Economics, Housing, & Commercial Real Estate Analysis

Keepin' It Real 

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  • Alex Pettee, CFA

Shopping Center REITs: Dodging Bullets

  • We're not malls, we promise! Open-air Shopping Center REITs have delivered a relatively strong year despite the reacceleration in store closings and fears of a 'retail apocalypse 2.0'.

  • Dodging bullets: shopping center REITs have generally avoided the wave of store closings in 2019, which have been primarily concentrated in the enclosed mall-based category.

  • Embracing the "bricks and click"s model including in-store pickup, open-air shopping centers have proven to be more adaptable to the rapidly changing retail distribution chain.

  • After underperforming the REIT averages for the last decade, shopping center REITs delivered same-store NOI growth that was only fractionally below the broader REIT average in 2Q19.

  • The bifurcation between high and low-quality retail centers continues to widen. We continue to see well-located grocery and hardline-anchored centers as the few engines of growth in the retail sector.

  • To read the full report, click here to visit Seeking Alpha!

REIT Rankings: Shopping Centers

One of the four major real estate sectors, the retail real estate sector can be divided into three subsectors: enclosed malls, open-air shopping centers, and free-standing. In the Hoya Capital Shopping Center REIT Index, we track the fourteen largest open-air shopping center REITs, which account for roughly $60 billion in market value: Regency Centers (REG), Federal Realty (FRT), Kimco (KIM), Brixmor (BRX), Weingarten (WRI), American Assets (AAT), SITE Centers (SITC), Retail Properties of America (RPAI), Acadia Realty (AKR), Urban Edge (UE), Retail Opportunity Investments (ROIC), Kite Realty (KRG), RPT Realty (RPT), and Urstadt Biddle (UBA).

After underperforming the REIT averages for the last decade, shopping center REITs delivered same-store NOI growth that was only fractionally below the broader REIT average in 2Q19. According to NAREIT's T-Tracker, over the last twelve months, shopping center REITs grew same-store NOI by 2.5%, the best rate since early 2015 and essentially in-line with the broader REIT average of 2.6%. Mall REITs, meanwhile, saw same-store NOI growth of just 0.9%. For now, it appears that much of the pain from big-box store closings may be in the rear-view for the sector as leasing spreads have accelerated modestly over the last several quarters. That said, we recall a similar sense of stability-turning-to-growth in 2016 before the unexpected Sports Authority bankruptcy and again in 2018 before the Toys "R" Us closing.


To read the full report, click here to visit Seeking Alpha!


For an in-depth analysis of all real estate sectors, be sure to check out all of our quarterly reports: Apartments, Homebuilders, Student Housing, Single-Family Rentals, Manufactured Housing, Cell Towers, Healthcare, Industrial, Data Center, Malls, Net Lease, Shopping Centers, Hotels, Office, Storage, Timber, and Real Estate Crowdfunding.


Disclosure: An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. We consider the information in this presentation to be accurate, but we do not represent that it is complete. It should not be relied upon as the sole source of suitability for investment. Please consult with your investment, tax or legal adviser regarding your individual circumstances before investing. Visit our website for a complete definition of all indexes cited in this report. Investing involves risk and loss of principal is possible.


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Hoya Capital Real Estate ("Hoya Capital") is an SEC-registered investment advisory firm that provides investment management services to ETFs, individuals, and institutions, focusing on portfolio and index management of publicly traded securities in the real estate industry. Nothing on this site is intended to be investment advice or an offer to buy or sell securities. The risks of investing in real estate securities are similar to those associated with direct investments in real estate, including falling property values, lack of liquidity, limited diversification, and sensitivity to certain economic factors such as interest rate changes and market recessions. No representation or warranty is made as to the efficacy of any particular strategy or fund, or the actual returns that may be achieved. An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes. Data quoted represents past performance, which is no guarantee of future results. The views and opinions in the preceding commentary are as of the date of publication and are subject to change without notice. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital, and there is no guarantee that investors will experience the type of performance reflected. There is no guarantee that any historical trend illustrated herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that any trend cited in this market commentary will be realized. This material represents an assessment of the market environment at a specific point in time, should not be relied upon as investment advice, is not intended to predict or depict performance of any investment and does not constitute a recommendation or an offer for a particular security. We consider the information in this presentation to be accurate, but we do not represent that it is complete. It should not be relied upon as investment advice or as the sole source of suitability for investment. Please consult with your investment, tax or legal adviser regarding your individual circumstances before investing.

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