- Simon Property Group is a constituent of the RTL Index
- Trade: Covered Call
- Buy Simon Property Group (SPG) REIT
- Sell June 2018 $160 Call for $5
- Collects over 3.30% in options premium
Kevin Kelly of Benchmark Investment weighs in on Simon Property Group via Bloomberg TV. Simon is a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations and currently has an implied yield of over 5%. The recent woes of retail have lead to the company’s implied volatility to become elevated at 24.5.
Simon Property has one of the strongest, best diversified retail real estate portfolios across the full-price and outlet segments and has proven to be an excellent capital allocator. Simon Property consistently generates attractive returns across its platform. The company’s balance sheet is one of the strongest in the RTL SCTR index, positioning the company well to take advantage of any dislocations in its sector as well as growth opportunities in its existing asset base.
SPG is down almost 10% YTD and Benchmark’s Kevin Kelly went on Bloomberg TV to discuss an options trade to generate additional yield on the company predicated on SPG’s redevelopment pipeline will fuel portfolio expansion and cash-flow growth. Other points include: Their funds from operations is expected to grow 6-7% in 2018, similar to the last two years, not focused on property acquisition or an M&A, focusing on replacing weaker retailers as well as recapturing and redeveloping department-store anchors.