Empty mall space is being quickly converted into makeshift distribution centers used for package pickup and drop-off of items purchased online, write Esther Fund and Jennifer Smith in the WSJ. Added to that are online sellers opening physical stores, either via short-term leases or long-term deals such as Amazon's upcoming move into NYC's Time-Warner Center.
“We don’t view [online retailing] as the enemy, we view it as another distribution channel,” says CBL & Associates (NYSE:CBL) CEO Stephen Lebovitz.
Consider startup Happy Returns, which accepts in-person returns from participating online retailers at six malls in California, Chicago, and Virginia. It plans to build a national network, including spots in open-air shopping centers, high-end grocery stores, and coffee shops.
Then there's the growing presence of Amazon Lockers, and Washington Prime Group (NYSE:WPG) late last year began rolling those out in 50 of its shopping centers.
While this trend could be a boost to struggling mall operators it doesn't change the fact that there are "clearly too many malls" in the country and hundreds are likely to close or become irrelevant over the coming decade, says Andy McCulloch of Green Street Advisors.
Skipping neutral, Jefferies analyst Omotayo Okusanya lifts his view of the sector to positive from negative thanks to the potential for better economic growth under the incoming administration.
Tanger Factory (SKT +2.6%) is lifted to Buy from Hold, and Simon Property (SPG +0.3%) and CBL (CBL +2.2%) are named as top picks.
He calls the holiday shopping season "solid," and sees a potentially improved retail sales environment this year, with store closings moderating. Sears, though, is the "wild card," given its potential bankruptcy.
High Pointe Commons is a 355K square-foot community center anchored by Target and J.C. Penney. Total consideration to the owning partnership was $33.8M, from which loans securing the asset of $17.4M were paid off.
CBL's share of what's left will go to pay down company debt.
CBL yesterday afternoon received a letter from the SEC saying the agency has concluded its investigation into four specific loans taken out by the company, and has no plans to recommend any enforcement action.