They find those REITs with a large portion of portfolios concentrated in malls are down 10% Y/Y vs. all REITs, which are higher by 6%. Going further, they find those REITs with exposure to higher-end malls and outlet centers - Simon Property Group (NYSE:SPG) and Tanger Factory (NYSEMKT:SKY) come to mind – have been spared, while those owning older malls have taken the hit. CBL & Associates (NYSE:CBL) and WP Glimcher (NYSE:WPG) are down 40% and 30% this year, respectively.
It's easy to pick on mall owners, but a broad slowdown at brick-and-mortar stores is ultimately a threat to all retail landlords, as traffic across all types of retail real estate in the U.S. and Canada has fallen as much as 18% Y/Y.
On the good side is low supply as developers have stopped building, but even that's begun to run its course, they write.
Sears alone would need to close 43% of its stores to get inflation adjusted sales per square foot back to 2006 levels. Of course, retailers like Sears, Macy's, and J.C. Penney have already closed hundreds of spots over the past few years.
The Green Street study says sales per square foot of $165 last year were down 24% from 2006, while physical footprints are off just 7%.
Department stores may not agree. J.C. Penney CFO has said that when the company closes a store - particularly in a small market - dot.com business also goes down.
This just in: REITs are in a sustained rally. The iShares DJ U.S. Real Estate ETF (NYSEARCA:IYR) is up 0.6% today (with the major averages lower), and is now ahead about 7.5% since hitting its low for the year around Labor Day.
A more dovish outlook on interest rates is no doubt helping - the 10-year Treasury yield is 2.07% vs. 2.20 in early Sept., and the Fed looks to be on hold until Dec. at a minimum - but low prices also cure low prices.
With so many names trading below conservative estimates of net asset values, buyers are stepping in - and not just for the stocks, but for the whole companies. In just the last month, Blackstone has agreed to buy Strategic Hotels and (this morning) BioMed Realty. The P-E giant's real estate chief Jon Gray says look for more to come.
Spirit Realty (SRC +0.8%), Ventas (VTR +0.4%), Medical Properties Trust (MPW +2%), Gramercy Property (GPT +0.3%), Lexington Realty (LXP +1.1%), AvalonBay (AVB +0.9%), General Growth (GGP +1.1%), Inland Real Estate (IRC +0.7%), CubeSmart (CUBE +0.5%), Washington Real Estate (WRE +0.9%), Sunstone Hotel (SHO +1.3%), Liberty Property (LPT +1.1%)
Eastgate Shopping Center - less than 20 miles east of downtown Cincinnati - sold for $21.1M to Inland Real Estate's (NYSE:IRC) JV with Dutch pension fund administrator PGGM. The seller is CBL & Associates (NYSE:CBL), which notes an additional $1.7M of future earn-out payments, and the assumption of $14.6M mortgage secured by the property.
Creekside Commons in Mentor, Ohio is a 202K square foot center anchored by Kohl's, Gordmans, Home Goods and Party City. Inland Real Estate's (NYSE:IRC) JV with Dutch Pension Fund adminstrator PGGM purchased the property for $28.3M, and took on a $16.5M mortgage maturing in 2024.