Retail real estate investment trust Simon Property Group (SPG -0.84%) recently jumped to a new 52-week high after releasing strong third-quarter results. While the stock is clearly not as attractive at $187 as it was when it was trading for about $145 earlier this year, don't think that the higher price means that Simon has become too expensive to justify buying. In fact, the exact opposite could be true.

Simon Property Group in a nutshell

Simon Property Group is a real estate investment trust, or REIT, that invests in shopping malls and outlet properties, many of which are operated under the company's The Mills and Premium Outlets brand names. Not only is Simon the largest retail-focused REIT, but it is one of the largest REITs of any kind in the world, with a market capitalization of about $58 billion.

Family of three walking through a mall while carrying shopping bags.

Image Source: Getty Images.

Because it is a REIT, Simon Property Group pays out the majority of its income to shareholders, which gives the stock an above-average dividend. Even at its 52-week high, Simon's dividend translates to a 4.3% annual yield.

Wait -- how is a retail stock at its 52-week high?

If you've been following the news over the past couple of years, you might be familiar with the "retail apocalypse" -- that is, facing pressures from e-commerce giants, particularly Amazon, many once-great retailers like Sears and Toys R Us have gone bankrupt, and many others are struggling to survive. As a result, many retail stocks have fallen considerably. So, how is Simon Property Group -- a retail REIT -- trading at its 52-week high?

The short answer is that not all retail is in the same boat. Simon prides itself on creating shopping destinations, with modern amenities, lots of popular dining options, and non-retail features like entertainment venues. In other words, Simon's properties offer an experience that e-commerce doesn't, so business hasn't suffered in the way you might think.

In fact, a look at Simon's recent results shows that the opposite is true. The company's funds from operations (FFO, the REIT version of earnings) through the first nine months of 2018 actually increased by 10% year over year on a per-share basis. The company's retail tenants reported 4.5% annualized sales growth over the past 12 months, which has not only kept occupancy high at 95.5%, but has allowed Simon to increase its base rent by nearly 3%.

Retail troubles = opportunity for Simon

Not only is Simon not terribly worried about the headwinds caused by e-commerce, but the company views the current wave of retail bankruptcies as an opportunity to position itself for future success.

This is especially true in the case of Sears and other department store tenants. To be clear, Sears is a major tenant in Simon's property portfolio, and the company's bankruptcy could create lots of empty square footage. But Simon has been anticipating this for some time and sees its redevelopment of these spaces as one of its greatest long-term opportunities. In fact, on the company's third-quarter conference call, CEO David Simon said the company is putting Sears "in the rearview mirror."

For a little more color, Simon has been gradually transforming its properties into so-called mixed-use centers -- incorporating elements such as hotels, offices, and apartments into its malls. The idea is that these properties create a natural, sustainable source of foot traffic for its retailers. Well, the soon-to-be-vacant Sears properties free up lots of existing room to add these things.

As one example of how this can be done, Simon used a vacant space formerly occupied by Belk in an Atlanta mall to incorporate a Nobu hotel, a 90,000-square-foot fitness center, and some office space.

And, Simon has the capital to redevelop its Sears properties in the best possible ways for the company's future success. In fact, Simon plans to spend over $1 billion on the 33 Sears locations in its portfolio that have either already closed or are planning to close later in 2018.

Just because it's at its high doesn't mean it's expensive

To sum it up, while Simon Property Group is near its 52-week high, it doesn't mean that it's expensive. For one thing, shares still trade for a relatively low valuation of just 15.4 times this year's expected FFO.

More importantly, Simon is perhaps the best positioned of all retail landlords to not only survive the retail-sector headwinds, but to capitalize on them going forward. With the financial flexibility to create destinations that today's consumers want to go to, I'm excited to see what the next several years have in store for this giant REIT.