I Stand STRONG With Simon

In my article today, I will provide a fact-based analysis of the one Mall REIT that I consider to be a STRONG BUY. In other words, “I am standing strong with Simon.”

Summary

  • Two of these REITs are trading above my comfort range, notably Digital Realty and American Tower.
  • Realty Income and Ventas, Inc. are both trading at “sound” value.
  • Simon Property Group is the fifth member of the “DAVOS” bracket and this REIT is trading at a quintessential “margin of safety”.

A few weeks ago, I decided to create a FANG look-a-like REIT portfolio representing a few of the most popular REITs. As I explained, “FANG has become a household name. And I thought to myself, wouldn’t it be cool to create my very own REIT version of FANG?”

It was my goal “not just to showcase some flashy acronym like SWAN (yes, I wanted to use it but there is no perfect combination of REITs that work), but to create a benchmark of the best REIT performers in one easy-to-use phrase.”

After contemplating the most popular REITs and coming up with an easy-to-use acronym I settled on DAVOS. The 5 REITs that make up the DAVOS include Digital Realty (DLR), American Tower (AMT), Ventas, Inc. (VTR), Realty Income (O), and Simon Property Group (SPG).

Two of these REITs are trading above my comfort range, notably Digital Realty and American Tower. Just look at this chart below:

Realty Income and Ventas, Inc. are both trading at “sound” value, and for those who don’t have “a toe in the water,” now may be a good time to begin to nibble.

Of course, we all know that value investors are wired to own bargains, stocks that are trading with a margin of safety. The most beneficial time to be a value investor is when the market is falling, or as Benjamin Graham reminds us,

“The margin of safety is always dependent on the price paid. For any security, it will be large at one price, small at some higher price, nonexistent at some still higher price.”

Simon Property Group (SPG) is the fifth member of the “DAVOS” bracket and this REIT is trading at a quintessential “margin of safety.” While some analysts label Washington Prime (WPG) or CBL & Associates Properties (CBL) as STRONG BUYS, I find this labeling somewhat misleading.

See my recent articles on CBL HERE and WPG HERE.

While there is no question that these two REITs are cheap, I consider a more appropriate label “speculative” (not strong). In my article today, I will provide a fact-based analysis of the one Mall REIT that I consider to be a STRONG BUY. In other words, “I am standing strong with Simon.”

Simon Says…

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