October 31, 2007
Mall REITs Get No Respect
Analysis of:
Regional Mall Reits Ring Up Solid Quarter | retailtrafficmag.com
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Implications: IOSC reports September sales increase @ 1.7% below year-to-date average of 2.3%. Economists expect GDP to grow at about 2%, the weakest figure since 2002, with projections that 2008 won't be much better. However the Regional REIT's sector continues to show gains and the obvious question is "what's happening?"
Analysis: Anyone intimately familiar with the quality of the leading mall
REIT's portfolio of "A" malls is not surprised at the continued upward progress of the values. Instead they are surprised at the volatility these companies have seen in recent months as the market seems to think there is some magic relationship between them and interest rates.
This should not be the case for several reasons. First and foremost is the fact that most "A" malls enjoy a virtual monopoly in their trade area.
If they have survived thus far, (and the malls owned by the leading mall REITS have not only survived but have prospered and are constantly being upgraded) they have very little to fear from any further competition. The big boxes are already nearby and their impact has been reflected in the sales.
Since no one is able to find well located property to build competing facilities, (and if they did find such property they would have a near-impossible task of finding anchor stores that might attract the high rent paying mall tenants) the existing "A" malls come as close to enjoying a monopoly position as any sector in any market ever enjoys.
Analysis: Anyone intimately familiar with the quality of the leading mall
REIT's portfolio of "A" malls is not surprised at the continued upward progress of the values. Instead they are surprised at the volatility these companies have seen in recent months as the market seems to think there is some magic relationship between them and interest rates.
This should not be the case for several reasons. First and foremost is the fact that most "A" malls enjoy a virtual monopoly in their trade area.
If they have survived thus far, (and the malls owned by the leading mall REITS have not only survived but have prospered and are constantly being upgraded) they have very little to fear from any further competition. The big boxes are already nearby and their impact has been reflected in the sales.
Since no one is able to find well located property to build competing facilities, (and if they did find such property they would have a near-impossible task of finding anchor stores that might attract the high rent paying mall tenants) the existing "A" malls come as close to enjoying a monopoly position as any sector in any market ever enjoys.
Report a Concern
More GLG News in
Real Estate
Most Popular:
Source Article | Expert Analyses
Some Fear Commercial Property Loans Will Be Next Stage in Downturn
www.nytimes.com
July Existing-Home Sales Show Gain
www.realtor.org
Cash Flow More Volatile but Still Stable: Fitch CMBS Study
www.cpnonline.com
An Economy on the Brink
www.usnews.com
EMPLOYMENT: Open season for jobs
www.lvrj.com
When data is vague or inconclusive, look at the real world
August 28, 2008
The other side of the coin
August 28, 2008
FINANCIALS SHOT IN THE FOOT
August 26, 2008
Once again the major rating agencies are getting it wrong
August 20, 2008
LAS VEGAS: REAL ESTATE RECOVERY UNDERWAY?
August 19, 2008