On Nov 29, Zacks Investment Research upgraded
Simon Property Group, Inc.
) to a Zacks Rank #2 (Buy). The upgrade of this retail real
estate investment trust (REIT) came on the back of strong
third-quarter 2013 results and guidance increase. Also, the
company's recent dividend hike and improving fundamentals added
to the bliss.
Why the Upgrade?
Keeping its winning streak alive, Simon Property came up with
a solid operating performance during the third quarter, with
funds from operations (FFO) of $2.21 per share comfortably edging
past the Zacks Consensus estimates by 5 cents and year-over-year
figure by 22 cents. Quarterly FFO per share improved 11.1% year
over year, primarily driven by an increase in revenues and
In particular, significant portfolio restructuring activity
has been driving Simon Property to enhance its footprint
globally. It has been active in capitalizing on growth
opportunities in some of the top global markets, with focus on
enhancing its Premium Outlets portfolio. Consequently, Simon
Property opened 3 premium outlets -Toronto Premium Outlets
(Canada), Busan Premium Outlets (Korea) and St. Louis Premium
Outlets (Missouri) - in third-quarter 2013.
Prompted by its strong fundamentals, the company raised its
FFO growth outlook for the third time this year. Simon Property
also hiked its quarterly dividend payout by 4.3%.
As a result, analysts became more positive on the stock's
future performance. This is evident from the movement witnessed
in the Zacks Consensus Estimate that rose 0.3% to $8.79 for 2013
and 0.3% to $9.48 per share for 2014 in the past 30 days.
Additionally, the growth forecast for 2013 FFO per share of
the company is 10.14%. Hence, the favorable estimate revisions,
driven by robust third-quarter results and expansion efforts made
way for the rank upgrade.
Other Stocks to Consider
Other players in REIT-Equity Trust - Retail industry, which
look attractive at current levels, include
Regency Centers Corporation
American Assets Trust, Inc.
Retail Properties of America, Inc.
), all carrying a Zacks Rank #2 (Buy).
Note: FFO, a widely used metric to gauge the performance of
REITs, are obtained after adding depreciation and amortization
and other non-cash expenses to net income.
AMER ASSETS TR (AAT): Free Stock Analysis
REGENCY CTRS CP (REG): Free Stock Analysis
RETAIL PROPERTS (RPAI): Free Stock Analysis
SIMON PROPERTY (SPG): Free Stock Analysis
To read this article on Zacks.com click here.