Keepin' It Real  

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  • Alex Pettee, CFA

Shopping Center REITs: Future Of E-Commerce

  • Reopening Rotation: Shopping Center REITs have continued their post-vaccine resurgence into mid-2021, surging another 45% this year and pushing stock prices back near or above pre-pandemic levels.

  • Rent collection has fully "normalized" for most REITs, and recent earnings reports showed that, while occupancy rates remain under pressure, a full earnings recovery could come as soon as 2022.

  • The pandemic accelerated retailers' investment in their in-store order fulfillment platforms. Shopping centers are becoming hybrid distribution centers in a decentralized third-party delivery network powering same-hour delivery.

  • The food "takeout" model - supplemented by delivery platforms like Uber, Postmates, and DoorDash - is becoming ubiquitous across all retail categories, but not all shopping centers are equally well-suited for this evolution.

  • While the long-term outlook for open-air strip centers remains far more promising than their enclosed regional mall peers, valuations currently appear stretched, and "bargains" have become harder to find.

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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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