The pandemic hurt the mall business a lot, but this company has rebounded well, Real Money Columnist Paul Price argues.
Some investors look for the big gains through hours of painstaking research, trying to find heavily undervalued assets poised for strong recoveries, or new companies in the early stages of striking it rich.
Others head for the mall.
“Simon Property Group (SPG) – Get Simon Property Group, Inc. Report is America’s premier operator of higher-end, also called Class-A, shopping malls,” Real Money Columnist Paul Price wrote recently on Real Money. “The whole industry was tested mightily when government-imposed lockdowns of their properties were implemented during the Covid crisis of 2020.”
But real estate investment trust Simon “not only survived, but prospered,” Price wrote.
Investors can see this recovery across a range of metrics. Take funds from operations, or “FFO,” for example. This refers to the revenue and income that a REIT generates from its underlying properties. For Simon Property Group this figure dropped from $12.04 per share pre-Covid to $9.11 in 2020. As businesses closed and people stayed home, revenue dried up. However by 2021 the group’s FFO had rebounded to $11.94, an almost complete recovery.
Or, Price writes, look at shareholder income. “Dividends per share dipped from $8.30 in 2019 to $5.85 in 2021 as cash flow declined due to the lost sales and rent collections when operations were shut down. The current annual rate is back to $6.60 with at least a small increase expected by year-end 2022.”
Recenty, shares of Simon have “continued to sell for less, on an absolute price basis, than they did a full decade earlier. How many things can you buy today at less than their 10-year ago prices?”
