Bank Of America: Malls Underperforming, Strips Outperforming in Q3

Craig Schmidt of Bank of America reviewed how REITs and Malls performed in the third quarter. According to the analyst, mall earnings mostly met or exceeded expectations for the third quarter while five of the seven mall REITs the analyst covers raised their guidance while the other two lowered guidance. 14 percent of strip mall companies beat quarterly expectations while 79 percent met expectations. Also, 79 percent of companies covered raised their guidance. As a whole, returns for malls at 8.4 percent slightly underperformed overall REIT returns of 9.9 percent since the end of September. However, strips returned 11.4 percent. “We believe investors were more positively surprised by the strip 3Q earnings, as limited new supply continues to drive occupancy increases and leasing spreads,” Schmidt wrote. “Also, we believe the strip space will have relatively few store closings than expected.”