Time To Consider Mall Owners? (GGP, SPG, VNO)

Brian Sozzi of Wall Street Strategies is out with a research note on the mall owners, and their response to online retailers. Is now a good time to buy shares? Sozzi writes that mall owners like Simon Property SPG and Vornado Realty Trust VNO are ramping up investment in the malls to bring customers back to the stores and keep the store owners happy. General Growth Properties GGP is another major mall owner, but it has just started to ramp up investment in its mall, as it emerged from bankruptcy in November. "Paramount to the efforts by mall owners is the desire to motivate consumers to shop the mall more than once a month. Many malls across the country have not received a refresh in some 20 years (a rule of thumb was that a mall received a refresh every 10 years, but owners got complacent when the economy was humming along as consumers spent no matter of the décor and amenities) despite a minor upgrade package costing, say, $1 million to $3 million to complete. So with rates on long-term debt quite attractive and materials and labor prices below their 2008 peaks, the likes of Simon Property (SPG), Vornado (VNO), and Westfield are realizing there is a compelling ROI to be earned by revamping a mall's parking lot or lighting fixtures," Sozzi wrote. If you believe that the mall owners are going to continue keep investing in the malls to keep tennants and that customers will keep shopping in malls, and not migrate all of their spending online, then perhaps considering investments in these mall owners might be a profitable trade.