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  • Alex Pettee, CFA

Shopping Center REITs: Bargain Hunting

  • Bouncing back from punishing pandemic-related declines, Shopping Center REITs are on the cusp of a full recovery across all critical metrics but Omicron introduces fresh uncertainty and also potential opportunity.

  • The retail landscape has improved dramatically this year. Retail sales are on-pace to rise over 15% this year while store closings are on pace for the lowest level in a decade.

  • Recent earnings results have been impressive as rent collection has fully normalized while occupancy rates and leasing trends are quite encouraging - a clear contrast from their enclosed regional mall peers.

  • Omni-channel retail strategy goes beyond the "showroom." We increasingly see well-located shopping centers becoming hybrid "distribution centers" in a decentralized last-mile delivery network powering same-day delivery.

  • Bargains in the shopping center REIT sector were becoming hard to find before the Omicron-driven sell-off. We continue to favor the "essential" grocery-anchored REITs, but see emerging bargains in power center REITs.

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Disclosure: Hoya Capital Real Estate advises two Exchange-Traded Funds listed on the NYSE. In addition to any long positions listed below, Hoya Capital is long all components in the Hoya Capital Housing 100 Index and in the Hoya Capital High Dividend Yield Index. Index definitions and a complete list of holdings are available on our website.

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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