Mall Mania

Group 1: Retail Industry Insights - The recent ICSC conference highlighted both enthusiasm and concerns within the retail sector, particularly noting that low-end consumers are reducing their spending habits [3][4] - Major retailers like Target and McDonald's are experiencing customer losses to grocery stores, particularly Walmart, which is thriving amid these changes [4][5] - The decline of traditional malls is evident, with many failing and a significant reduction in the number of stores like Sears, which has dwindled from 700 to just 11 locations [6][9] Group 2: Simon Property Group (SPG) - SPG is the largest publicly traded mall REIT with a market cap of $47.6 billion, owning or having an interest in 195 properties across 37 states [13][14] - In Q1-24, SPG reported total revenue of $1.44 billion, a 6.67% increase from $1.35 billion in Q1-23, and FFO of $1.334 billion, or $3.56 per share, compared to $1.026 billion, or $2.74 per share in the previous year [19][20] - SPG's portfolio generated 71.4% of its NOI from U.S. malls and outlets, with a 95.5% occupancy rate, reflecting a year-over-year increase of 1.1% [16][20] Group 3: Macerich (MAC) - MAC has a market cap of approximately $3.21 billion and a portfolio of 43 regional malls, but has faced negative AFFO growth since 2017, dropping from $3.21 per share to $1.28 per share [24][26] - Under new CEO Jackson Hsieh, MAC aims to improve its balance sheet and reduce its leverage ratio from 8.76x to the low-to-mid 6.0x range through NOI growth and asset sales [30][32] - Analysts project a 5% increase in AFFO per share for 2024, with a potential 12% growth by 2026, although skepticism remains regarding the latter estimate [33] Group 4: Tanger Factory Outlet Centers (SKT) - SKT operates 38 outlet centers with a market cap of approximately $2.98 billion, focusing on properties in fast-growing markets and near tourist destinations [36][37] - The company reported a core FFO of $0.52 per share in Q1-24, up from $0.46 in Q1-23, and same center NOI increased by 5.2% [41] - SKT's dividend was increased by 5.8% to $1.10 per share, with a low payout ratio of 54%, indicating strong financial health [41]