"Malls are like the fashion business," says Sandler O'Neill's Alexander Goldfarb. "It's very expensive to look good."
While many malls countrywide are struggling - Green Street Advisors figures about 15% of the nation's 1K-1.5K malls will close or be converted to other uses over the next ten years - owning so-called A malls is typically seen as a buffer against such a shakeout.
It's not easy to keep up with the A-listers though, and Taubman Centers (NYSE:TCO) - for one - is spending $500M to renovate tony Beverly Center, while Westfield Corp. is putting $800M into Century City just three miles away. Simon Property Group (NYSE:SPG) is spending about $1.5B on various projects.
A++ malls like the two mentioned above - Green Street figures there are only 37 in the U.S. - generate $965 per square foot in sales vs. B+ malls at $415 and C+ malls $305.
The payoff can be big, says Goldfarb.
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