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Simon Property (SPG) Plans to Invest $1B in its Portfolio

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Simon Property Group, Inc. (SPG - Free Report) , the Indianapolis, IN-based retail real estate investment trust (REIT), is continuing with its strategy to invest in its portfolio. The underlying idea is to augment the number of visitors and enhance their experience.

Simon Property is engaged in acquiring, owning and leasing a diverse portfolio of shopping malls. The company reported first-quarter 2017 funds from operations (FFO) of $2.74 per share, missing the Zacks Consensus Estimate by 2 cents. Despite choppy retail environment during the quarter, the company reaffirmed its earlier outlook.

Importantly, increasing consumer purchases through the Internet has emerged as a pressing concern for retail REITs, including Simon Property, which is striving to counter the pressure through various initiatives. Given this backdrop, the latest initiatives to lift the shopping experience of the customers is very significant.

In fact, in the last five years, the retail REIT invested over $5 billion in development projects and intends to spend around $1 billion each in 2017 and 2018. Several initiatives are likely to be taken by the company to enhance the premier shopping, dining and entertainment destinations across the U.S. These include investing in various physical projects, renovation, interior enhancements, redevelopment, redevelopment, addition of new restaurants and eateries, mixed-use developments etc.

Shares of Simon Property have underperformed the Zacks categorized REIT and Equity Trust - Retail industry in the last three months. Shares of the company have decreased 14.5%, whereas the industry has lost 10%. Moreover, in the last 30 days, both its second quarter and full-year 2017 FFO per share estimates moved down.

Currently, Simon Property carries a Zacks Rank #3 (Hold).

Investors interested in the REIT space, may consider better-ranked stocks like Easterly Government Properties, Inc. (DEA - Free Report) , Gaming and Leisure Properties, Inc. (GLPI - Free Report) and DiamondRock Hospitality Company (DRH - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the last 30 days, Easterly Government Properties’ FFO per share for second-quarter 2017 remained unchanged at 31 cents.

In the last 30 days, Gaming and Leisure Properties’ FFO per share for second-quarter 2017 increased 1.3% to 77 cents.

In the last 30 days, DiamondRock Hospitality Company’ FFO per share for second-quarter 2017 remained unchanged at 31 cents.

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All EPS numbers presented in this write up represent FFO per share.

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