DCF Studio

    SPG · NYQ · Real Estate

    Simon Property Group, Inc.

    Also onConsensus Drift

    Implied value per share

    USD 57.61

    Market price

    USD 205.32

    Implied upside

    -71.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Current EV/EBITDA of 22.5x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 57.61-71.9%
    Exit multiple
    USD 225.48+9.8%
    Market price
    USD 205.32

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn3bn5bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 6.8bnUSD 7.2bnUSD 7.7bnUSD 8.1bnUSD 8.7bn+6.3%
    EBITUSD 3.4bnUSD 3.6bnUSD 3.8bnUSD 4.1bnUSD 4.3bn+6.3%
    NOPATUSD 3.3bnUSD 3.5bnUSD 3.8bnUSD 4.0bnUSD 4.2bn+6.3%
    Add depreciation & amortisationUSD 1.6bnUSD 1.7bnUSD 1.8bnUSD 1.9bnUSD 2.1bn+6.3%
    Less capital expenditureUSD -907.9mUSD -965.5mUSD -1.0bnUSD -1.1bnUSD -1.2bn+6.3%
    Less increase in working capitalUSD -684.6kUSD -728.1kUSD -774.3kUSD -823.5kUSD -875.7k+6.3%
    Free cashflow to firmUSD 4.0bnUSD 4.3bnUSD 4.6bnUSD 4.8bnUSD 5.1bn+6.3%
    Discount factor0.95430.86900.79140.72070.6563-
    Present valueUSD 3.8bnUSD 3.7bnUSD 3.6bnUSD 3.5bnUSD 3.4bn-3.2%
    Present Value Of The ForecastUSD 18.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.209Reported 1.312, pulled toward 1.0 (Blume)
    Cost of equity11.65%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 77.9bn72.8% of capital
    Total debtUSD 29.2bn27.2% of capital, book value as a proxy
    Tax rate1.9%Effective, capped at statutory
    WACC9.81%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 57.61

    62% of EV

    Forecast FCFF, final year
    USD 5.1bn
    Capex at depreciation, working capital in reinvestment
    USD 4.2bn
    Less reinvestment at g/ROIC (25.5% of NOPAT)
    USD -1.1bn
    Capitalised
    USD 3.2bn
    ROIC (WACC floor)
    9.8%
    Terminal value, undiscounted
    USD 44.4bn
    Terminal value, discounted
    USD 29.1bn
    Enterprise value
    USD 47.2bn
    Less net debt
    USD 28.4bn
    Equity value
    USD 18.8bn

    Exit at 20.0x EBITDA

    Value per shareUSD 225.48

    82% of EV

    Terminal value, undiscounted
    USD 127.9bn
    Terminal value, discounted
    USD 83.9bn
    Enterprise value
    USD 102.0bn
    Less net debt
    USD 28.4bn
    Equity value
    USD 73.6bn

    Spread between methods: 119%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.81%96.3099.08102.28106.05110.58
    8.81%73.4474.5075.6676.9378.36
    9.81%56.7457.1857.6158.0558.48
    10.81%44.1544.5344.9145.2945.67
    11.81%33.6834.0134.3534.6835.01

    Outlined: this model. Green text: above today's price of 205.32. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year6.3%25.1%+18.7pp
    Discount rate9.8%5.8%-4.0pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.