Advertisement
U.S. markets closed
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow 30

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Russell 2000

    2,124.55
    +10.20 (+0.48%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Silver

    25.10
    +0.18 (+0.74%)
     
  • EUR/USD

    1.0778
    -0.0015 (-0.14%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • GBP/USD

    1.2621
    -0.0001 (-0.01%)
     
  • USD/JPY

    151.3490
    -0.0230 (-0.02%)
     
  • Bitcoin USD

    70,255.73
    +550.69 (+0.79%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,413.91
    +245.84 (+0.61%)
     

How is PREIT Placed Amid Transforming Landscape of Malls?

In a recent video interview at Nareit’s REITworld: 2018 Annual Conference in San Francisco, CEO, Joe Coradino, of Pennsylvania Real Estate Investment Trust PEI — better known as PREIT — discussed the evolving landscape of malls and consumers’ growing sophistication.

He noted, “It’s clear that given the track record of success we’re experiencing with restaurants, entertainment, health, fitness, and other experiences, that the consumer is enjoying this and they’re coming back more often to experience it.”

Admittedly, the shrinking mall traffic, store closures and retailer bankruptcies amid aggressive growth in online sales have kept retail REITs, including PREIT and others like Kimco Realty Corp. KIM, Macerich Company MAC, Taubman Centers, Inc. TCO, on tenterhooks. In addition, tenants are demanding substantial lease concessions due to a choppy retail real estate market scenario.

Nonetheless, retail REITs are countering this dreary situation and putting in immense efforts to enhance the productivity of malls, by trying to grab attention from new and productive tenants, and disposing the non-productive ones on the other hand.

Specifically, retail REITs are fighting back and transforming their retail shopping centers in a way such that these spaces appear as a one-stop destination where people can not only shop, live and work, but also entertain, socialize and exercise, and even visit doctors or relax at the spa.

Also, the companies are making efforts to grab the attention of online retailers, and rolling out innovative platforms to go beyond e-commerce and expand their presence to physical-store formats. Eventually, such measures are aimed at growing mall traffic and driving sales.

PREIT, too, along with its re-merchandising efforts, has resorted to a portfolio rejig, selling low productive assets, and investing heavily in refurbishments and remerchandising to increase property value.

Moreover, recently, the company announced a partnership with 1776, a network of incubators, which encourages start-up companies in the Northeast. This will offer scope to bring in a company that will help nurture retailers in an actual retail environment, which will support having interface with customers, making the most of their business potential in a short span. In addition, PREIT’s CEO pointed out its least chance of being affected by the Sears bankruptcy. Although the company initially had 27 Sears stores, the number is now down effectively to four.

Though such steps will likely help PREIT efficiently tide over the tepid retail real estate market, portfolio-redevelopment measures entail considerable capital and tend to drag margins in the near term. In addition, rate hike adds to its woes.

PREIT currently has a Zacks Rank #3 (Hold). The company’s shares have declined 19.9% in the past three months compared to the industry’s loss of 13.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Macerich Company (The) (MAC) : Free Stock Analysis Report
 
Kimco Realty Corporation (KIM) : Free Stock Analysis Report
 
Pennsylvania Real Estate Investment Trust (PEI) : Free Stock Analysis Report
 
Taubman Centers, Inc. (TCO) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Advertisement