REITs Profit from Malls
Mall landlords performed well last year, but REITs recognize that some shopping centers aren't worth holding on to...

This Article Originally was Published here:

Last year, mall landlords ended up as the second best-performing domestic REIT group with gains of 26 percent overall. But operators are focusing sharply on emerging markets, clearly shifting away from hard-hit retail centers and shopping centers.

Bloomberg reports:

“There are some tired malls out there that shouldn’t exist and won’t exist in a few years,” Ryan Severino, a senior economist at Reis Inc. (REIS), a New York-based real estate data company. “It’s very difficult to bounce back. Very difficult.”

With retail numbers improving (sales were up 5.2 percent over last year), affected properties in suburban areas are falling behind as the new store performance metrics bypass them.

Just last month, for example, Simon Property Group Inc. (NYSE: SPG), the largest domestic real-estate investment trust, shifted a $94 million loan on one of its malls in South Dakota over to a special servicer to negotiate with landlords on behalf of the bondholders.

Meanwhile, General Growth Properties Inc. (NYSE: GGP) entrusted three of its malls to loan-workout companies in Q3.

Nevertheless, after industrial and warehouse owners, mall companies were second-best on the list of highest-performing REIT industry groups.

General Growth, for example, was up 36 percent through 2012, with an 8.8 percent rise in operational funds in Q3 alone. Simon’s operations funds rose 19 percent over Q3, and the company saw shares rise 23 percent over the year.

Given consumer spending patterns lately, it makes sense that malls that already are highly visible and rated in their markets, offering high-end options, are the ones doing well.

On the other hand, malls with more modest ambitions likely won’t see their fortunes improve until consumer spending sentiment really picks up across the board.

This Article Originally was Published here:

REITs Profit from Malls originally appeared in Wealth Daily. Wealth Daily, a free daily newsletter, offers practical investment analysis and contrarian stock market advice.
Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here