Simon Property Group Earnings: Property NOI Growth of 5.0% as Occupancy Surpasses 96%

Simon Property Group's third-quarter results were relatively in line with our expectations, leading us to reaffirm our $161 fair value estimate for the no-moat company. Occupancy improved 60 basis points sequentially to 96.2%, the highest it has been for Simon’s portfolio since 2016. Minimum rent increased 2.3%, in line with our estimate, and same-store property net operating income grew 5.0%. However, Simon saw a $7.6 million loss from its retail investments and a decline in corporate and other NOI sources, so total company NOI only grew 2.1% in the third quarter. The company reported funds from operations of $2.84 per share. Excluding a $49.3 million noncash loss for marking to market its investment in Klépierre exchangeable bonds and excluding a $28.3 million adjustment for retail investments, Simon would have reported FFO of $3.05 per share for the quarter, relatively in line with our $3.07 estimate.