Keepin' It Real  

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Mall REITs: Only The Strong Shall Survive

  • Despite reporting record-low occupancy rates and rental rate spreads, mall REITs have been the best-performing property sector this year, riding the vaccine-driven reopening rotation to gains of more than 40%.

  • "A traumatic time for our company." Reflecting on an epic plunge in operating performance over the past year, Simon Property's CEO sounded humbled when discussing recent performance and its outlook.

  • While rent collection rates have improved to around 90%, Q1 results showed that vacancy rates continued to climb. Simon is the lone mall REIT projecting positive FFO growth this year.

  • From SPARC to SPAC. Desperate times call for desperate measures, and we've been encouraged to see some "fight" and creativity from Simon, which sponsored a SPAC and continues to buy distressed retail brands.

  • Dismal earnings reports from mall REITs came despite the strongest year for retail sales in history. Outside of Simon, the remainder of the mall sector remains in a fight for survival with an uncertain future.

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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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