Did Simon Property insiders signal a bottom in the ravaged REIT sector? 9 directors, including CEO David Simon, bought $20 mil.

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To say that March of 2020 in the REIT sector has been ugly does a disservice to the word. The average month-to-date loss for the top ten stocks in the retail REIT sector was 46.82% through the 19th. The Coronavirus pandemic is forcing most Americans to hunker down in their homes, leaving mall stores with minimal traffic — assuming they’re open at all. Indeed, yesterday Simon Property Group announced it was closing all its malls due to the pandemic. But while investors appear to be pricing in the extinction of malls, over the last three days nine Simon Property insiders combined to buy $20.8 million of SPG on the open market.

Among the Simon Property insiders aggressively buying SPG was CEO/Chairman/President David Simon, who bought $9.1 million of SPG @ $60.83 on March 17. That increased Simon’s holdings by 19% to 954,000. Simon’s only previous purchase was in Sept. of 2004 when he bought 50,000 shares at $53.70, spending $2.68 million.

David Simon’s uncle Herbert, a director at SPG, also a multi-billionaire, bought $9.93 million of stock at $52.67 on March 18. The 188,572 share purchase increased Herbert’s holdings by 8014% to 190,930 shares. Herbert Simon’s most recent purchase of SPG was a private transaction in March of 2010, when he bought 329K shares @ $78.51. More recently he sold $139 million of SPG on Dec. 12, 2014 @ $149.75.

The Simon Property insider purchases were among the many large insider buys in recent days as corporate insiders take advantage of the Coronavirus crash to buy their own stock en masse.

Nine Simon Property insiders bought shares over the last three days. Total purchased: $20.8 million.

InsiderTitleTransactionTrade Date Shares Avg. Price Total Change in Holdings
Glasscock Larry CDirectorOpen Market Purchase19-Mar-2020              10,000 58.98 $                589,788 68%
Smith J Albert JrDirectorOpen Market Purchase18-Mar-2020                1,750 52.03 $                  91,053 4%
Smith Daniel C.DirectorOpen Market Purchase18-Mar-2020                   921 53.14 $                  48,946 7%
Simon HerbertDirectorOpen Market Purchase18-Mar-2020            188,572 52.67 $             9,933,030 8014%
Hubbard Allan BDirectorOpen Market Purchase18-Mar-2020                3,615 54.81 $                198,138 24%
Leibowitz Reuben SDirectorOpen Market Purchase18-Mar-2020                1,000 50.15 $                  50,145 2%
Selig Stefan MDirectorOpen Market Purchase18-Mar-2020              15,000 46.17 $                692,625 498%
Simon DavidCEO/Chairman/President, DirectorOpen Market Purchase17-Mar-2020            150,000 60.83 $             9,124,050 19%
Leibowitz Reuben SDirectorOpen Market Purchase17-Mar-2020                1,500 64.88 $                  97,325 3%
 $           20,825,099

Simon Property Group Inc. is the largest mall developer in the United States. SPG has full or partial ownership of more than 300 properties — mostly in the U.S., but also in Europe and Japan. Simon’s properties include traditional enclosed shopping malls, outlet malls, and lifestyle centers, which offer a combination of specialty retail stores, entertainment, and sit-down restaurants, often in an open-air setting.

Simon Property, the U.S.’s largest owner of malls, has lost 2/3 of its market value in 2020.

Simon’s market cap is $14.39 billion, down from $45 billion at 2019 year end. Even after a 10% rally on March 19, SPG yields 15%.

On March 18, Deutsche Bank analyst Derek Johnston upgraded Simon Property to Buy from Hold with a price target of $120, down from $164. The analyst views Simon, Boston Properties (BXP), Invitation Homes (INVH), Prologis (PLD) and Welltower (WELL) as “conviction buys” in the real estate investment space amid the COVID-19 risks.

The large purchases by Simon Group insiders suggest that CEO Simon and his team do not believe malls will soon be extinct. Rather, high quality class A malls will survive, thrive, and SPG stock will eventually trade at much higher levels.

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