One sector, or more precisely subsector that got hit especially hard by the COVID-19 pandemic was retail REITs. They essentially had to close for a period of time, which obviously had a large impact on their sales and cash flows. However, most of them are open again, and the death of brick-and-mortar retail appears to be greatly exaggerated. Contrary to what some people might believe, brick-and-mortar retail still represents most of all sales. However, online retail is growing rapidly and is expected to be approximately 25% of all sales by 2024. Nevertheless, most retail brick-and-mortar operations have developed an online presence in addition to their brick-and-mortar locations.

Importantly, real estate – just like stocks – derive their value from the amount of cash flow they generate for their owners. In the case of REITs, that is measured by a cash flow-related metric funds from operations or FFO. It essentially represents the distributable income that a REIT is required to pay out by law. The disruption of those cash flows did wreak havoc on the operating results and the prices of most retail REITs. However, there is one exception that is revealed in this video.

In this video, I will be reviewing Tanger Factory Outlet (SKT), Simon Property Group (SPG), Macerich (MAC) and Realty Income (O).

Video Length: 00:17:14