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  • Alex Pettee, CFA

Mall REITs: Too Little, Too Late

  • Pushed to the brink by the pandemic, Mall REITs entered 2020 on unstable footing following a tsunami of store closings over the past decade, and the forthcoming vaccines may be too-little-too-late.

  • Despite improving rent collection and foot traffic, earnings reports revealed that Q3 was another epically-bad quarter with same-store Net Operating Income plunging over 20% and occupancy rates in free fall.

  • It's the end of the road for some: Troubled mall REITs Pennsylvania REIT and CBL & Associates each filed for bankruptcy this month while Washington Prime likely isn't far behind.

  • "Black Swan Times Three." Retail real estate legend David Simon provided some grim commentary on the state of the mall sector, commenting that it's "sad to see what's happened to a good solid business."

  • While the lower-tier of the sector is getting hollowed out, the forthcoming post-pandemic "suburban revival" offers a glimmer of hope for the higher-productivity mall REITs, including Simon Property and Brookfield Property.

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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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Hoya Capital Research & Index Innovations is an affiliated index provider and research firm that builds custom indexes tracking U.S. commercial and residential real estate sectors, including indexes tracked by exchange-traded funds (ETFs). 

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