Many investors are afraid to put their money into anything having to do with the retail industry, and who could blame them? However, mall real estate investment trust Simon Property Group (NYSE:SPG) is in a league of its own. Here is one good reason why Simon Property Group could be a safe long term real estate investment:
1. Some Of The Best Malls In The Industry
One of our favorite investment strategies is to focus on the stocks of companies that own assets that are either irreplaceable or that would be difficult for competitors to replicate. For example, properties like local strip malls or budget hotels are extremely common and can be found almost anywhere within a large city or metropolitan area, so it is very easy for competitors to enter the real estate market and construct competitive properties.
On the other hand, Simon Property Group owns some of the most valuable and unique mall properties in the entire world (it is believed that Simon Property Group owns five of the ten most valuable malls in the United States). Real estate industry experts estimate that Simon Property Group’s Sawgrass Mill mall in Florida is worth approximately $4.1 billion dollars, Fashion Show Mall in Las Vegas is worth about $3.1 billion dollars, and Forum Shops at Caesars in Las Vegas is worth approximately $2.8 billion dollars, just to name a few world class malls owned by Simon Property Group. That is a huge barrier to entry for future real estate competitors.