Simon Property Group Inc. becomes the first equity REIT to join the S&P 100. Learn more about this popular alternative investment.
Simon Property Group Inc. will make history tomorrow when it becomes the first equity REIT to join the S&P 100 Index, a benchmark of leading blue chip companies such as Apple Inc., Exxon Mobile and Microsoft.
The Indianapolis-based company has a market capitalization of more than $43 billion and is the largest U.S. retail REIT, or Real Estate Investment Trust. “We are delighted and honored to be the first REIT included in the S&P 100 Index,” David Simon, the company’s chairman and chief executive officer, told the industry association NAREIT. “I have no doubt that as the REIT industry continues to excel, other REITs will be included.”
That’s not likely to happen anytime soon, according to market data that shows Simon Property Group Inc. is roughly twice the size as the second-largest REIT, American Tower Corp., which has a market capitalization of $25 billion.
Simon Property Group Inc. owns or has an interest in 337 properties comprising 245 million square feet of retail space in North America and Asia, according to the company website. It trades on the New York Stock Exchange under the symbol SPG. According to a company spokesman, share price is at an all-time high of more than $141.00. Last week the company announced plans to enter the European market by buying a $2 billion minority stake in Paris-based Klepierre.
REITS are a popular alternative for investors seeking to diversify their portfolios away from stocks, bonds and cash, according to Millionaire Corner research. REITs, corporations that own rental apartments, office buildings, mortgage bonds and other real estate assets, derive income from renting or leasing property, or loaning money to fund real estate projects. A REIT is exempt from corporate income taxes, but is required to distribute at least 90 percent of its profits to shareholders as dividends – a rule that can provide a strong revenue stream for investors.
That dividend stream is sought by one-third of high net worth investors, who have investable assets of $5 million to $25 million, according to a fourth quarter study conducted by Millionaire Corner on financial product ownership. High net worth investors prefer REITs to all other forms of alternative investments, including hedge funds, gold and other commodities.
U.S. publicly traded REITs currently manage $407 billion of assets and own $550 billion of real estate assets, according to NAREIT, which reports the products have outperformed the S&P for the last three years.
S&P Indices maintains a family of benchmark indices, including the S&P 500, which according to the company is the world’s most followed stock market index. The company also maintains the S&P/Case-Shiller Home Price Indices and the S&P GSCI, closely watched measures of home price and commodity values. The S&P 100 Index is a subset of the S&P 500 and is comprised of blue chip companies from multiple industry groups. Also joining the S&P 100 tomorrow are Eli Lilly and Co., Anadarko Petroleum Corp., eBay Inc., Accenture plc and Starbucks Corp. Companies removed from the S&P 100, but remaining in the S&P 500, are Entergy Corp., Xerox Corp., Weyerhaeuser Co., Alcoa, Inc., Avon Products, Inc., and Sprint Nextel Corp.