Core Insights - The transformation of struggling malls, such as the Dayton Mall, is being driven by unconventional tenants like churches, which can attract community engagement and foot traffic [2][3][6] - The decline of traditional enclosed malls has been attributed to changing demographics, shopping habits, and the rise of e-commerce, but there are signs of potential revival through innovative repurposing strategies [7][8][15] - Successful mall redevelopment involves subdividing large anchor spaces into niche businesses that encourage cross-shopping, leading to increased revenue [10][11][12] Group 1: Mall Transformations - The Dayton Mall has faced challenges due to anchor store closures, leading to its receivership, but the sale of the former Sears space to Crossroads Church has revitalized the mall [2][4] - Crossroads Church has drawn thousands of visitors, including non-affiliated individuals, contributing to the mall's renewed activity [5][6] - The trend of repurposing anchor spaces is not unique to Dayton, as other malls are also exploring unconventional tenants to fill vacancies [6][12] Group 2: Industry Trends - The trend of repurposing empty anchors has been ongoing for over a decade, with recent data indicating a rebound in mall traffic as these strategies take effect [8][14] - CBL Properties' CEO noted that subdividing former anchor stores has significantly increased revenue, with some locations generating five to six times the previous amounts [11] - The incorporation of experiential categories, such as entertainment and dining, is becoming essential for attracting visitors to malls [13][15] Group 3: Consumer Behavior - Gen Z's affinity for malls as community spaces has been highlighted, with a shift towards seeking in-person experiences post-COVID [13][19] - Malls are increasingly being viewed as destinations for various activities beyond shopping, including seasonal events and dining [15][20] - The nostalgic connection many consumers have with malls is influencing their return, as they seek to recreate memories from their youth [19][20]

Investment Rating - The report maintains a bullish view on AAA and A mall-oriented portfolios owned by Multiplan and Iguatemi, indicating strong performance and growth potential in these segments [1][2][6]. Core Insights - Multiplan malls outperformed Allos malls with an average rent growth of +5% year-over-year, aligning with inflation, while Allos malls experienced a growth of +3.4%, resulting in negative real rent performance [1][6]. - Sales growth for both Multiplan and Allos malls was impacted by the Easter shift, but they grew at the same pace as rent [6]. - AAA malls demonstrated the strongest performance, with a rent growth of +9.4% and nominal sales growth of +9% [7]. - Investor interest in malls has increased, with Brazilian mall stocks rising +26% year-to-date, outperforming the iBovespa index [2]. Summary by Sections Mall Performance Analysis - Multiplan's malls showed a +5% year-over-year increase in rent per square meter, while Allos reported +3.4%, indicating a -1.6% real rent growth for Allos [6][11]. - AAA malls, such as Morumbi Shopping and Barra Shopping, achieved +6% rent growth and +9% nominal sales growth, outperforming A and B tier malls [7][8]. - Allos had a higher percentage of malls with rent increases (90% of NOI) compared to Multiplan (80%), but Multiplan's rent growth for those malls was higher by +100 basis points [7][11]. Market Trends - The implied cap rate spreads for both Iguatemi and Multiplan have compressed significantly, indicating a tightening market, yet they remain above historical averages [2]. - Malls are perceived as rate-sensitive investments, with historical data showing that they were more sensitive to interest rate changes compared to homebuilders prior to the COVID-19 pandemic [2]. Tiered Mall Summary - The report provides a detailed tiered summary of mall performance, highlighting that AAA malls had a monthly rent of BRL 441 and monthly sales of BRL 3,801, with a rent growth of +9.4% [8]. - A tier malls had a monthly rent of BRL 199 and sales of BRL 2,289, with a rent growth of +4.6% [8]. - B and C tier malls showed lower performance metrics, with B malls experiencing a rent growth of +3.3% and C malls declining by -0.9% [8].