Now Entering Russ's World
Many people believe that malls are on their death bed, especially this year. In the business world, one of the exaggerated stories is the “death of retail.” Most believe that Amazon will take over the retail business approximately one year from now.
The assumption is that people will no longer go out to shop. The streets in the various shopping districts around America will be empty. Instead, the roads will be full of UPS freight vans delivering goods to customers. Thousands or even hundreds of thousands of drones will be used to make the goods delivery process even faster.
How Are the Investors Responding?
Although this is what most people believe, investors are viewing a different picture. On November 13, 2017, Brookfield Property Partners LP offered to buyout GGP Inc. (NYSE: GGP) for up to $14.8 billion. Since the rumor first spread a week before, GGP has seen the price of its stock rise by 18%. This was a significant rise given that the prices had fallen by about by 40% last year.
But why are investors thronging into the malls while everyone is running away? Whereas internet retail has led to a significant reduction in mall visitors, the malls can generate a lot of revenue as retail and real-estate assets. In one of the deals, GGP accepted to redevelop a part of their Seattle-area mall properties into apartment buildings.
Miller Value Partners is another company that has discovered the investment opportunity in the sector. Recently, they invested in Washington Prime Group (NYSE: WPG) and CBL Properties (NYSE: CBL). Berkshire Hathaway has bought shares in two companies namely Seritage Growth Properties (NYSE: SRG) and STORE Capital (Nasdaq: STOR).
It is agreeable that America is “over-malled.” However, online retail has played a significant role in the fall of most of these retailers. The resulting drastic reduction in the prices of these assets has seen an influx of other investors. The mall REIT sector is at this stage now.
Who is Jeff Yastine?
Jeff Yastine works at Banyan Hill Publishing as the editor of Total Wealth Magazine. The magazine provides investment advice critical to achieving financial freedom. This research advisory has gained a lot of popularity emerging as one of the most influential financial publications of its kind.
Jeff Yastine has worked as a stock market investor as well as a financial journalist for over 20 years. He has participated and reported on important financial world events. He was once nominated for the Annual Emmy Awards financial journalist. Over the years, he has helped many people make significant economic gains from their investment by following his advice.