SPGSU-Simon Property Group Acquisition Holdings

[Gregmal]

Spac idea for my homies who showed love the last month....

 

Cash alternative with virtually no downside. Simple and straight forward.

 

Current price 10.14

 

Simon Property Group is the largest retail REIT in the world by equity market capitalization with a 27 year public company track record of industry-leading performance.

 

Over the past half decade I have talked real estate with more folks than I can remember, many smarter than I, and all holding great admiration for the guys at Simon. To quote one of them "If David Simon cant make it work no one can".

 

You've got premier spacs run by Malone, Softbank, Ackman, etc all trading at significant premiums to cash. All chasing businesses and unicorns that have appreciated significantly in value. Here you have the apex predator in RE land hunting legitimately impaired turf where oporuntities are clearly more likely to be found.

 

From the S1

 

We intend to identify innovative businesses with the potential to disrupt various aspects of the retail, hospitality, entertainment and real estate industries and make a transformative impact on in-person and/or online experiences.

 

Additionally this is a very recent IPO so its caught in the wind of bubble deflation and still has about 5-6 weeks until warrant separation. Warrants are also only 1/5 compared to 1/3-1/2 which is standard.

 

Go get em boys.

 

 

Discolure, very long SPGSU

[BG2008]

Wow.  Holy crap.  Probably a decent set up due to the market going fairly insane.  I have actually been thinking about SPG itself.  I am inclined to short SPG by writing some ATM calls.  I think SPG is challenged in the long run and value creation from development will take much longer than people think.  I think the SPAC will do fine, but I am pretty bearish on Malls. 

[bizaro86]

Nice! Thanks for sharing - and wonderful to see you back! I can only speak for myself, but it wasn't the same around here without you, imo.

[Gregmal]

Appreciate the kind words.

 

BG on SPG I would lean towards agreeing. I exited the position entirely not long ago. Not that I dont still like it, but the next 10-15% up or down doesnt really get me interested. I liked it better on a relative basis pre covid @140 or so and certainly post covid at 50/60. Here there's much easier money to pick from the money tree. I'd also add that the spac is pretty awesome because its a way for a lot of people who admire the Simon guys but are otherwise(like yourself) put off by the hair on SPG.

 

Which leads me to what I will probably write up in a bit. Sun Belt.

 

As many know I spent the past couple months traveling and on a much needed vacation with the family. What is going on in the Sun Belt, specifically Florida, is breathtaking. It was a Mark Baum/Big Short due diligence trip type of moment for me. And I say this as someone who's typically spent 3-10 weeks a year in Florida almost every year of my life. You might think you have an idea, but you really dont. I thought I did, as was totally blown away by it. The plandemic will have lingering effects and shoes to drop that will have varying effects depending upon where on the map you reside. The SunBelt is absolutely on fire and its just getting started. At best, as a real estate guy, investing in the NE or coastal states is like being a value investor. Investing in Sun Belt is like being a growth investor. I encourage anyone willing to explore, and ultimately have a blast, to take a road trip for due diligence purposes.

[BG2008]

Appreciate the kind words.

 

BG on SPG I would lean towards agreeing. I exited the position entirely not long ago. Not that I dont still like it, but the next 10-15% up or down doesnt really get me interested. I liked it better on a relative basis pre covid @140 or so and certainly post covid at 50/60. Here there's much easier money to pick from the money tree. I'd also add that the spac is pretty awesome because its a way for a lot of people who admire the Simon guys but are otherwise(like yourself) put off by the hair on SPG.

 

Which leads me to what I will probably write up in a bit. Sun Belt.

 

As many know I spent the past couple months traveling and on a much needed vacation with the family. What is going on in the Sun Belt, specifically Florida, is breathtaking. It was a Mark Baum/Big Short due diligence trip type of moment for me. And I say this as someone who's typically spent 3-10 weeks a year in Florida almost every year of my life. You might think you have an idea, but you really dont. I thought I did, as was totally blown away by it. The plandemic will have lingering effects and shoes to drop that will have varying effects depending upon where on the map you reside. The SunBelt is absolutely on fire and its just getting started. At best, as a real estate guy, investing in the NE or coastal states is like being a value investor. Investing in Sun Belt is like being a growth investor. I encourage anyone willing to explore, and ultimately have a blast, to take a road trip for due diligence purposes.

 

Thank you for bringing this up.  Now I really regret not getting some St Joe exposure.  Speaking of SunBelt, there is a company called Ashtead that owns SunBelt rental.  It is a competitor to United Rental.  This is probably one of the best companies out there.  10% market share in a very fragmented industry.  Scale, tech, culture, route density advantages.  Can probably grow EPS through the cycle by 12-15% for a very long time.  May want to buy a small position but reserve some cash for a pull back.  I was too much of a Wimp and bought some during March and April.  Only a 3% position for me now. 

 

Where did you go during your trip?

[Gregmal]

Did varying amounts of time in:

 

Richmond, VA

Hilton Head, SC

Savanagh, GA

St. Augustine, FL

Jacksonville, FL

Daytona Beach, FL

Wellington, FL

Palm Beach/Boca Raton area

Orlando, FL

Lakeland, FL

Tampa, FL (including for the Bucs SB celebration...fun fun!)

Miami/Coral Gables/South Beach

Islamorada

 

 

Didnt do JOE territory but I already know that deal there. Its still widely regarded as yuckville by local Floridians, but out of state folks see it much differently and yea, that area is going to be a Hamptons lite in time. I recently re-opened a small JOE position(today via small stock position and then some put sales)

 

Just generally speaking, imagine life normal and vibrant a few years ago. Now amplify that by a few multiples. Thats how life is down there. Atlantic coast is basically NY/NJ folks and that type of vibe. A recent Post article summed it up well..."NYC is thriving, in Palm Beach"...100% true. You love retail brick and mortar right BG? I kid you not its booming and in good locations there no space and tons being developed. Vacancies are low/non existent in prime space. Whereas you and I could go through the wealthiest NY/NJ/NYC hubs and there's no shortage of vacancies and space available signs. Hospitality, restaurants down there? Bustling. In the Keys the restaurant parking lots looked like tailgate parties. 2000 people a day are(a figure someone down there mentioned to me so take it with a grain of salt) are moving to Florida. Engage in the exercise of tracking homes that go up for sale on Zillow. I inquired about 6 that listed within 24 hours and 5 were under contract already. My sister works at Lockheed in Orlando and said people are just signing out of work randomly to go see houses because if they wait to the end of the day they're gone. All the Northeast folks I ran into said they'd wished they'd moved sooner. Evaluate it from a business and financial perspective and I dont even need to elaborate on those benefits.....I really didnt even want to come back and I am a born and raised NJ guy who absolutely loves my current setup here. But boats going in the water in a few weeks and spring is around the corner so it'll get better. But the mentality down there is just so different from here where everyone lives in fear and is obsessed/consumed with covid all the time...and when you look at the justification for why things arent like that here? And then look at the overall figures and see that Sunbelt figures are the same, if not markedly BETTER than the comparable NE and coastal stuff you just wonder how badly things were bungled and there absolutely will be long term effects on the economy and for everyday folks it will become more and more apparent. When reopening, to a degree you are running a race and many of the Sunbelt states took off months ago and folks here probably won't be back to normal for a minimum of 6 more months and even then carry the psychological damage of whats transpired for the past year whereas down there its just business as usual and people are free and thriving. The craziest cherry on top was yesterday being back here and going to the supermarket and I observed someone walking with their head down toward a crowd of people and everyone just scattered like cockroaches. At first I laughed. Then I genuinely felt bad for them because the damage is so apparent. There's still signs up everywhere reminding everybody of everything and it'll prevent and stunt a return to normal. And like a little kid at Founders Park in Islamorada who was playing with my kids...he was SO SERIOUS, digging hard, determined, to find dinosaur bones in the sandbox. And like the people in the supermarket...I chuckled a little. But I also realized that this issue was fundamentally SO IMPORTANT to him that I would just let him keep doing his thing even though he was wasting his time and just unapologetically misinformed in the purpose of his endeavor. Same thing with the folks in the supermarket...chuckled, maybe smile and encourage them; "go along now....you keep fighting to flatten that curve!".....People are psychologically driven. I dont think this area is doomed per say....theres still probably money and opportunity here....but the Sunbelt is a no brainer and the runway is long. Like many other trends, specifically in tech, the train was already moving in that general direction, but slowly prior to covid...now its full steam ahead. And its impossible to stop. I prioritized my trip because all my friends down there were raving about it. The same will continue as more and more people up North see their friends and family enjoying quality of life that is simply impossible up here. Its sad, but its true and its opportunity.

[peridotcapital]

Very interesting read... thanks for that!

[cubsfan]

Gregmal - you da' man - thank you much!

[fareastwarriors]

Nice to hear from you sir!

 

[thepupil]

1. thanks for the SPAC-tacular idea.

 

2. I completely agree with you about Florida / sunbelt generally. I grew up in Boca, family and friends still down there. live in DC metro / many contacts in Northeast.

 

with my friends in the south/Florida, covid has been over for months. Most of them have already gotten it already and "been fine" and live their lives as they used to, except for the economy is full on at ludicrous speed.

 

meanwhile, I've been living a hermit life and will do so until vaccinated, as have all our friends who are similarly healthy 30 somethings.

 

[COBFInfinity]

How do you know when the warrant separation will occur? TIA.

 

Never mind. Found it in the S-1. For others who have not actually bought SPACs before, like me, it will be the 52nd day after February 12.

 

I like this idea a lot. Much appreciated.

[Spekulatius]

How do you know when the warrant separation will occur? TIA.

 

Never mind. Found it in the S-1. For others who have not actually bought SPACs before, like me, it will be the 52nd day after February 12.

 

I like this idea a lot. Much appreciated.

 

I believe it is always on the 52nd day after the IPO, at least that seems to be the rule.