Keepin' It Real  

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

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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Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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