RDOG - Mall REITs: Fears Of Double Dip

• Glimmers of hope were beginning to emerge for the battered mall REIT sector, which has soared 50% this year on signs of stabilizing in occupancy rates and normalizing rent collection.
• Net Operating Income surged more than 40% in Q2 - albeit from easy comps - driven by a recovery in rent collection to 94%. Simon significantly boosted its full-year outlook.
• Despite the rebound, full-year FFO will remain 20-50% below pre-pandemic levels across the sector. Downward pressure on re-leasing rental rates suggests that it's still too soon to call the bottom.
• Hopes dashed? High-frequency activity data suggest that economic reopenings have stalled - and even reversed in some areas - amid a resurgence in COVID cases and hospitalizations across the globe.
• Despite seemingly reasonable valuations, risks remain skewed to the downside. Outside of Simon, the balance of the mall sector - particularly the three recently-bankrupt REITs - cannot survive a "double-dip."

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