Recently, Fitch Ratings affirmed
Simon Property Group Inc.
) and its operating partnership, Simon Property Group L.P.'s
Issuer Default Rating (IDR) at 'A-' with a "Stable" outlook.
The rating affirmation is justified by Simon's resilient cash
flow from its sufficiently large, superior quality mall and
premium outlet portfolio coupled with interests in other retail
real estate. This, in turn, fortifies a fixed-charge coverage
ratio suitable for the 'A-' rating.
In addition, Simon's ratings reflect a solid management team and
accessibility to multiple sources of capital. While leverage
remains high of late, it is anticipated to remain in line with
the requirement for 'A-' IDR for a large capitalization retail
real estate investment trust (REIT).
However, Simon's increasing development pipeline heightens its
risk, though it is partly offset by sufficient liquidity
coverage. As a matter of fact, Simon's keenness for large
purchases leads to a deterioration in its debt metrics in the
The rating affirmation of Simon at 'A-' IDR is encouraging. In
fact, this plays a major role in preserving investor confidence
in the stock and helps boost its creditworthiness in the market.
This largest publicly traded REIT boasts a diversified retail
portfolio and its tenant roster consists of names like
The Gap Inc.
Limited Brands Inc.
Abercrombie & Fitch Co.
). The diversification helps it endure the continuously changing
Therefore, with strong fundamentals, robust growth projections,
and a healthy dividend yield, Simon Property offers an enticing
upside potential going forward. Moreover, Simon Property
currently retains a Zacks Rank #2 (Buy). We also have a long-term
Outperform recommendation on the stock.
ABERCROMBIE (ANF): Free Stock Analysis Report
GAP INC (GPS): Free Stock Analysis Report
LIMITED BRANDS (LTD): Free Stock Analysis
SIMON PROPERTY (SPG): Free Stock Analysis
To read this article on Zacks.com click here.