February 28, 2024

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These three mall real estate funds offer steady dividends: But what then when stores like Zumiez run into inflation?

Now that we’re firmly into the second half of the year, we can analyze the impact of higher interest rates and inflationary pressures on REITs, which own large malls and malls.

For example, trendy teenage niche retail chains such as Zumiez Inc (NASDAQ: ZUMZ) And the American Eagle Outfitters Inc (NYSE: AEO) Earnings per share for the second quarter were lower than the previous quarter. In addition, both companies failed to estimate the consensus estimate for second-quarter earnings per share of more than 60%.


The EPS loss can be attributed to worse-than-expected sales, as Zumiez and American Eagles Outfitters reported lower sales than they did in the second quarter of last year. With CPI reading 8.5% in the 12 months to July, consumer confidence deteriorated along with purchasing power.


Ahead of the third quarter of 2022, Zumiez provided revenue guidance that fell short of analyst estimates. While the second half of the year is usually a positive time for brick-and-mortar retail as we head into the holiday season, it could prove beneficial for the three mall REITs that offer solid dividend yields.

Simon Property Group Inc (NYSE: SPG) It offers a dividend yield of 6.73%, or $7.00 per share per year through quarterly payments, and has a proven track record of increasing its dividend over the past two years. Simon Property Group is the second largest real estate investment trust in the United States, and 12 months before the pandemic, the company’s average returns were $693 per square foot.



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Simon’s portfolio includes interests in 222 properties – including 95 shopping malls, 69 premium outlets, 33 international outlets, 14 mill centers (a combination of a traditional mall, retail center and big box retailers), six lifestyle centers and five other retail properties (As of December 31, 2021).

National Retail Properties Inc (NYSE: NNN) It offers a dividend yield of 4.90%, or $2.20 per share per year when paid quarterly, and has an aristocratic track record, having increased its dividend for 34 consecutive years. National Retail Properties is a real estate investment trust that invests in and develops real estate throughout the United States, particularly in the South and Southeast.

This REIT generates rental income from property for tenants, including stores, auto services, fitness centers, theaters, restaurants, and banks. As of 2022, National Retail Properties has more than 380 tenants, 3,305 properties, an occupancy rate of 99.1%, and the largest tenant is 7-Eleven with 138 properties.

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Tanger Factory Outlet Centers Inc (NYSE:SKT) offers a dividend yield of 6.73%, or $7.00 per share annually, pays quarterly and has raised its dividend once in the past year. Tanger Factory Outlet Centers owns and operates malls in the United States and Canada and is a fully integrated, self-managed, self-directed REIT focused on the development, acquisition, ownership, operation and management of focused malls.

Tanger Outlets operates approximately 37 outlets with a gross leasable area of ​​approximately 14 million square feet that will house over 2,700 stores with over 600 brands as of 2022.