SPG Downgrade - A Terrific Compounder now at All-Time Highs

Research evidence excerpt

SPG Downgrade - A Terrific Compounder now at All-Time Highs

has been trending well but at 96% in 1Q26, compared to a ~97% high watermark in 2014-15,

further upside could be limited.

○Development/redevelopment opportunities are exciting, including the announced Copley Place in

Boston (see here), The Mall at Green Hills in Nashville, Cherry Creek Shopping Center in Denver, and

International Plaza in Tampa (see here). SPG's current pipeline is expected to generate ~9% returns

though with ~$499MM of forecasted investment spend through 2027 against a Real Estate FFO base of

~$4.8B in 2025, the order of magnitude in earnings contribution is less meaningful.

○Debt refinancings continue to be a headwind for the company (see here), a ~2% annual drag to FFO in

the medium term.

●Valuation. Strong compounded performance over years has expanded the SPG multiple. Exhibit 2 shows that

the company saw a multiple re-rate of ~21% YTD, compared to Wolfe's coverage expanding just ~half that

amount. Overlaying valuation with growth in Exhibit 3, SPG trades at a premium PEG of ~4.2x (2026 multiple

on 2025-27 CAGR) versus our retail and overall coverage averages of ~3.4x and ~3.1x, respectively. While a

combination of sophisticated operations and grit make SPG an excellent investment, the current entry point is

challenging. We are not huge fans of historical relative multiples (sectors and stocks can have secular shifts that

make them less relevant), but one that jumped out at us was relative to AVB in apartments, where the relative

multiple is near an all-time high (Exhibit 4).

●Channel Check. We will be hosting our Private Real Estate Conference on Sep 17 (in-person in Midtown

NYC) including Raider Hill/PREIT. Please register here for 1x1/group requests.

Where Could We Be Wrong?

Upside