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On Mar 22, 2013, we reiterated our long-term recommendation on Simon Property Group Inc. (SPG - Analyst Report) at Outperform. This reflects the company’s strong fundamentals, robust growth projections and a healthy dividend yield that offers an enticing upside potential going forward.
 
Why Outperform?

Simon Property is one of the leading publicly traded retail real estate companies in the U.S. with assets in almost all retail distribution channels. Furthermore, the company’s international presence gives it a more sustainable long-term growth prospect than its domestically focused peers.

Simon Property generally enters into long-term leases with companies, which protect it from short-term market swings that have weighed on other players in the industry. The company has one of the strongest comparable sales per square foot in the industry. Its upscale properties and their strategic locations attract large number of high-end retailers for opening their outlets.

In February, Simon Property reported strong fourth quarter 2012 results with FFO per share of $2.29, substantially beating the Zacks Consensus Estimate by 12 cents. This also compared favorably with the year-ago quarter’s FFO per share of $1.91. The results were driven by an increase in rental revenue and occupancy.

Noteworthy acquisitions and addition of premium development and redevelopment projects during the quarter further fueled the company’s prosperity. These moves are expected to strengthen Simon Property’s presence in both national and international markets and boost its top-line growth going forward.

In addition, the company has a solid balance sheet with adequate liquidity and has announced a 21.1% year over year hike in its quarterly dividend rate, reflecting a hike for 6 straight quarters.

Following the release of the fourth quarter and full year 2012 results, the Zacks Consensus Estimate for full year 2013 moved up 1.7% to $8.55 per share with 11 out of 14 estimates moving north.  Also, the Zacks Consensus Estimate for full year 2014 climbed 2.9% to $9.18 per share, driven by 3 positive estimate revisions. With the Zacks Consensus Estimates moving up for both full year 2013 and 2014, Simon Property now has a Zacks Rank #2 (Buy).

Other Stocks to Consider

Other REITs that are currently performing decently include Agree Realty Corp. (ADC - Snapshot Report), Cousins Properties Incorporated (CUZ - Analyst Report) and Mack-Cali Realty Corp. (CLI - Analyst Report), all carrying a Zacks Rank #2 (Buy).
 

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