Peter Barnes

Only 1.2% of Simon Property’s gross annual revenues from inline or freestanding stores comes from month-to-month leases. 6.5% of leases will expire in 2015.

Simon Property has a strong track record of aggressive acquisitions. Since its IPO in 1993, the company has completed acquisitions worth $40 billion.

Simon Property Group’s retail malls have two types of tenants, anchor and inline. Anchor tenants are large, big names, while inline tenants are small.

Simon Property’s US properties consist of malls, premium outlets, community centers, and retail properties that make up ~182 million square feet of GLA.

Toll Brothers is primarily engaged in the development of attached and detached homes in luxury residential communities. It’s a dominant player in the luxury segment with very few comparable competitors.

Headquartered in Indianapolis, Simon Property Group formed in 1993 when the shopping center division of Melvin Simon & Associates became publicly-traded.

The most common way of calculating the relative value of a REIT is the price-to-FFO multiple. FFO is widely used because it’s the main earnings metric for REITs.

The capitalization rate, or cap rate, is an important concept in the commercial real estate industry. It’s defined as an initial yield on a real estate investment.

Traditional valuation methods don’t apply to REITs because their operations are different from traditional companies. REITs are valued based on three main techniques.

Economic growth is the major factor that determines REITs’ growth. An uptick in economic fundamentals positively affects the REITs by increasing business growth.

There are three types of REITs—equity REITs, mortgage REITs, and hybrid REITs. Mortgage REITs lend money to landlords and their operators to purchase a property.

Every investment comes with certain advantages and disadvantages. REITs are no exception. There are benefits and risks associated with investing in REITs.

US REITs came into existence in 1960 when President Eisenhower signed the REIT Act contained in the Cigar Excise Tax Extension.

To qualify as a REIT, a company must make REIT election by filing a Form 1120-REIT with the IRS. This is essential to reduce or eliminate corporate tax.

Sales order backlog represents homes under contract but not closed or delivered. For orders in backlog, the company receives a customer contract and deposit, which may or may not be refundable.

PulteGroup’s debt-to-equity ratio peaked to 1.7x in 2011. Since then it has been declining consistently due to debt reduction and stock repurchase initiatives.

PulteGroup (PHM) mainly acquires land to complete sales of housing units within 24 to 36 months from the date of opening a community.

The move-up buyers in Pulte Homes communities tend to place more premium on location and amenities.

Cost of homes sold is the highest of the company’s costs at 78.1%, followed by SG&A at 10.6%, and cost of land sold at 1.6%.

As part of its market segmentation strategy, D.R. Horton launched a variety of different brands, including D.R. Horton, America’s Builder, Express Homes, and Emerald Home.

Pretty much all of the homes in D.R. Horton’s sales order backlog at the end of fiscal 2014 are likely to close in fiscal 2015, which will boost the company’s revenues.

D.R. Horton directly acquires almost all of its land and lot positions. The company has initiated few joint ventures for land acquisitions.

The homebuilding segment of D.R. Horton, which mainly focuses on single-family attached and detached homes, is divided into six divisions.

Lennar’s land acquisition process includes acquiring land from individual land owners, developers, or homebuilders. Lennar also creates JVs to acquire land.

Lennar’s market segmentation is primarily first-time, move-up, and active adult homebuyers in areas ranging from urban infill to golf course communities.

Lennar’s (LEN) four main business segments include Homebuilding, Lennar Financial Services, Rialto, and Lennar Multifamily.

Homebuilders earn substantial profits buying land at a cheaper rate, allowing it to appreciate over time, constructing a house on it, and selling it.

Along with housing starts, building permits are also a leading indicator of the health of the US housing market.

The US homebuilding industry comprises many large, publicly traded residential construction companies. Top homebuilders mainly focus on specific categories.