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The Zacks Analyst Blog Highlights Realty Income, Simon Property Group, Kimco Realty, Federal Realty Investment Trust

For Immediate Release

Chicago, IL – October 4, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Realty Income Corp. O, Simon Property Group SPG, Kimco Realty Corp. KIM and Federal Realty Investment Trust FRT.

Here are highlights from Monday’s Analyst Blog:

Will Retail REITs Continue to Rebound This Holiday Season?

The rising prices of commodities and the consequent impact on consumers' spending might have fueled fears among retailers and their landlords — retail REITs — for the upcoming holiday season. However, the favorable job-and-wage growth environment, which supports consumer confidence, and stimulus savings from last year are raising hopes. Predictions also suggest that retail sales will pick up during the holiday season.

Per Mastercard SpendingPulse, U.S. retail sales, excluding automotive, are anticipated to surge 7.1% from a year earlier during the traditional holiday period that runs from Nov 1-Dec 24. While in-store retail sales are projected to increase 7.9%, e-commerce is expected to rise 4.2%.

Obviously, this is a positive for retail REITs like Realty Income Corp., Simon Property Group, Kimco Realty Corp.  and Federal Realty Investment Trust .

The retail real estate industry is poised to benefit from the pent-up consumer demand as consumers look for an exclusive in-store shopping experience, following the pandemic downtime. Amid these, retailers' focus has now shifted from the closing of stores to the revival of their growth plans, resulting in more demand for physical store spaces and paving the way for the retail REITs to experience gain in leasing activity, pricing power and flourish.

Retailers are also focusing on investments in their stores because apart from serving as showrooms, physical stores offer a convenient location for pick-up or exchange of goods, helping retailers counter the increasing costs associated with last-mile delivery.

Furthermore, amid limited availability and with the rapid formation of new businesses in the retail sector, lease signings, rent and occupancies in retail real estates are likely to get a boost. This will support the growth of retail REITs like Realty Income, Simon Property, Kimco Realty, Federal Realty and others.

Moreover, omni-channel is the focal point for retailers. Physical stores will be a vital sales channel over the long run because though there is convenience in online shopping, it cannot replace the benefits and satisfaction of visiting a brick-and-mortar store. This is quite evident from the recent foot traffic at retail destinations.

Digitally native brands are likely to keep boosting their physical presence in the days to come as part of the omni-channel strategy as the opening of stores helps them improve their connection with customers and drive expansion.

In fact, for retailers, the focus now is not only on boosting their online presence but also on maintaining brick-and-mortar stores in the best locations, which in turn is raising hopes for retail REITs that focus on such locations. Also, with the waning impact of the pandemic, entertainment and dining concepts are seeing a revival, boosting retail REITs' growth scopes.

Nevertheless, inflationary pressure, a slowdown in the economy and the depletion of savings might temper consumers' willingness to spend to some extent. With office usage affected and international tourism yet to regain lost ground, certain submarkets also remain choppy.

Moreover, given the convenience of online shopping, it is likely to remain a popular choice among consumers. This is likely to affect the market share for brick-and-mortar stores and hurt demand for retail REITs' properties.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Simon Property Group, Inc. (SPG) : Free Stock Analysis Report
 
Kimco Realty Corporation (KIM) : Free Stock Analysis Report
 
Federal Realty Investment Trust (FRT) : Free Stock Analysis Report
 
Realty Income Corporation (O) : Free Stock Analysis Report
 
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