Madhu at LeftBrain Investment Research argues SPG is a buy for investors betting on brick-and-mortar retail recovery. The REIT has strong occupancy and sales per square foot, plus enough cash to survive a second COVID wave. Even if the dividend gets cut, the depressed valuation offers attractive risk-reward.
Hi, I'm Madhu, investment analyst here at LeftBrain Investment Research. I just finished my work on Simon Property Group. An investment in Simon Property Group is a play on the recovery in the brick-and-mortar retail industry from the lows reached in April and May. Simon Property Group is one of the largest publicly traded mall REITs in the US. The company's success going forward depends on its ability to minimize erosion of operating occupancy and rentals while preserving its balance sheet to invest opportunistically in the future. Simon Property Group is one of the largest retail-focused REITs in the US. Here's what we like about Simon Property Group. The company has a consistent track record of growing rentals and sales per square foot at its properties, as well as its dividends. The company benefits from one of the best balance sheets and high-quality properties in the mall REIT space, and has access to ample liquidity ability to ride out the current downturn. Even assuming a large dividend cut, the company's current valuation provides opportunistic investors with strong risk-reward and income potential. These are qualities and metrics we look for when evaluating businesses for inclusion in our monthly chosen lists. Here's what concerns us. A significant second wave in the fall can prolong the recovery in the retail space and put further stress on the retail ecosystem. Having said that, we still believe that the company has the balance sheet to fight a long battle. In conclusion, keep an eye on Simon Property Group as the company's current depressed valuation provides opportunistic investors with an attractive entry point despite, despite well-publicized risks. For LBIR, this is Madhu inviting you to join our community of left-brainers. Learn more at leftbrainir.com and like, share, and subscribe.
