RIET - Mall REITs: Survive And Advance

• Mall revival or dead cat bounce? Three mall REITs that survived the pandemic - Simon, Tanger, and Macerich - have doubled in value this year on signs of stabilizing fundamentals.
• While lower-tier malls continue to face nearly insurmountable secular challenges, occupancy rates and rent collection have meaningfully rebounded in the higher-tier segments since bottoming in early 2021.
• Mall REITs reported solid third-quarter results, highlighted by significant guidance increases. Simon Property, which hiked its dividend for the fourth time this year, now sees its FFO within 5% of pre-pandemic levels.
• Beneath the doom-and-gloom and concerns over inflation and supply chains, retail sales are still on pace for record-growth this year, and nearly twice as many stores have opened than closed this year.
• Secular headwinds on the mall format will persist and leasing trends remain a concern as REITs have traded lower fixed rents for higher variable rents. Still, the outlook for higher-tier malls has unquestionably brightened and valuations and yields appear reasonably attractive.

For further details see: