The United States is dependent on the consumer for a complete economic recovery. A recovery that brings back increasing revenues and a boost for retail. When the consumer is back in full (and sustainable) force, spending discretionary income, and not going into debt — we may finally be fully back to normal. That’s where some mall and outlet REITs may come in handy for your portfolio.
A recently upgraded REIT…
One such REIT is CBL & Associates Properties, Inc. (NYSE:CBL). The trust invests in the real estate markets of the United States and owns a portfolio that consists of enclosed malls and open-air centers. CBL & Associates Properties, Inc. (NYSE:CBL) recently received a Baa3 rating (investment grade) with a stable outlook from Moody’s as well. The company’s CFO, Farzana Mitchell, commented on the recent accomplishment by stating:
“We are pleased that the strength and flexibility of our balance sheet as well as the value of our market-dominant strategy was recognized by Moody’s with the assignment of an investment grade rating; an important milestone for CBL… We believe a balanced financing structure, including full access to both the secured and unsecured credit markets, will allow CBL to fuel our ongoing growth using the most attractive sources of capital and further reducing our cost of funds. We look forward to building on this significant accomplishment.”
CBL & Associates Properties, Inc. (NYSE:CBL) also recently witnessed an upgrade to buy from Goldman Sachs Group, Inc. (NYSE:GS) as well.
An East-Coaster to consider…
Another mall REIT to consider is Pennsylvania R.E.I.T. (NYSE:PEI). The company owns, manages, develops, acquires, and leases mall and power and strip centers, and is primarily concentrated in the Eastern United States. It also provides management, leasing, and development services to affiliate and third party property owners.
The company has also witnessed an upgrade and a string of recently raised price targets by a number of firms as well.
A midwest based REIT…
Based in Colombus, Ohio, Glimcher Realty Trust (NYSE:GRT) managed and leased 27 properties, including 23 malls and four community centers located in the states of Ohio, West Virginia, California, Florida, North Carolina, Pennsylvania, Kansas, Kentucky, Minnesota, New Jersey, Oklahoma, Oregon, Tennessee, and Washington as of 2007, according to their company profile.
Already one of the nation’s premier retail REITS, Glimcher is also looking to expand and diversify. The company recently announced that it plans to add a 275-unit, luxury apartment community to Scottsdale Quarter in Scottsdale, Arizona, in a partnership with Crescent Communities. Glimcher’s CEO also added that:
“A luxury, multifamily community has always been a part of our vision for The Quarter. Based on the high level of demand from retailers and businesses interested in coming to Scottsdale Quarter, adding luxury apartments will build upon the center’s current success.”
Valuations and fundamentals from a traditional perspective…
Moving right along, here is a brief glance at CBL & Associates Properties, Inc. (NYSE:CBL):
|P/E||EPS (ttm)||Forward P/E||Annual EPS Est (Dec-13)||Dividend (yield)|
Data obtained from Yahoo Finance as of May 23.
As can be seen, the company looks much more attractive going forward than it does now, so future earnings are key. If they can meet expectations or at least come reasonably close, they look pretty cheap going forward. Meeting their annual estimates going forward may also mean great things for the growth of the trust’s dividend. The firm’s payout ratio is currently listed at over 164%, but if this same dividend payment is paired with future earnings, then the payout sits at only around 41% — which could mean increasing dividends.