Is it Time to Buy the Mall REITs Again?
(1:00) - Can You Invest Into Mall Real Estate?
(6:45) - Do These Top REITs Fit Into Your Portfolio Right Now?
(23:30) - Episode Roundup: SKT, SPG, MAC
Welcome to Episode #323 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
Recently, she talked about the big retailers and whether or not any of them were still values after the pandemic boosted many of them to new highs.
The mall REITs were initially sold off when the pandemic hit, as malls and stores closed. The mall REITs halted their dividends and cut costs to survive.
But in 2023, with it being the third year after the start of the pandemic, the malls have reopened and shoppers are back to dining, shopping and going to entertainment venues such as movie theaters and casinos.
Not Your Parents Mall
Even before the pandemic had hit, the shopping malls REITs were already busy transforming their businesses. The “old” suburban indoor mall with the food court and same old retailers was out. Mini urban town centers, some with apartments or condos and farmer’s markets, became the “new” mall.
What is happening with the shopping malls now, after the reopen?
The Retail REIT industry is ranked 75 out of 249 industries on the Zacks Industry Rank. That puts it in the top 30% of all industries.
3 Mall REITs: Values or Traps?
1. Tanger Factory Outlet Centers (SKT)
Tanger Factory Outlet Centers is a REIT which operates open air outlet centers in 20 states and Canada. In 2022, it started construction on a new center in Nashville which should open in Sep 2023.
Shares of Tanger Factory Outlet Centers are up 4.5% year-to-date but over the last 5-years they have underperformed the S&P 500, falling 14.8% while the S&P 500 is up 52% during that same time.
Earnings are expected to rise just $0.01 in 2023 compared to 2022.
However, Tanger Factory Outlet Centers is trading with a forward P/E of just 10.3. It also is paying a dividend, currently yielding 4.6%.
Should Tanger Factory Outlet Centers be on your short list?
2. Simon Property Group (SPG)
Simon Property Group is a large cap REIT which owns premier shopping, dining and entertainment centers in North America, Europe and Asia. In Oct 2022, Simon Property Group opened its 10th premium outlet center in Japan.
Shares of Simon Property Group are down 8.4% year-to-date. Earnings are expected to be up in 2023, but just 1.4% to $12.04 from $11.87 last year.
Simon Property Group is cheap, with a forward P/E of 8.7. It also raised its quarterly dividend for Q1 by 9.1% and now pays a juicy yield of 6.9%.
Is Simon Property Group a hidden value stock in 2023?
3. Macerich Company (MAC)
Macerich is a small-cap REIT which owns retail and mixed-use developments in several US markets including California, Pacific Northwest, Phoenix/Scottsdale, and Metro New York down to the DC Corridor. It operates 44 regional towncenters.
Macerich finished 2022 with the strongest annual leasing volumes for the company in well over a decade.
Yet analysts are bearish about 2023. 3 estimates have been cut in the last 30 days. Earnings are expected to fall 7.7% in 2023.
Macerich shares reflect the bearishness. They are down 9.5% in 2023 and 36% over the last year. But Macerich is also dirt-cheap. It trades with a forward P/E of just 5.4.
It’s also paying a dividend, currently yielding 7%.
Is Macerich a value or a trap?
What Else do Buy and Hold Investors Need to Know About Mall REITs?
Listen to this week’s podcast to find out.
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Simon Property Group, Inc. (SPG) : Free Stock Analysis Report
Macerich Company (The) (MAC) : Free Stock Analysis Report
Tanger Factory Outlet Centers, Inc. (SKT) : Free Stock Analysis Report
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