Simon Property, Mall REITs Up on Retail Sales

NEW YORK ( TheStreet) -- Simon Property Group ( SPG), General Growth Properties ( GGP) and Kimco Realty ( KIM) were among the real estate investment trusts trading higher Thursday following a round of stronger-than-expected retail sales.

Retail same-store sales expectations for June were mediocre heading into Thursday's results, but so far companies have been topping forecasts .

Standard & Poor's Equity Research REITs analyst Robert McMillan noted that "several retailers reported surprisingly strong retail sales."


Strong retail sales bode well for REITs that invest in shopping malls and community shopping centers.

Positive results on Thursday allowed McMillan to raise his 12-month price target on Simon Property Group by $10 to $135 "in anticipation that demand for space in SPG's centers and rents will continue to increase over the next 12-18 months."


Shares of Simon Property rose 1% to $121.43 on Thursday. Kimco gained 1.2% to $19.31 and General Growth added almost 2% to $17.28.


Other mall owning REITs showing strength in Thursday's session included Developers Diversified ( DDR), up 2% at $14.86, Glimcher Realty Trust ( GRT), higher by 3.3% at $10.18, Tanger Factory Outlet ( SKT), which rose 1.7% to $28.61, and Equity One ( EQY), up 1% at $19.55.


S&P Equity Research said it expected June same-store sales -- or sales at stores open at least one year, a closely watched metric in the restaurant industry -- to rise 5.4% from the last year, while the actual gain was 8.1%.

"In addition, our optimism was boosted by the ADP survey of private payrolls showing a gain 157,000 new jobs in June, significantly above the 78,000 new June jobs expected by consensus," McMillan said.

-- Written by Miriam Marcus Reimer in New York.

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