2 for Tuesday: Simon Says Buy Malls!

As this consumer spending slowdown takes its toll on retailers, it's time for savvy investors to step back a bit and think about where value is lurking. If you ask me, a good place to start is with the shopping center owners -- stocks like Simon Property Group (SPG Quote), an Indianapolis-based real estate investment trust.

Simon Property owns or manages 252 retail properties in 36 states. Unlike many other players these days, the company has plenty of good news.

For starters, Simon's occupancy rate was 90.6% as of Sept. 30, flat with a year ago. Retail sales rose $3 per square foot to $378 in the third quarter. That's a good sign that business remains resilient.

Meanwhile, the company remains in robust financial health. Simon's interest coverage on its debt is a manageable 2.2, and the company plans to pay down roughly $250 million in 9% debt over the next several quarters. That will free up additional funds for new development and redevelopment.

The Stock Simon Property Group (SPG:NYSE)
Recent Stock Price:	$29.93
52-Week Range:	$23.75-$30.97
P/E Ratio:	28.45
Market Cap:	$5.25 billion
Float:	98.2 million shares
Short Interest Ratio:	3.95
Institutional Ownership:	69%
Source: Yahoo! Finance

It looks as if Simon is on target to meet 2001 and 2002 earnings forecasts of $3.52 and $3.76 a share. Management recently affirmed that it's "comfortable" with 2001 forecasts. And the company pays a $2.10 annual dividend.

The Stats
Year	Revenue	EPS
1999	$1.89 billion	$2.98
2000	2.02	3.28
2001*	2.01	3.52
2002*	2.10	3.76
*Thomson Financial/First Call est. Source: Company reports

Assuming the company holds its ground on occupancy rates and meets consensus estimates over the next year, I think the shares could easily trade north of $32. When coupled with Simon's 7% dividend yield, the total potential return is north of 15%.

In my book, that's not too shabby.

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