Shopping the Best Retail REITs
Like many public companies, retail real estate investment trusts have been turning in quarterly reports over the past couple of weeks, and overall, I've liked what I've seen. Here are four that have been experiencing excellent growth, revenues, and investor confidence over the past year.
General Growth Properties (NYS: GGP)
Remember when Sears Holdings (NAS: SHLD) sold 11 stores earlier in the year, one of which was located in Honolulu? Well, the outfit that bought the Ala Moana Center's anchor Sears store was General Growth, which paid a premium of $250 million for just that one property, versus a total of just $20 million for the other 10 stores. This may sound terribly expensive, but that mall does $1 billion in yearly sales, so it seems like a bargain.
General Growth was very busy acquiring other properties last year as well, with 12 other anchor-store purchases. The company also spun off its less-profitable Rouse subsidiary earlier this year, enabling it to concentrate on its more lucrative properties and reduce debt. General Growth experienced a slight drop on revenue in its latest report, but both core funds from operations and core net operating income increased, as did company guidance for this year.
Taubman Centers (NYS: TCO)
Taubman is a Michigan-based REIT which invests primarily in high-end regional shopping centers in cities such as Los Angeles, New York, and Washington, D.C. The stock has risen nearly 25% so far in 2012, and 30% from a year ago. This outfit has turned in nothing but stellar numbers for the past several quarters, with the more recent reports reflecting the favorable effects of last year's rent increases and low occupancy rates in their portfolio properties.
Simon Property Group (NYS: SPG)
Simon Property Group is the biggest of all REITs, as it manages 337 properties worldwide and is still expanding. The company just recently announced construction starts on two new premium outlets in Toronto, Canada, and Shisui, Japan. This trust has been showing outstanding success, thanks to its appeal to wealthy consumers with money to spend, outshining many other retail REITs. The company is also a member of the S&P 100.
Tanger Factory Outlets (NYS: SKT)
Despite turning in numbers that didn't quite make the grade this past quarter, Tanger Factory Outlets is doing just fine, with an increase of revenue from the prior year of 19%. This REIT specializes in outlet malls, which are growing in popularity. Tanger is also adding to its holdings, having recently entered into a partnership with Canada's largest REIT and a large Canadian real estate developer to build designer premium outlet stores in Toronto.
There's no denying the profit power of these four REITs, especially considering how well they've done during the past year or two, when consumer confidence was faltering. Expansion plans, increased rents, and rising occupancy rates make for excellent prospects for this sector, and a recipe for success that should deliver the goods for years to come.
The success of retail REITs also points to the fact that retail stores are doing quite well, too. If you'd like to know more about who the big guys are in retail and how their growth can help your portfolio, get our free report today!
At the time this article was published Fool contributorAmanda Alixowns no shares in the companies mentioned above.The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.