SPG

Simon is the premier US retail-REIT operator, and the operating numbers are quietly solid: revenue grew 6.7% to $6.36B (its fifth straight annual gain from $5.12B in FY2021), operating cash flow rose 8.4% to $4.14B, and the portfolio is full — the 10-K reports ~96.4% leased GLA across 108 malls and 70 Premium Outlets and 99.2% leased at The Mills. That occupancy, plus 188.4M sq ft of high-quality, hard-to-replicate GLA in 38 states, is the real engine here, and it is healthy.

But the headline that makes the stock look cheap is misleading. Net income jumped 96.6% to $5.36B and diluted EPS leapt 95.2% to $14.17, yet operating income rose only 2.7%. The MD&A explains the gap: on October 31, 2025 Simon completed the TRG Acquisition, buying the remaining 12% of The Taubman Realty Group it didn't own — a transaction that produces large non-operating, largely non-cash remeasurement gains. The tell is in the ratios: a 84.3% net margin and 103% ROE are economically impossible to sustain for a mall landlord. So the 14.9x P/E on $14.17 of EPS is an illusion; normalized to the ~$2.7B of recurring earnings this business actually generates (FY2024 level), the true multiple is far richer, and REITs are properly valued on FFO and dividend yield, not EPS, in any case.