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Healthy Q2 Retail Sales Imply Stronger Growth for Mall REITS

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According to analyst research from BTIG, mall retails should expect further growth for the remainder of the year.

“As we approach the earnings release season for our mall REIT coverage, we believe that the data set provides solid evidence for conclusion that Census Bureau sales results provide a good leading indicator of Mall REIT SSNOI Growth.”

The firm points out that it is lowering its price target on GGP to $21.95 which is the current value of the Brookfield bid. The company also reiterated its buy rating on Macerich and Simon Property Group.

The latest research report points to Census Bureau data indicating that the recovery in overall retail sales, and more specifically, “brick and mortar” sales has continued through the second quarter.

“The strength in consumer spending mirrors the healthy employment market, positive consumer sentiment and increases in inflation,” the report says. “There could be some emerging headwinds in the second half. Sales comparisons do get more challenged in the second half. The potential for a trade war that lowers US GDP growth would be a negative and could dent consumer sentiment, and higher gasoline prices compete for the consumer dollar. But the strength of the job market and the gains in corporate profits provide a healthy backstop.”