Episode Details

Simon Property Group, Inc. (SPG) Q2 2026 — Q2 2026 (quarter ended June 30, 2026): GAAP diluted EPS $1.49 vs a $1.64 consensus. Real Estate FFO $3.29 vs a $3.18 bar, up 7.9%. Revenue $1.7906B, up 19.5%. Domestic NOI up 8.5%, occupancy 96.0%. FY26 FFO guidance raised to $13.20-$13.30; Q3 dividend $2.25, up 4.7%. An AMC print on Aug 10, so Aug 11 was the reaction: $219.53 close, down 0.46%. It closed $220.56 on Aug 12 - one cent above the pre-print close. Simon closed at $220.55 the afternoon it reported and $220.56 two sessions later - one cent of net movement - even though every screener showed a 15-cent earnings miss. Real Estate FFO of $3.29 beat a $3.18 bar, revenue beat, guidance rose and the dividend rose. Depreciation alone was $1.61 a share, more than the entire $1.49 of reported EPS. This episode teaches why EPS is the wrong input for a REIT, then asks whether $838 of retailer sales per square foot at 96% occupancy is durable or flattered by the Taubman consolidation. THE CALL: HOLD (3/5, AN EXCELLENT QUARTER - AND THE MULTIPLE ALREADY OWNS IT) — base-case value ~$205.0 vs ~$220.56 today. KEY METRICS: - CALL: HOLD, 3/5. Fair value ~$205 vs the $220.56 Aug 12 close, ~7% below. Not an owner-earnings DCF - for a REIT the inputs are a multiple, a yield and a cap rate. A: 15.0x our 2027 Real Estate FFO of $13.85 = $207.75. B: a 4.40% fair forward yield on a $9.20 dividend = $209.09. C: a 6.25% cap rate on $6,576M of 2026 portfolio NOI, less net debt = $195.71. Weighted 40/35/25. Bear $172, bull $234. Street: 15 buy, 20 hold, 2 sell, average ~$216 - already under the market price. - THE TWO SCOREBOARDS: net income to common $483.1M, or $1.49 on 324.5M shares. Real Estate FFO $1.249B, or $3.29 on 380.4M shares AND operating-partnership units - a 14.7% economic interest absent from the EPS denominator. Simon's bridge, page 9 of Exhibit 99.1: $1.49 EPS, plus $1.61 of depreciation net of the noncontrolling share, plus $0.02 of disposals = $3.12 of FFO; plus $0.19 of non-cash marks = $3.29. Depreciation alone exceeds the whole EPS figure. - WHY THE EPS SERIES IS NOISE: Q4 2025 EPS was $9.35 and FY2025 $14.17, because on October 31, 2025 Simon bought the last 12% of TRG (Taubman), consolidated it and booked a $2.858 BILLION non-cash gain. Real Estate FFO over the same six quarters: $2.96, $3.05, $3.23, $3.49, $3.17, $3.29. Q2 depreciation was $459.9M vs $339.1M, up 35.6%, mechanically from that consolidation - $21.4B is now written off $51.1B of property at cost. - THE GUIDANCE RAISE, DECODED: FY26 Real Estate FFO guidance went to $13.20-$13.30 from $13.10-$13.25, up $0.08 at the midpoint - but the quarter beat by $0.11. A $13.25 midpoint less the $6.46 banked in H1 leaves $6.79 for H2, against $6.72 in the back half of 2025: about 1% growth, behind an H1 that grew 7.5%. Dividend $2.25, a 4.08% yield, 78% of the $2.89 of FAD per share generated. Retailer sales $838 a foot (+13.9%) - but the measured portfolio grew 9.5% and was not restated. What to watch: UP: domestic NOI still compounding near 8% at the November 2 print; the implied 1% second half proving to be conservatism; retailer sales per foot holding above $800 on a comparable base. DOWN: that ~1% second-half FFO growth turning out to be the real run-rate; occupancy slipping from 96.0%; further losses at Catalyst Brands, Rue Gilt Groupe and Jamestown; the 16.6x multiple giving back its 2026 expansion. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.