retailed. While the U.S. has higher GDP per capita than most of the world and therefore better sales per capita, it still had a disproportionate amount of retail square footage even after adjusting for spending levels. The excess supply has challenged retail for over a decade, but is moderating substantially. In the past 15 years there has been almost no new development. On the flip side, there has been substantial churn of supply. In addition to properties that age out such as an old shopping center or mall getting demolished, the struggles of lower tier malls have accelerated the demise of properties. Malls usually are built centrally in population dense areas with good ingress and egress. This makes it prime land for many types of real estate. I have seen malls converted to apartments, hotels, data centers, logistics warehouses and even office. It's a rare phenomenon in real estate to see net supply growth of a property type actually go negative. The result is that square footage has shrunk to a much healthier number and more importantly, the remaining square footage is of higher quality. I suspect there will be a couple more years of redevelopment as there are still some mid-tier malls that need to go, but overall supply levels already look about right. National mall vacancy was 8% in the first quarter of 2022 which is an OK number. I would like to see it closer to 5% and I think it will get there by 2025. Demand – existing, churn and growth The 8% national vacancy figure is in many ways a measure of existing demand too. If we were to look at that in isolation I would say tenants are mildly favored over landlords in negotiations. However, demand looks to substantially outpace supply on the growth side. Demand churn is abnormally low right now due to the lack of bankruptcies. Retail sales, and particularly those in brick-and-mortar, have been strong in 2022 so there should be a reduced level of store closures. Demand growth is coming from a wide variety of sources with the big ones being: Resurgence in experiential spending post-pandemic – restaurants, bars, barbers, salons, etc. E-commerce and digitally native opening physical stores. In-storing of inventory. Supply chain challenges have encouraged retailers to keep more inventory in stock. This increases the square footage requirements for store footprints. The International Council of Shopping Centers held a major conference (ICSC) in May of 2022 which had 22,000 attendees, up from 10,000 last year. Fellow mall REIT Macerich (MAC) was in attendance and detailed their experience at the REITWEEK conference in June. They described the mood of ICSC as overwhelmingly positive and said it was the best retail leasing environment in over a decade. David Simon (CEO of SPG) echoed similar sentiments on the latest SPG call. Leasing fundamentals look good to me and the commentary seems to match the fundamental data. Hard data is usually more reliable than commentary, but I like to look at both because the commentary is more up to date whereas hard data tends to be lagging by a quarter or so. SPG specific leasing Simon Property owns the highest tier of malls, so its demand tends to come in above the national average. With overall leasing looking healthy, SPG should be able to source substantial leasing volume. There's little churn to offset the inflow of new leases as SPG has only 5.4% of leases rolling in 2022 and 4.2% in 2023. Supplemental As such, I anticipate significant net growth in occupancy with stable to slightly up lease rates. Market lease rates in 2022 are up substantially from 2021 and 2020, but we should note that it is not the year over year comparison that hits FFO/share. The new lease rate would have to be compared to the lease rate of the expiring lease so that could be a vintage anywhere from 2012-2021 depending on how long the initial terms were. So while market rents are up compared to last year, they are not up compared to say 2014-2016 when malls in general were much stronger. Thus, the actual lease rolls will likely be a mixed bag of some roll-ups and some roll downs. With rent per square foot flattish and occupancy increasing a percentage point or two I would anticipate moderate organic NOI growth leading to moderate organic FFO growth. This is largely in-line with analyst estimates which have FFO/share going from $11.71 in 2022 to $12.48 by 2024. S&P Global Market Intelligence Malls do incur significant tenant improvement costs and leasing commissions so I would generally recommend valuing them on AFFO rather than FFO. SPG’s AFFO is expected to be $10.86 in 2022 and scale to $11.93 in 2024. Argument could be made for further negative adjustment for redevelopment costs. It's a bit of a gray area as to whether redevelopments are growth capex or maintenance capex. Each project is anticipated to generate a fairly substantial IRR, so SPG argues that it's growth investment, but with how frequently the retail landscape changes, some space becomes antiquated and must be redeveloped to maintain its revenue.

Shareholder Returns

SPGUS REITsUS Market
7D7.8%2.9%1.3%
1Y-14.8%-4.6%-11.7%

Return vs Industry: SPG underperformed the US REITs industry which returned -4.3% over the past year.

Return vs Market: SPG underperformed the US Market which returned -11.6% over the past year.

Price Volatility

Is SPG's price volatile compared to industry and market?
SPG volatility
SPG Average Weekly Movement4.7%
REITs Industry Average Movement4.3%
Market Average Movement7.8%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: SPG is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: SPG's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19602,850David Simonhttps://www.simon.com

Simon is a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company (Simon Property Group, NYSE: SPG). Our properties across North America, Europe and Asia provide community gathering places for millions of people every day and generate billions in annual sales.

Simon Property Group Fundamentals Summary

How do Simon Property Group's earnings and revenue compare to its market cap?
SPG fundamental statistics
Market CapUS$42.61b
Earnings (TTM)US$2.11b
Revenue (TTM)US$5.20b

17.7x

P/E Ratio

7.2x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
SPG income statement (TTM)
RevenueUS$5.20b
Cost of RevenueUS$999.38m
Gross ProfitUS$4.20b
Other ExpensesUS$2.09b
EarningsUS$2.11b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)6.43
Gross Margin80.77%
Net Profit Margin40.54%
Debt/Equity Ratio607.4%

How did SPG perform over the long term?

See historical performance and comparison

Dividends

6.1%

Current Dividend Yield

58%

Payout Ratio

Does SPG pay a reliable dividends?

See SPG dividend history and benchmarks
When do you need to buy SPG by to receive an upcoming dividend?
Simon Property Group dividend dates
Ex Dividend DateSep 08 2022
Dividend Pay DateSep 30 2022
Days until Ex dividend26 days
Days until Dividend pay date48 days

Does SPG pay a reliable dividends?

See SPG dividend history and benchmarks
We’ve recently updated our valuation analysis.

Valuation

Is SPG undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for SPG?

Other financial metrics that can be useful for relative valuation.

SPG key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue12.2x
Enterprise Value/EBITDA17.1x
PEG Ratio-20.7x

Price to Earnings Ratio vs Peers

How does SPG's PE Ratio compare to its peers?

SPG PE Ratio vs Peers
The above table shows the PE ratio for SPG vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average39.4x
O Realty Income
81.2x13.4%US$45.7b
REG Regency Centers
23x-6.6%US$11.2b
KIM Kimco Realty
20.8x4.6%US$14.1b
FRT Federal Realty Investment Trust
32.7x7.9%US$8.9b
SPG Simon Property Group
17.7x-0.9%US$42.6b

Price-To-Earnings vs Peers: SPG is good value based on its Price-To-Earnings Ratio (17.7x) compared to the peer average (39.4x).


Price to Earnings Ratio vs Industry

How does SPG's PE Ratio compare vs other companies in the US REITs Industry?

Price-To-Earnings vs Industry: SPG is good value based on its Price-To-Earnings Ratio (17.7x) compared to the US REITs industry average (31.8x)


Price to Earnings Ratio vs Fair Ratio

What is SPG's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

SPG PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio17.7x
Fair PE Ratio38.6x

Price-To-Earnings vs Fair Ratio: SPG is good value based on its Price-To-Earnings Ratio (17.7x) compared to the estimated Fair Price-To-Earnings Ratio (38.6x).


Share Price vs Fair Value

What is the Fair Price of SPG when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: SPG ($114.07) is trading below our estimate of fair value ($303.56)

Significantly Below Fair Value: SPG is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


Discover undervalued companies

Future Growth

How is Simon Property Group forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


-0.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SPG's earnings are forecast to decline over the next 3 years (-0.9% per year).

Earnings vs Market: SPG's earnings are forecast to decline over the next 3 years (-0.9% per year).

High Growth Earnings: SPG's earnings are forecast to decline over the next 3 years.

Revenue vs Market: SPG's revenue (1.5% per year) is forecast to grow slower than the US market (8% per year).

High Growth Revenue: SPG's revenue (1.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SPG's Return on Equity is forecast to be very high in 3 years time (79.5%).


Discover growth companies

Past Performance

How has Simon Property Group performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-2.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: SPG has high quality earnings.

Growing Profit Margin: SPG's current net profit margins (40.5%) are higher than last year (31.6%).


Past Earnings Growth Analysis

Earnings Trend: SPG's earnings have declined by 2.9% per year over the past 5 years.

Accelerating Growth: SPG's earnings growth over the past year (42.3%) exceeds its 5-year average (-2.9% per year).

Earnings vs Industry: SPG earnings growth over the past year (42.3%) underperformed the REITs industry 47.9%.


Return on Equity

High ROE: Whilst SPG's Return on Equity (58.83%) is outstanding, this metric is skewed due to their high level of debt.


Discover strong past performing companies

Financial Health

How is Simon Property Group's financial position?

Financial Health Score

1/6

Financial Health Score 1/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: SPG's short term assets ($1.5B) do not cover its short term liabilities ($4.0B).

Long Term Liabilities: SPG's short term assets ($1.5B) do not cover its long term liabilities ($24.9B).


Debt to Equity History and Analysis

Debt Level: SPG's net debt to equity ratio (594.2%) is considered high.

Reducing Debt: SPG's debt to equity ratio has increased from 523.4% to 607.4% over the past 5 years.

Debt Coverage: SPG's debt is not well covered by operating cash flow (14.7%).

Interest Coverage: SPG's interest payments on its debt are well covered by EBIT (3.2x coverage).


Balance Sheet


Discover healthy companies

Dividend

What is Simon Property Group current dividend yield, its reliability and sustainability?

Dividend Score

6/6

Dividend Score 6/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


6.14%

Current Dividend Yield

Upcoming Dividend Payment

TodayAug 12 2022Ex Dividend DateSep 08 2022Dividend Pay DateSep 30 202222 days from Ex DividendBuy in the next 26 days to receive the upcoming dividend

Dividend Yield vs Market

Notable Dividend: SPG's dividend (6.14%) is higher than the bottom 25% of dividend payers in the US market (1.5%).

High Dividend: SPG's dividend (6.14%) is in the top 25% of dividend payers in the US market (4.05%)


Stability and Growth of Payments

Stable Dividend: SPG's dividends per share have been stable in the past 10 years.

Growing Dividend: SPG's dividend payments have increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (58.5%), SPG's dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: At its current cash payout ratio (86.2%), SPG's dividend payments are covered by cash flows.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

8.5yrs

Average management tenure


CEO

David Simon (60 yo)

27.58yrs

Tenure

US$10,475,192

Compensation

Mr. David E. Simon is a Director at Rue Gilt Groupe, Inc. since October 2019. He serves as an Independent Director at Apollo Global Management, Inc. since June 15, 2021. He has been the Chief Executive Off...


CEO Compensation Analysis

Compensation vs Market: David's total compensation ($USD10.48M) is about average for companies of similar size in the US market ($USD12.88M).

Compensation vs Earnings: David's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: SPG's management team is seasoned and experienced (8.5 years average tenure).


Board Members

Experienced Board: SPG's board of directors are seasoned and experienced ( 15.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: SPG insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Simon Property Group, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Simon Property Group, Inc.
  • Ticker: SPG
  • Exchange: NYSE
  • Founded: 1960
  • Industry: Retail REITs
  • Sector: Real Estate
  • Implied Market Cap: US$42.611b
  • Market Cap: US$37.342b
  • Shares outstanding: 374.66m
  • Website: https://www.simon.com

Number of Employees


Location

  • Simon Property Group, Inc.
  • 225 West Washington Street
  • Indianapolis
  • Indiana
  • 46204
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/11 00:00
End of Day Share Price2022/08/11 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.