Simon Property Group Inc. (SPG)

US REITs? He shares his interest in the sector because they rose dramatically from the crisis years, and then eased back a little. There are 2 concerns. Higher interest rates and their ability to borrow. There is also the question about the need for property given the migration of consumer spending to the Internet from the old bricks and mortar mall. He would urge you to look at the Simon Property Group, because it is the largest and bluest chip of all the mall operators.

(A Top Pick Jan 27/16. Up 0.31%.) This is interest rate sensitive, which has been a drag on the stock. It is the best of breed and has great use of capital. Pristine balance sheet. Great international exposure. Class A mall operator. But this is not the time. Rates are going higher which means a cap rate on the valuation of the hard assets is a bit tougher right now.

E-commerce is a big threat, but he is comfortable owning this because they have fantastic properties and great locations. These are in closed malls, but they have high output. Their sales per square foot is very high and traffic continues to go up. They’ve done a fantastic job of reorienting some of the malls to make them look a little more service oriented. A good example of location, location, location. Trading at a substantial discount to NAV, and he would be prone to pick away at this here.

This has sold off dramatically. It is the largest REIT in the world with one of the strongest balance sheets. They own the highest quality malls. They are growing and can deliver growth to offset a higher cost of capital in coming years. (Analysts’ Target: $220.86)

REITs tend to do well in the spring and summer. Once we get into September, we enter into a period of seasonal weakness. That takes a lot of the REITs lower until about the Nov/Dec timeframe. The chart for this year shows it going up to the beginning of August and then dropping with lower lows and lower highs. Momentum indicators are heading lower and it is underperforming the market.

In the REIT sector, rather than retail. The market is looking for yield. He is worried about this because of Amazon and because REITs have had a lot of a run up.

(Top Pick Apr 9/15, Up 11.72%) He likes this name and continues to hold it. They are a unique competitor in that real estate space. He is not a high growth name and watch for interest rates to rise.

Best in class operator, assets and balance sheet. Quickly escalating rates could be a negative. They are internationally diversified. Good ‘A’ properties all round. They have the best leading numbers of anyone. They are in the top markets. They are the best in the business.

The largest REIT in the world with a lot of operations in the US and some in Canada, Europe and Asia. Business conditions continue to look pretty good. Consumer spending in the US remains pretty firm. Occupancy levels continue to be quite tight, which will allow revenues to remain pretty strong. They also did a share buyback. Dividend yield of 2.84%.

The biggest REIT in the US. A decent, very high quality REIT with the exception that it is a little bit expensive. However, you could make that argument for most US REITs, which was the best performing sector last year. This was because people rotated into sectors where there is a high degree of predictability of income and an improving economy. You can expect to get higher dividend growth. If there is just a little bit of a sign of interest rates going up, this is going to go down.

(Top Pick July 9/13, Up 12.67%) They spun off some of their lower quality assets so the remaining portfolio will be very powerful in terms of sales per square foot. They now provide exposure to higher end consumers. 5% free cash flow growth going into 2015.

You can’t go wrong with this one. Beautiful retail properties. The best malls don’t suffer from e-commerce. Their last earnings surprised significantly to upside. A good long term hold.

Tremendous value in this company. Best real estate portfolio in the world and trading at a big discount to its NAV. This is the largest component of the US real estate index. As money comes back into REITs this one will benefit the most. It is his largest US holding.