Mall REITs: Clicks to Bricks?

Focus: REITS

Brad Thomas Image Brad Thomas Editor, Forbes Real Estate Investor

To a certain extent, I’m tired of reading overblown, negative -- almost apocalyptic-like -- headlines regarding the retail industry today, asserts Brad Thomas, editor of Forbes Real Estate Investor.

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Sure, there are some retailers in more trouble than others and at a higher risk of going bankrupt. In an evolving sector, nobody is safe, but that doesn’t mean the retail industry is going extinct. And malls aren’t dying. Far from it, in fact.

That being said, I haven’t been enthused with the spillover effect that’s panning out in the retail real-estate investment trust, or REIT, space. Some of the best mall and shopping center landlords have watched their stocks take unnecessary beatings over the past year because of a big misunderstanding.

High-quality, retail real estate will always have a place in the United States. If you’re worried about tenants declaring bankruptcy, think of all the innovative companies prepared to take over their leases.

Instead of “bricks to clicks,” I’m seeing more and more “clicks to bricks.” Once internet-only brands are realizing the value in owning and operating a brick-and-mortar storefront. Retailers are playing up experiences. Pop-up shops are coming into fashion.

Now, I want to tell you a little bit more about some of my favorite companies in the sector — and ones I personally own — and why they stand above the rest.

Simon Property Group (SPG)

Simon owns nearly 200 U.S. properties and has holdings around the globe -- in April reaffirmed its guidance for 2017, projecting that funds from operations will climb about 6 percent.

Sure, Simon has Sears stores in its portfolio today, but the landlord is prepared to mitigate any risk that could stem from that relationship in the future.