Retail REITs – Mission Accomplished?

The timing of this post is absolutely not cherry-picked based on a huge recent run up in some stocks we looked at recently.  If only you had subscribed to our newsletter, these fabulous riches could have been yours!

There is no newsletter, but wow retail REITs have really “bounced back” lately.  Today the Supremes decided that internet retailers have to collect state sales taxes.  I guess there’s a nexus after all (or something).

This decision is what the media is using to explain the positive price movements in many REITs today.  Of course, I am unsurprised, having applied my keen intellect and research skills to predict this outcome months ago.  Just kidding, I’m not sure I was aware the case was pending.  I think I knew, but I didn’t really care enough to form an opinion.

No, I don’t think I can attribute this to me predictive powers.  I think I will have to file this under “base rates win again” or “but it cheap and something good might happen!”

REITs in general and retail REITs in particular are up smartly since we started looking at them.  There has been a fair amount of M&A in the area too, which I take to mean we are probably fishing in the right “hole.”

I’ve still got to figure out what to do with my GPT proceeds.  I thought I would update the performance of some of the names we looked at.  Maybe I will update some of the valuation touchstones this weekend or something, if any look interesting (i.e., have not roared over the last month).  The timing of this update is not totally arbitrary, as I drafted my first post pretty much a quarter ago (03/18/18).

I’ve also got to figure what, if anything, I’m going to do with this CAG.  Which hit a 52 week high today before news came out that CAG had approached PF about doing a deal.  M&A (as the buyer) scares me (as it should based, again, on the craptastic base rates) but then again it kind of maybe puts CAG in play too.  I would like to hear Connolly’s thesis for liking PF as his target.  They seem to be actually one of the other good operators in the space right now. Maybe I should go back and try to find the deck/announcement for the SLE/PF deal from back in the day.  GOOG can probably make that happen for me.  Anyway, I digress…

So REITs, especially retail REITs have been moving up since we first looked at them.  Here are some prior hits on the space:Retail REITs: Apocalypse or Opportunity?;  Retail REITs: Brookfield’s Acquisition of General Growth PropertiesBed, Bath & an Abomination?I’m Just Saying…I Bonds, Earnings, REITs, and CPG Bloodbath.

So here are the most recent 3 months performance figures for some of the REITs we looked at before (I think the actual returns would be a little worse if you bought on publication date because that first day (03/19 was a down day for most, but these are easy to find on M*).  These are the three I liked the best after looking at the space:

BRX                KRG               KIM

19.38%          ~16.87%         25.04%

Pretty, pretty, pretty good…for a quarter.  Too bad I didn’t load the boat.  I hope you did!

Here are some other ones I discussed:

VER               REG               STOR                RPT                GGP

9.90%            9.44%           11.89%             10.14%          (.43%)

For more context:

CBL               SPY               GPT

48.33%         7.78%           26.66%

The takeaway might just be “buy it cheap and something good might happen.”  Also, seems like maybe Brookfield got a good deal.  I might flip my GPT proceeds into GGP and then take stock to ride the redevelopment train with Bruce Flatt and co.  We will see.

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