The Demise Of The Mall

Simon Property Group (SPG) is the largest REIT in the country, with 241 million square feet in the U.S. and Asia. It is a fully integrated real estate company, which operates from five retail real estate platforms: regional malls, Premium Outlet Centers, The Mills, community/lifestyle centers and international properties. It pays a 4.88% dividend.

Macerich Co. (MAC) is a California-based company that is the third-largest REIT operator in the country. It has been growing through acquisitions for the past decade. It pays a 5.31% dividend.

Taubman Centers, Inc. (TCO) runs a national network of malls in some of the priciest ZIP Codes in the country. Properties include the Beverly Center in Los Angeles, Stamford Town Center in Stamford, CT, and the Fair Oaks Mall in Fairfax, VA. It was established by the late Alfred Taubman of Sotheby’s fame. It pays a 4.59% dividend.

Mind you, REITs are not exactly risk-free investments. To get the high returns, you take on more risk. We remember how disastrously the sector did when the credit crunch hit during the 2009 financial crisis. Many went under, while others escaped by the skin of their teeth.

There are a few things that can go wrong with malls. Local economies can die, as it did in Detroit. Populations age, shifting them out of a big spending age group. And tax breaks can be here today and gone tomorrow. These are all highly leveraged companies, so any prolonged rise in interest rates could be damaging. But as I pointed out below, there is little chance of that in the near future.

The bottom line here is that we are seeing anything but the death of the mall. It just depends on the mall. All in all, if you are looking for income and yield, which everyone on the planet is currently pursuing, then picking up some REITs could be one of your best calls of the year.





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