r/stocksMar 3, 11:05 PM
Investing in Third Spaces: Simon Property Group (SPG) Stock Analysis
I came across a fairly fascinating Reddit thread yesterday, which posed a fairly simple question: with AI exploding in both capacity & adoption rates and the dead internet theory becoming ever closer to reality, how can investors capitalize on the inevitable desire for people to form genuine relationships in third spaces?
To answer this, I focused on analyzing one specific company that stands to gain significantly if our disconnecting thesis plays out. Simon Property Group (SPG) is the largest REIT in the US, and invests in malls, outlets, and community/wellness centers. While malls seemed like a fading trend as online retailers ate their lunch, the story may not be so simple. Familiar fixtures like Build-a-Bear Workshop (BBW) and American Eagle (AEO) are doing quite well (albeit suffering a bit of a beating on the YTD charts), and SPG in particular is already up 8.8% YTD, up over 42% since Liberation Day lows.
Section 0: Supporting Qualitative Evidence?
At a glance, it does seem like people are quite sick of being online so much. Match Group Inc. (MTCH), who run Tinder and Hinge, have seen their stock drop over 69% (nice) since IPO, and is essentially flat over the past year. Strava, the exercise tracker, reported at the end of 2024 that they saw a 59% increase in club memberships and an 89% increase in club participation by women.
What about spending? Total U.S. personal consumption expenditures reached roughly $16.6 trillion in Q3 2025, marking a record high, while overall retail sales have been growing 2-3% YOY. Core retail sales have shown somewhat stronger momentum, with certain readings above 4-5% growth. Seasonal and discretionary categories have been particularly robust, with holiday spending up 6.4% percent YOY and Cyber Monday sales projected at $14.2 billion, up over 6%. Valentine’s Day spending is expected to reach $29.1 billion, also a record.
Most relevantly for us, indoor malls saw H1 2025 YOY visits up 1.8%, open-air shopping centers 0.6%, and outlet mall traffic fell -0.8%; simultaneously, all mall formats experienced a significant rise in average visit duration, with indoor malls seeing the greatest increase at 3.3%. Between more visits and more spending, higher-income households appear to be driving much of this discretionary strength, which benefits Class A assets holders like SPG greatly.
But does any of this mean that there’s actually room for growth, and even if there is, are we too late to tap in?
Section 1: Growth & Momentum
First, we have to establish how SPG actually makes their keep, and look at how they’ve done recently. The core earnings engine is net operating income (NOI) generated from long term leases with retail tenants. For FY2025, beneficial interest of combined NOI was approximately $6.83 billion, funds from operations per share were $12.34, and Real Estate FFO per share was $12.73. Domestic property NOI grew 4.4% YOY and portfolio NOI grew 4.7%, strong indicators that earnings growth isn’t coming fr