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I've quit reading most opinions on stocks I follow, but do my own CF tracking, and I just uploaded the 1Q19 10Q data into my Excel SS for SPG, one of my larger REIT holdings.

CFFO per share dropped considerably in 1Q but was unusually high 4Q18. I think this has to do with elective rearrangement of working capital accounts, principally payables for REITs. This is why I use rolling 4-quarters for REITs, as they tend to fluctuate considerably between quarters. So for 2Q18-1Q19 here is what I came up with ($Millions except per share data)

Interest as a % of CFFO + Interest declined slightly to 17.8%, the lowest its been over the past 19Q I've been tracking SPG. This is very low for a REIT, but for SPG is a bit unique as they use a lot of capital from Non-Controlling interests. 15.1% of SPG distributions were to Non-Controlling interests. So like PSA which also has a very low interest Expense % because it gets much of its financing through preferred stock and so like SPG relies less on debt.

Revenue per share rose to $4.62 while CFFO per share stayed at $3.03. Net CFFO (CFFO - dist to preferreds - dist to NCI) per share stayed constant at $2.64.

Dividend to Net CFFO payout ratio went from 78% to 82%, highest its been in past 19Q I've tracked it. This is not a bad coverage ratio for common dividends but the trend in going from mid to upper 60% range over my holding period up to 82% is a bit concerning

The % of CFFI (net spent on investing activities...primarily net property acquisitions) covered by Net CFFO after the common dividend is paid, remains >100% over the past 11 rolling 4Q periods. This is unusual for a REIT, which usually doesn't retain enough cash after the dividend to be able to do this. This is one of the reasons SPG is able to keep its borrowing rate low (hence low interest expense).

Managerial Efficiency, CFFO/Revenue, or how much CFFO management can generate per dollar of revenue, remained constant at .66, which is good for a retail REIT.

The new metric I'm starting to use is the CFFO/Share trend compared to CFFI/Share. Graphing these out and calculating the slope of their trend line will show if operational cash is growing at a rate higher or lower than the trend line for new investments per share. Here SPG definitely shows its operational cash is growing at a faster rate than its investment rate...or it is getting a positive return on investment.

Overall, I think SPG is doing well which is definitely a good sign for a retail REIT today. If CFFO per share doesn't pick up to the rate its been, we may see a slowing of dividend growth, which jumped up to 10.5% growth in 2018 over 2017.

BruceM
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