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Retail REITs Q3 Earnings on Nov 1: AAT, RPT, REG, RPAI, TCO

Zacks Equity Research

As we tread into another busy week of the current reporting cycle, a lot of activity can be noticed in the retail real estate investment trust (REIT) space. In fact, there is a deluge of Q3 earnings releases this week, with American Assets Trust, Inc. AAT, Ramco-Gershenson Properties Trust RPT, Regency Centers Corporation REG, Retail Properties of America, Inc. RPAI and Taubman Centers, Inc. TCO of the retail REIT category, reporting their numbers on Nov 1.

Industry top shots like Simon Property Group, Inc. SPG and Kimco Realty Corporation KIM have already announced their results last week. Simon Property reported a positive surprise of 0.75%, benefiting from growth in operating income and transformative redevelopments.

On the other hand, Kimco’s improved results in the third quarter which included U.S. same-property net operating income (NOI) growth of 3.3% year-over-year. U.S. pro-rata rental-rate leasing spreads moved north 12.9%, with new leases and renewals/options increasing 26.6% and 7.8%, respectively.

Amid limited supply, demand for retail spaces continued to rise, with retailers combining online and bricks-and-mortar operations and retail landlords transforming their boring shopping hubs into entertainment zones. This is because even though online retailing has gathered momentum, customers still prefer spending time in retail centers for shopping, together with dining and entertaining activities.

In fact, retail availability rate tightened in many of the U.S. markets in the third quarter, according to a CBRE Group study. Nationally, average availability came in at 10.4% in the quarter under review, denoting a contraction of 20 bps sequentially and 50 bps from a year ago.

However, not every retail REIT is equally poised to beat earnings this season. Hence, we relied on the Zacks methodology for predicting a beat this quarter, combining a favorable Zacks Rank –  Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP, to predict the chances of a beat this quarter.

Our proprietary methodology – Earnings ESP – shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Research shows that with this combination of rank and ESP, chances of a positive earnings surprise are much high for the stocks.

Let’s take a look at what’s in store for these retail REITs which are slated to report their third-quarter earnings tomorrow.

American Assets, Inc. owns, operates, acquires and develops retail and office properties primarily in Southern California, Northern California, Oregon, Washington and Hawaii. With an  Earnings ESP of 0.00% and a Zacks Rank #4 (Sell); this stock is not poised for a beat this quarter as it lacks the right combination of Earnings ESP and favorable Zacks Rank as given above.

In fact, we caution against stocks with Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
However, the stock has a mixed surprise history over the trailing four quarters, having exceeded estimates in one quarter, meeting in another and missing in the rest two occasions, as depicted in the chart below.

AMER ASSETS TR Price and EPS Surprise


AMER ASSETS TR Price and EPS Surprise | AMER ASSETS TR Quote

Ramco-Gershenson Properties Trust is engaged in the business of owning and managing large, multi-anchor shopping centers, primarily in a number of the largest-metropolitan markets in the central U.S. Though the stock has an Earnings ESP of 3.03%, which is a meaningful indicator of a likely positive surprise, its Zacks Rank #4, makes any beat unlikely this quarter.

Over the trailing four quarters, this stock has beat estimates in two and met in the other two, with an average positive surprise of 5.42%. This is shown in the chart below.

RAMCO-GERSHENSN Price and EPS Surprise



Regency Centers Corporation is engaged in the ownership, operations and development of high-quality, grocery-anchored neighborhood and community shopping centers. Though it has a favorable Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

You can see the complete list of today’s Zacks #1 Rank stocks here.

However, Regency has exceeded estimates in each of the four trailing quarters, with an average surprise of 4.89%.

REGENCY CTRS CP Price and EPS Surprise



Retail Properties of America is engaged in the ownership and operations of high quality, strategically-located shopping centers in the U.S. The company has an Earnings ESP of -3.85% and a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, a negative ESP itself lowers the chances of a beat this quarter.

Nevertheless, this stock has posted a positive average beat of 9.24% over the trailing four quarters, having beaten the Zacks Consensus Estimate in each of the four quarters, as demonstrated in the chart below.

RETAIL PROPERTS Price and EPS Surprise



Taubman Centers is involved in the ownership, management and/or leasing of regional, super-regional and outlet shopping centers in the U.S. and Asia. Though the stock has a favorable Zacks Rank #3, a surprise prediction is difficult with an Earnings ESP of -1.12%.

Over the trailing four quarters, the stock has met estimates in three quarters and missed in the other one. It has an average positive surprise of 4.33%. This is shown in the graph below.

TAUBMAN CENTERS Price and EPS Surprise



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KIMCO REALTY CO (KIM): Free Stock Analysis Report
TAUBMAN CENTERS (TCO): Free Stock Analysis Report
REGENCY CTRS CP (REG): Free Stock Analysis Report
AMER ASSETS TR (AAT): Free Stock Analysis Report
RAMCO-GERSHENSN (RPT): Free Stock Analysis Report
RETAIL PROPERTS (RPAI): Free Stock Analysis Report
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