Simon Property Group Inc

Simon Property Group expects to convert the $18 million in annual rent it lost from Saks Global's Chapter 11 filing into $44 million, a 144% increase, by re-leasing the 1 million square feet vacated across its mall portfolio. CEO Eli Simon told analysts on the Q2 2026 earnings call that the REIT has already leased roughly half of the vacant Saks space and recovered more than the $18 million it lost, with initial base rent from new leases rising 17% year-over-year through the second quarter. Saks Global exited bankruptcy in June as Exemplar Luxury Group with a two-thirds smaller store count of just 49 locations after its $2.7 billion acquisition of Neiman Marcus in 2024 left it unable to service $2 billion in debt. Simon's retail investment segment, which includes stakes in Catalyst Brands and Rue Gilt Groupe, recorded a nearly $53 million net operating loss in the first half of 2026, with net operating income from that segment dropping 24% in the second quarter to $31.8 million.

Simon Property Group declared a quarterly dividend of $1.0468 per share on its 8.375% Series J Cumulative Redeemable Preferred Stock, in line with the previous payout. The dividend is payable September 30 to shareholders of record as of September 16, with the ex-dividend date also set for September 16. The forward yield on the preferred shares is 7.48%.

Simon Property Group reported second-quarter real estate funds from operations of $1.25 billion, or $3.29 per share, up 7.9% year-over-year, and raised its full-year 2026 real estate FFO guidance to a range of $13.20 to $13.30 per share. Domestic property net operating income increased 8.5% year-over-year, while portfolio NOI grew 8.3% on a constant currency basis. Malls and premium outlet occupancy held at 96%, and retailer sales reached $838 per square foot, up 13.9%. The company signed more than 1,200 leases totaling over 4.8 million square feet, with new deal rents up 17% and tenant allowances down 12% year-over-year. Simon also declared a third-quarter dividend of $2.25 per share, a 4.7% increase, and repurchased approximately 793,000 shares for $211 million at an average price of $205.10 per share.

Zacks Equity Research has identified Host Hotels & Resorts, Realty Income, and Simon Property Group as three real estate investment trusts with the potential to deliver positive earnings surprises this season. Host Hotels carries a Zacks Rank #2 and an Earnings ESP of +1.48%, with consensus estimates pointing to quarterly revenues of $1.62 billion and adjusted funds from operations per share of 62 cents. Realty Income also holds a Zacks Rank #2 and an Earnings ESP of +0.92%, with consensus revenues of $1.54 billion and AFFO per share of $1.09. Simon Property Group has a Zacks Rank #3 and an Earnings ESP of +0.39%, with consensus revenues of $1.71 billion and funds from operations per share of $3.18. All three companies are scheduled to report second-quarter results in early August, and Zacks notes that the combination of a favorable rank and a positive Earnings ESP has historically indicated a roughly 70% chance of an earnings beat.

7th Avenue, the Los Angeles-based modular furniture brand, is opening its first Long Island showroom at Walt Whitman Shops in Huntington Station, New York, on July 11, 2026. The 1,206-square-foot appointment-first space, which also accepts walk-ins during mall hours, marks the brand's second location with Simon Property Group following a King of Prussia Mall opening. Co-Founder and CEO Billy Shaw cited strong online demand from the region's high concentration of homeowners as a key driver for the expansion. The showroom features the brand's signature design elements and allows customers to test performance fabrics, configure modular sofas, and work with design consultants. This opening brings 7th Avenue's national showroom count to more than 20 locations, with additional openings planned through summer and fall 2026.

Simon Property Group stock still screens as undervalued despite a 135.8% return over the past five years. A Discounted Cash Flow analysis using adjusted funds from operations estimates an intrinsic value of about $301 per share, implying the stock is roughly 24.9% undervalued relative to its current price. The company trades on a P/E of about 15.6 times, well below the Retail REITs industry average of 26.4 times and a modelled fair P/E ratio of about 24.3 times. The stock recently hit a 52-week high following strong first-quarter results and raised FFO guidance, yet the valuation gap suggests the market may not be fully reflecting the longer-term cash flow profile. The key debate is whether the discount will close through a higher earnings multiple or through future cash flows aligning with intrinsic value assumptions.

Simon Property Group raised its 2026 Real Estate FFO guidance to $13.10-$13.25 per share and increased its quarterly dividend to $2.25 per share for the second quarter, up 7.1% year over year. The REIT signed more than 1,100 leases covering over 4.7 million square feet in the first quarter, with new lease rates 20-25% higher than a year ago, and U.S. mall and Premium Outlet occupancy reached 96%. Simon is investing $1.06 billion in redevelopment projects at 29 centers with a blended expected yield of 9%, and has another $1 billion of projects that could begin in 2026. However, online shopping competition, soft tourist-driven markets, and a $35.17 billion debt load with rising interest expenses remain headwinds.

The modeled fair value estimate for Simon Property Group has been revised upward from $214.55 to $219.26, reflecting updated analyst price targets and modest adjustments to key assumptions. Revenue growth assumption was increased from 2.37% to 2.66%, net profit margin from 34.48% to 34.57%, and the future P/E multiple from 34.67x to 35.05x, while the discount rate remained at 7.83%. Several firms including BofA, JPMorgan, Truist, Citi, and UBS raised their price targets, while Barclays, Morgan Stanley, and Evercore ISI also lifted targets but maintained neutral stances. Scotiabank twice increased its target as part of broader retail REIT reviews. However, Wolfe Research downgraded the stock to Peer Perform from Outperform, citing a challenging entry point at all-time highs and valuation that has largely caught up with the business model.