WPG - Mall REITs: It Can Always Get Worse

• From Bad to Worse. Before the pandemic, we warned that several mall REITs were "one recession from extinction." Two REITs have since entered bankruptcy and a third is close behind.
• Pushed over the edge by the pandemic, mall REITs entered 2020 on already unstable footing following a tsunami of store closings over the past decade and relentless share price declines.
• The vaccine-driven rotation has lifted mall REITs to 40% gains so far this year and pushed share prices of several REITs back to pre-pandemic levels despite a far bleaker outlook.
• Despite improving rent collection and foot traffic, earnings reports revealed that Q4 was another epically-bad quarter. FFO per share plunged more than 50% in 2020 and occupancy-rates remain in free-fall.
• The forthcoming post-pandemic "suburban revival" offers a glimmer of hope for the enclosed mall format, but investors should be wary of jumping into a perennial "value trap" until fundamentals clearly stabilize.

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