5 Retail REITs That Currently Yield Over 7%

by: Zvi Bar

Retail REITs are real estate investment trusts that own and/or operate retail properties, such as malls and hotels. Retail REITs earn revenue by leasing space to retail tenants selling goods or services to the American consumer. Many retail REITs also operate retail centers on behalf of third party owners, earning a management fee.

Many trustees rely upon the REIT space as a source of income, among other purposes. Like most REITs, retail REITs have been significantly volatile over the past few years, as have their yields. Nonetheless, and because large size trusts often require diverse allocation, I prepared a screen for retail REITs that have a yield of at least 7% and a market capitalization of at least $200 million. I also included debt information on the results.

Market Cap
Hospitality Properties Trust
$2.98 Billion
$2.11 Billion
Investors Real Estate Trust
$753.36 Million
$1.02 Billion
Monmouth Real Estate Investment Corp.
$291.18 Million
$239 Million
NorthStar Realty Finance Corp.
$396.98 Million
$3.64 Billion
One Liberty Properties Inc.
$222.72 Million
$252 Million
Retail REITs are considered highly sensitive to economic cycles and the strength of the American consumer, because the strength of leasing space to retailers is directly connected to the level of public consumption. Therefore, any continued economic downturn will further weaken the demand for retail property space. Improving economics should benefit the business.
For example, most malls once had a Sharper Image in them; their bankruptcy lessened the demand for retail space as will any other bankruptcy. Similarly, rent collection rates should go down when consumption goes down. Conversely, a strong American consumer should result in lower vacancies, improved rent collection rates and new stores (hopefully a few more with massage chairs).
Please share your evaluations of these companies, other retail REITs and the REITs generally for use in trusts and other long-term oriented portfolios.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.