We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can Simon Property Group (SPG) Beat Mall Traffic Blues?
Read MoreHide Full Article
For the past few years, mall traffic has been plagued with challenges thanks to the shift in shopping patterns, with e-retail taking precedence, keeping retail REITs on tenterhooks. This has shrunk demand for retail real estate space, as changing shopping patterns are compelling retailers to reconsider their footprint, and eventually opt for store closures or file bankruptcies.
This has been a prevailing concern for retail REITs like Simon Property Group Inc. (SPG - Free Report) , GGP Inc. , Kimco Realty Corp. (KIM - Free Report) , Macerich Company (MAC - Free Report) and others.
And not all companies are equally poised to beat mall traffic blues. However among those, reputed retail REIT — Simon Property Group — has been making concerted efforts focused on overhauling its properties and increasingly adopting omni-channel strategies. These will help the company to counter the retail blues and make its shopping malls more alluring.
In line with this, the company has re-launched its brand and marketing programs. Moreover, with the omni-channel strategy gaining popularity among retailers, Simon Property is initiating programs and events, as well as entering into several partnerships for upgrading services and amenities provided to its consumers. In fact, over the last five years, this retail REIT invested more than $5 billion in development projects, and further intends to invest around $1 billion annually through 2018 for development and redevelopment projects.
Simon Property has been active in restructuring its portfolio, and is aimed at premium acquisitions and transformative redevelopments. In fact, at the end of fourth–quarter 2017, the company had redevelopment and expansion projects, including the addition of new anchors, in progress at 25 properties across the United States, Canada and Asia. With such a huge pipeline, it is well poised to effectively leverage the improving spending habits of wealthier customers amid a strengthening economy.
In addition, Simon Property boasts a strong and improving balance sheet. At the end of the last reported quarter, the company had around $8.0 billion of liquidity. Also, this February, Simon Property announced amendment and extension of its 3.5-billion unsecured multi-currency revolving credit facility. The newly refinanced credit facility, when combined with the existing $4.0-billion revolver, offers the company $7.5 billion of total revolving credit capacity.
Furthermore, solid dividend payouts are arguably the biggest enticement for REIT shareholders and Simon Property remains committed to that. Concurrent with the fourth-quarter earnings release, the company announced a quarterly dividend of $1.95 per share, denoting an increase of 5.4% sequentially and 11.4% year over year. It has steadily raised its dividend over the past years, increasing from $3.50 in 2011 to the current annualized rate of $7.80 per share.
Nevertheless, though Simon Property is putting in every effort to enhance the value of its assets, implementation of such measures requires a decent upfront cost. This would, therefore, limit any robust growth in its near-term profit margins.
Additionally, rise in interest rate remains another concern as this would restrict the company’s ability to refinance existing debt and increase the interest cost on new debt. This might impact the company’s financial results and dividend payout.
Simon Property has a Zacks Rank #3 (Hold). The stock has declined 8.7% in the past three months which is narrower than its industry’s decline of 10.9%. Over the past week, the Zacks Consensus Estimate for first-quarter 2018 funds from operations (FFO) per share remained unchanged at $2.83. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Can Simon Property Group (SPG) Beat Mall Traffic Blues?
For the past few years, mall traffic has been plagued with challenges thanks to the shift in shopping patterns, with e-retail taking precedence, keeping retail REITs on tenterhooks. This has shrunk demand for retail real estate space, as changing shopping patterns are compelling retailers to reconsider their footprint, and eventually opt for store closures or file bankruptcies.
This has been a prevailing concern for retail REITs like Simon Property Group Inc. (SPG - Free Report) , GGP Inc. , Kimco Realty Corp. (KIM - Free Report) , Macerich Company (MAC - Free Report) and others.
And not all companies are equally poised to beat mall traffic blues. However among those, reputed retail REIT — Simon Property Group — has been making concerted efforts focused on overhauling its properties and increasingly adopting omni-channel strategies. These will help the company to counter the retail blues and make its shopping malls more alluring.
In line with this, the company has re-launched its brand and marketing programs. Moreover, with the omni-channel strategy gaining popularity among retailers, Simon Property is initiating programs and events, as well as entering into several partnerships for upgrading services and amenities provided to its consumers. In fact, over the last five years, this retail REIT invested more than $5 billion in development projects, and further intends to invest around $1 billion annually through 2018 for development and redevelopment projects.
Simon Property has been active in restructuring its portfolio, and is aimed at premium acquisitions and transformative redevelopments. In fact, at the end of fourth–quarter 2017, the company had redevelopment and expansion projects, including the addition of new anchors, in progress at 25 properties across the United States, Canada and Asia. With such a huge pipeline, it is well poised to effectively leverage the improving spending habits of wealthier customers amid a strengthening economy.
In addition, Simon Property boasts a strong and improving balance sheet. At the end of the last reported quarter, the company had around $8.0 billion of liquidity. Also, this February, Simon Property announced amendment and extension of its 3.5-billion unsecured multi-currency revolving credit facility. The newly refinanced credit facility, when combined with the existing $4.0-billion revolver, offers the company $7.5 billion of total revolving credit capacity.
Furthermore, solid dividend payouts are arguably the biggest enticement for REIT shareholders and Simon Property remains committed to that. Concurrent with the fourth-quarter earnings release, the company announced a quarterly dividend of $1.95 per share, denoting an increase of 5.4% sequentially and 11.4% year over year. It has steadily raised its dividend over the past years, increasing from $3.50 in 2011 to the current annualized rate of $7.80 per share.
Nevertheless, though Simon Property is putting in every effort to enhance the value of its assets, implementation of such measures requires a decent upfront cost. This would, therefore, limit any robust growth in its near-term profit margins.
Additionally, rise in interest rate remains another concern as this would restrict the company’s ability to refinance existing debt and increase the interest cost on new debt. This might impact the company’s financial results and dividend payout.
Simon Property has a Zacks Rank #3 (Hold). The stock has declined 8.7% in the past three months which is narrower than its industry’s decline of 10.9%. Over the past week, the Zacks Consensus Estimate for first-quarter 2018 funds from operations (FFO) per share remained unchanged at $2.83. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>