C-Suite Buy of the Week: REIT Edition

Dear Benzinga Member,

One of Wall Street’s best-kept secrets is the consistent outperformance of REITs since 1972. This was when
the National Association of Real Estate Investment Trusts and some large real estate developers successfully
lobbied for legislative and tax changes, creating the modern version of the REIT.

For the past several years, real estate has generally been viewed as toxic.

Rates were rising, and a wave of refinancing’s would doom property owners to bankruptcy.

Thanks to generous work-from-home policies after the pandemic, no one would rent office space again.

We were building too many apartments that would never be rented, and wide swaths of America would look
like the landscape in a dystopian post-apocalyptic movie.

Malls were dead, and no one would ever shop in one again.

While there are small kernels of truth in the bearish case for real estate, the fears were greatly exaggerated
for the most part.

One of the most overlooked concepts is that Real Estate Investment Trusts tend to own the most excellent
properties in the best markets. There are very few sagging office buildings in bad neighborhoods or failing
cities.

REITs also have far more access to financing and the markets than private real estate companies. Their
borrowing costs are lower, and it is easier for them to sell equity if they choose to do so.

Thanks to rising mortgage rates and a lack of single-family home inventory, demand for multifamily housing
has been much higher than most analysts expected.

The shopping malls that were going to fail have already failed. The high-end malls in the best neighborhoods
are thriving.

Even center-city office towers are starting to see demand pick up as the economy continues to grow and
employers rethink overly generous work-from-home policies.

Now, REIT insiders have decided that the future is so bright they have to write checks. In the past few weeks,
we have seen officers and directors reach into their pockets and buy more shares of the Real Estate
Investment Trusts they manage.

Not too long ago, investors were certain that Simon Property Group SPG would be filing for bankruptcy
before too much time passed. Simon is one of the largest owners of small space in the United States.

Before COVID hit our shores, we were already writing off malls, and e-commerce was killing off brick-andmortar stores. Weaker malls in lower-income and less populated areas were shutting down all over America.

When COVID stopped mall foot traffic cold in almost every brick-and-mortar store, Simon was the next likely
casualty, according to the Instant Experts of the Internet.

The experts and analysts overlooked one crucial fact: Simon Property Group owns the very best malls in the
very best markets around the world.

Simon Property Group’s mall portfolio is its crown jewel, featuring some of the most iconic and productive
malls in the United States and abroad. These malls are primarily located in affluent, densely populated urban
and suburban areas, ensuring a steady stream of consumers with strong purchasing power. SPG owns a variety
of malls, from regional shopping centers to upscale, luxury malls that host high-end retailers.

Flagship properties such as The Forum Shops at Caesars Palace in Las Vegas, The Galleria in Houston, and King
of Prussia in Pennsylvania demonstrate SPG’s dominance in the luxury and high-traffic retail space.

SPG’s portfolio of premium outlet centers represents a significant portion of its holdings. These outlets allow
shoppers to purchase discounted luxury and high-end brands, drawing both local consumers and tourists. The
company operates dozens of premium outlet centers across the U.S. and internationally, with flagship
properties like Woodbury Common Premium Outlets in New York and Orlando International Premium Outlets
in Florida serving as major retail destinations.

Recognizing the shifting dynamics in retail, Simon has expanded into mixed-use developments, where retail is
integrated with office, residential, and hospitality spaces. These projects are often located in densely
populated urban areas and designed to meet the growing demand for live-work-play environments. For
instance, Simon’s Phipps Plaza in Atlanta is undergoing a transformation to include luxury hotel
accommodations, office space, and fine dining, in addition to high-end retail offerings.

Simon also has a fortress-quality balance sheet and receives an investment-grade rating from the major rating
agencies.

Insiders know the value of their properties and have been loading up on the stock. Officers and directors have
been consistently buying stock all year. They are not buying to make a few percentage points on their
investment. They believe the shares of Simon Property Group can deliver huge returns equaling several times
the current price.

They will also be collecting a dividend yield of 4.59% while they wait.

Officers and directors have also been snapping up shares of Armada Hoffler Properties AHH.

Armada Hoffler Properties is a diversified real estate investment trust (REIT) focusing on high-quality
properties across multiple sectors, including office, retail, and multifamily residential. Founded in 1979 and
headquartered in Virginia Beach, Virginia, the company operates primarily in the Mid-Atlantic and
Southeastern United States.

The company’s portfolio comprises urban and suburban properties, strategically focusing on markets
experiencing strong population growth and economic expansion. Its expertise in mixed-use development has
allowed it to create vibrant, dynamic environments that cater to various tenants and residents, making its
properties more resilient to market fluctuations.

One of the hallmarks of Armada Hoffler’s property portfolio is its expertise in mixed-use developments. These
projects integrate office, retail, and residential spaces into a single complex, often creating community hubs
that offer convenience and appeal to a wide range of tenants. Notable examples include The Town Center of
Virginia Beach, a landmark project that combines luxury apartments, office spaces, retail stores, dining, and
entertainment in a walkable urban environment.

The stock is underpriced at current levels, and insiders have been aggressively accumulating shares over the
past few months.

You get paid very well to wait for good things to happen, as shares of Armada Hoffler are currently yielding
over 7%.


Best Regards,
The Benzinga Research Team

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