Many investors are hesitant to invest in anything related to brick-and-mortar retail, and given the surge of e-commerce and wave of store closures and bankruptcies in the industry, who could blame them? However, it’s important to realize that not all retail investments are in the same boat, and the recent carnage in the sector has produced some excellent bargains for patient long-term investors.
With that in mind, here’s why…
The biggest and best retail property portfolio in the world
Chances are you know of a mall that used to be busy. There are many shopping malls in the United States that have been absolutely destroyed by retail bankruptcies and store closures, and their owners are in big financial trouble.
However, when it comes to malls, Simon Property Group is in a league of its own. The company, which is one of the largest real estate investment trusts (REITs) in the world, owns a massive portfolio of some of the best malls in the industry. In fact, Simon owns five of the 10 most valuable malls in the U.S., some of which are worth several billiondollars each.
Simon differentiates itself by providing experiences shoppers are willing to visit in person. This includes things like modern dining options, entertainment venues, hotels, and more. For example, Simon’s Arundel Mills Mall near Baltimore features the Live! Casino and Hotel, a Dave & Buster’s, a megaplex theater, a Medieval Times dinner theater, and more. It also has been actively adding nonretail elements like hotels, apartments, and office space in anchor space formerly occupied by Sears stores. Simon’s massive size and financial flexibility gives it a big advantage when it comes to keeping up with changing retail trends, so it should have no problem remaining a step ahead of the competition.
The proof is in the numbers. Over the past year, Simon’s retail tenants reported sales growth of 3.5%, not a decline. However, because of the pressure on all things retail, Simon’s stock price has dropped by 15% over the past three months and it now has a well-covered 5.6% dividend yield for investors patient enough to hold on as the retail industry evolves…
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