Mall REITS Reeling after Forever 21 Bankruptcy

October 4, 2019 | Investments, News, Real Estate
https://dailyalts.com/wp-content/uploads/2019/10/54e5dc444852a914ea898579ce203e7c1d22dfe05451734b742e7cd4_640.jpg

Another Retailer Bites the Dust. Well, now what for Malls?

Forever 21 is just the latest retailer to file bankruptcy and announce a wave of store closings. The news will impact Real Estate Investment Trusts that own mall properties (Mall REITs).

The retailer will close more than 175 properties around the United States. The decision leaves mall operators scrambling to lease or repurpose the space.

These operators already face declining traffic from the rise in E-Commerce and other major retail closings over the last few years.

How Forever 21 Impacts Mall REITs

At this point, many mall REITs and property owners must feel like Sisyphus eternally pushing the rock up the hill only to watch it roll back down. They scramble to fill one space and watch another wave of closures force a new search for new tenants.

Forever 21 is just one retailer shutting down stores. The numbers are much higher.

According to Coresight Research, 8,558 stores have closed. Now, as many as 12,000 stores could close by year’s end.

Store closings hit an all-time high this year. And, we still have three months left in 2019.

The death of retail is having a harsh impact on shopping mall REITs in 2019.

On average, the group is down over 13% so far this year. Further, the replace or repurpose problem has few solutions. Not even Bill Ackman has enough money and time to turnaround all of the retail malls that continue to decline.

A few band-aids have been applied by Mall REITs.

Retailers are reaching out to health and fitness facilities, entertainment companies, and digital brands. Those companies can provide needed physical space to showcase products. It also allows customers to return products in a store instead of through the more expensive shipping option at the retailer’s expense.

Data from real estate research firm Reis shows that occupancy rates are at eight-year lows, with 9.4% of space nationally sitting empty right now.

That’s a lot of space to fill in a slow economy. This trend will likely continue to pressure results and stock price prices for mall REITs.

[Related story: REIT Industry Shows Growth in Acquisitions]

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Alt Insights

January 29, 2020

Venture Capital: The Kobe in “Bryant Stibel & Co”

Venture Capital: The Kobe in “Bryant Stibel & Co”
Shape

Latest Alternative Investment News

Alternative Investments: Activists Will Get Busy Soon, Says Tim Melvin

As companies become more undervalued as the economy slows because of shutdown orders across the United States, I expect that the pace of activist activity to increase. We should see…

https://dailyalts.com/wp-content/uploads/2020/04/54e5d0424b54b10ff3d8997cc3213f771737c3e456597441702a7cd297_640.jpg
Private Equity: Active Triage Happening at KKR and Other Funds
April 2, 2020     News, Private Equity

KKR & Co (NYSE: KKR) has shelved a plan to sell Singapore-based Goodpack, a Singapore based shipping containers, and logistics services.  They had bids for the company that was said…

https://dailyalts.com/wp-content/uploads/2020/04/key-visual-kyash.jpg
FinTech: Kyash Closes $45M Series C Funding
April 2, 2020     FinTech, News

Kyash, a Japanese fintech startup aspiring to be a leading challenger bank, gained $45 million in a Series C funding. The round was co-led by Greenspring Associates and Goodwater Capital,…

https://dailyalts.com/wp-content/uploads/2020/04/dollar-1362244_640-mmfs.jpg
Liquid Alternatives: Investors Shovelled $677B Into Money Market Funds In Scramble to Safety
April 2, 2020     Liquid Alternatives, News

Investors set up a record-breaking first quarter this year for inflows into U.S. money market funds. These funds gained from the massive risk-off sentiment that prevailed as investors realized the…

Scroll to Top