Simon Property Group Earnings: Strong Property NOI Growth Despite Tenant Sales Slightly Falling

Simon Property Group reported second-quarter results that were relatively in line with our estimates, leading us to reaffirm our $156 fair value estimate for the no-moat company. Occupancy improved 10 basis points sequentially to 95.6%, above our estimate of 95.0% for the quarter. Minimum rent improved 3.0%, better than our estimate of 2.0% minimum rent growth, and North America property net operating income increased 5.2%, better than our estimate of 4.2% NOI growth. While income from retail investments was only $6.5 million in the quarter, that is relatively in line with our $12 million estimate and is significantly better than the $83 million loss reported in the first quarter. Simon reported funds from operations of $2.90 per share in the second quarter, slightly below our $2.97 estimate and just 0.9% above the $2.88 figure the company reported in the second quarter of 2023.