Retail Soars, Mall REITs Stumble

So far this week, second-quarter results for major US retailers have been generally positive. Yesterday saw solid results from the likes of TJX (TJX) and Home Depot (HD) and this morning Lowe’s (LOW) and Target (TGT) are looking at their largest gap up in response to earnings since at least 2001.

Despite this strong price action from retailers, an adjacent group, shopping center REITs, has continued to suffer. If you want to see some truly awful long-term price charts, these have you covered.

Below we show the charts of a handful of REITs with a particular focus on shopping centers. Each one is in a long-term downtrend over the past five years and is currently around the lows of this timeframe. The worst of these has been CBL & Associates (CBL) which has fallen 96% over the past five years! Meanwhile, Washington Prime (WPG) and Pennsylvania REIT (PEI) have both lost over 75% of their value. While performance is still not good, Simon Property Group (SPG) has held up relatively well compared to its peers, only declining 13.4%. The rest have fallen around 50%.

Given the stocks’ decimated price over the past few years, dividend yields of this group have become astronomical. CBL & Associates (CBL), Pennsylvania REIT (PEI), Washington Prime (WPG) and Macerich (MAC) each have double-digit dividend yields. CBL and WPG’s yields are actually now over 30%! Unfortunately, none of these yields are likely to remain high as future dividend cuts are all but certain. 

 

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