Gap closing hundreds of stores, hotels into apartments, reeling REITs, Party City not investing in Halloween so much, and a look at a millionaire-making REIT.
In Today's News
Gap Inc. Closing 350 Stores in Transition From Malls to E-Commerce
More bad news for the beleaguered brick-and-mortar crowd as Gap (NYSE: GPS) announces plans to close 350 Gap and Banana Republic stores, including about 225 in the next year.
Why it matters: Wall Street loved the news, driving up the company's stock, but retail REITs, and those who own them, may not feel the same about the coming gap in those portfolios if these stores are currently their tenants.
Turning Guests Into Tenants, Hotels Into Apartments
The hotel business is in a world of hurt. Could some of these depressed properties get new life as apartments? It's happening already.
Why it matters: This GlobeSt.com piece focuses on the Los Angeles market, but I know of at least two such conversions here in little Columbia, South Carolina and can imagine it might look like an attractive repurposing elsewhere.
Rising Vacancies, Declining Rent Squeezing Apartment REITs
On the other hand, according to Moody's Analytics REIS, apartment vacancies have risen to their highest level since 2012 and a measure it calls "effective rent" posted its sharpest drop since the firm began publishing such data in 1999.
Why it matters: The Associated Press article also points out that the 15 apartment real estate investment trusts (REITs) included in the Nareit index have a negative year-to-date total return of 26.2% while the S&P 500 index is up about 8.2%, including dividends. Tough sledding has begun already as the pandemic ramps up and winter approaches.
Today on Millionacres
Pandemic Proves a Party Pooper for Halloween Pop-Ups
The fall harvest of temporary tenants may be slim this fall. Party City (NYSE: PRTY) alone has said it will open only 25 of its popular pop-up stores selling Halloween swag this year, compared to the usual 275.
Why it matters: Millionacres' Maurie Backman notes that while competitor Spirit Halloween is not seeing the same shrinkage, the National Retail Federation is predicting an $8 billion decline this year in Halloween spending and that CRE operators can ill afford to lose any more revenue or tenants right now, even the temporary ones.
Is Alexandria Real Estate Equities a Millionaire-Maker REIT?
Alexandria Real Estate Equities (NYSE: ARE) has posted an average annual return of 13.3% since going public in 1997. But can it keep up the pace with all the headwinds facing owner-operators of office space?
Why it matters: Millionacres' Matthew DiLallo makes a case for how its heavy emphasis on life sciences tenants makes strong total returns from this REIT a good possibility for years to come. If you buy that, buy this.