UPDATE: Citigroup Upgrades Simon Property Group to Buy, Raises PT

In a report published Monday, Citigroup upgraded its rating on Simon Property Group

from Neutral to Buy, and raised its price target from $156.00 to $173.00. Citigroup noted, “We are upgrading SPG to Buy and increasing our target price from $156 to $173. SPG's U.S mall and dominant outlet platform should continue to provide solid NOI growth, complemented by a low cost of capital and potential for external growth. Our valuation methodology takes into consideration the company's strong balance sheet and high sales productivity regional mall portfolio. We use a ~27x AFFO multiple and a ~21x FFO multiple on 2013 earnings to arrive at a $173 price target, which implies a ~5% cap rate on 12 month forward NAV. SPG's current valuation appears firm at a 5.2% implied cap rate and ~24x 2013 AFFO, however, outpaced NOI growth complemented by re/development accretion means forward valuation estimates are more attractive vs. both retail REIT peers and large cap REITs.” Simon Property Group closed on Friday at $153.89.