Do Shopping Malls Actually Have a Rosy Future?
There is a very common theme in the economy at the moment related to sizeable growth in e-commerce. Essentially, the argument is Amazon (AMZN) and online sales will destroy the bricks and mortar retailers and leave investors in shopping malls high and dry, losing rental income as stores close.
Looking at recent Retailer earnings reports seems to support this argument, as per Macy’s (M) 1Q17 report that saw a 4.6% drop in Same-Store Sales with a 17% drop in stock price and Sears’ (SHLD) warning that there is substantial doubt about its ability to remain a going concern in its annual report. Both companies are closing more stores along with some other high-profile companies like JC Penney (JCP). The landlords must hate to see this type of news.
However, reading the conference call transcript for Starwood Property Trust (STWD) in 1Q17, shows that the news may not be so dire. In fact, in some cases, Starwood’s CEO Barry Sternlicht actually welcomes this situation: Read the rest of the article here…