Summary
Bob Kanter's careful analysis of this article did not mention the huge backlog of previously announced department store closings which will undoubtedly have a "domino" effect on the FFO of all major mall REITs.
Analysis
When Sears, Dillard's and Bon Ton complete their program of closing their under performing stores, the shopping center landscape and the quarterly profits of all mall REITs will look quite different than today's picture.
I can tell you first hand that things are NOT GETTING ANY BETTER IN THE RETAIL SECTOR (except perhaps for a few of the discounters and popular priced specialty stores, some of which are benefiting from the closing of competitor's nearby stores) and the worst is yet to come.
I am predicting the closure of HUNDREDS of department stores in 2010! This will inevitably lead to the decline and fall of HUNDREDS of "C" level malls around the country in 2011.
As I have written here previously this is due as much to the fact that this country is terribly over stored as it is to the recession which I believe only hastened the inevitable.
20 years ago the number of square feet of retail space in this country approximated 13. In 2007 it approximated 22! I don't think anyone is buying twice as much toothpaste simply because there is almost twice as many places to buy it from.
When this much ignored issue is factored into most of the pundit's predictions of "recovery", I am certain that their resulting predictions of recovery would appear much more subdued.
Kenneth Leonard consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
