&l;p&g;&l;img class=&q;dam-image getty size-large wp-image-939736208&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/939736208/960×0.jpg?fit=scale&q; data-height=&q;605&q; data-width=&q;960&q;&g; US President Donald Trump makes his way to board Marine One on the South Lawn before departing from the White House on March 29, 2018. Trump is visiting Ohio to speak on infrastructure development before heading to Palm Beach, Florida. / AFP PHOTO / Mandel NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)
The media erupted Thursday morning after President Donald Trump slammed Amazon, something he&a;rsquo;s been known to do before, saying the company doesn&a;rsquo;t pay enough taxes and has been hurting traditional retailers that have been forced to close stores.
He wrote on &l;em&g;Twitter&l;/em&g;: &a;ldquo;I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state &a;amp; local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!&a;rdquo;
On Wednesday, a &l;a href=&q;https://www.axios.com/trump-regulation-amazon-facebook-646c642c-a2d7-454b-a9a9-cdc6e4eaef2c.html&q; target=&q;_blank&q;&g;report surfaced&l;/a&g; that Trump was largely worried about mom-and-pop retailers being put out of business. Trump&a;rsquo;s friends in real estate have been in the president&a;rsquo;s ear telling him that Amazon is killing shopping malls , according to Axios. And he agrees, Axios said.
With more chaos sure to ensue following Trump&a;rsquo;s comments — and what he could potentially do to Amazon with his seat in the White House — this got me thinking about the landlords that are suffering from a substantial chunk of store closures already in 2018. There are a lot of troubled names in the space, which will struggle to find replacement tenants. But there are also three REITs that come to mind that — despite the headlines — are doing just fine.
&l;p class=&q;tweet_line&q;&g;These 3 REITs scream &a;ldquo;Strong Buy!&a;rdquo;&l;/p&g;
&l;strong&g;&l;u&g;Kimco Realty (KIM)&l;/u&g;&l;/strong&g;
Kimco has been in the news recently for its connection to Toys R Us, &l;a href=&q;https://www.forbes.com/sites/bradthomas/2018/03/12/farewell-toys-r-us-we-will-miss-you/&q;&g;which I covered earlier this month&l;/a&g;. But it&a;rsquo;s important to see this shopping center REIT has very limited exposure to the toy chain, and its properties across the U.S. are some of the finest in the country. The company has increasingly signed new leases with service providers (think gyms and health clinics), top grocers like Trader Joe&a;rsquo;s and off-price chains including Marshall&a;rsquo;s and Dollar Tree.
All of these segments are nearly bulletproof from any &a;ldquo;retail apocalypse.&a;rdquo;
Kimco&a;rsquo;s centers are typically found in densely populated, metro markets, something else that sets this REIT apart from its smaller peers. By the end of the fourth quarter of 2017, Kimco had roughly $2 billion of redevelopment projects in the pipeline. &l;a href=&q;https://www.forbes.com/sites/bradthomas/2018/02/20/kimco-realty-rings-the-register-with-albertsonrite-aid-merger/#564098234a92&q;&g;I also wrote last month&l;/a&g; about Kimco being an investor in Albertsons, which is merging with Rite Aid. The boost (when it cashes out its shares) will help the company fund some of its redevelopments and continue to deleverage its business.
I am maintaining a &l;strong&g;STRONG BUY&l;/strong&g; rating on KIM due to the company&a;rsquo;s wide margin of safety. Shares now trade at $14.40 with a P/FFO multiple of 9.6x. The dividend yield is now a whopping 7.8%.
&l;a href=&q;https://blogs.forbes.com/bradthomas/files/2018/03/kim.jpg&q; target=&q;_blank&q;&g;&l;img class=&q;size-medium wp-image-2997&q; src=&q;http://blogs-images.forbes.com/bradthomas/files/2018/03/kim-300×233.jpg?width=960&q; alt=&q;&q; data-height=&q;233&q; data-width=&q;300&q;&g;&l;/a&g; Source: FAST Graphs
&l;strong&g;&l;u&g;Simon Property Group (SPG)&l;/u&g;&l;/strong&g;
It&a;rsquo;s hard to call Simon a bad bet in retail today, though some still try to do it. This REIT owns some of the best-quality malls in the U.S., backed by a top-notch management team. We all know by know it&a;rsquo;s inevitable many malls across the country are nearing their final months, if not days, with more and more retailers closing stores.
But none of Simon&a;rsquo;s Class-A properties would fall on that list. The REIT has managed to maintain high occupancy rates at its malls, bringing in e-commerce brands, massive food halls, and other new uses. Occupancy for Simon&a;rsquo;s U.S. malls and premium outlets ended 2017 at 95.6%, while The Mills occupancy ended the year at 98.4%.
CEO David Simon said consumers should expect the company will start experimenting more with technology &a;ldquo;to enhance the value of the shopping trip for the consumer from many different points of view, including discovery and convenience.&a;rdquo; Simon, more that some of its peers in the space, understands how retail is evolving, and the company is fighting to keep up or in some instances stay ahead.
I am maintaining a &l;strong&g;STRONG BUY&l;/strong&g; rating on SPG shares due to the wide margin of safety. Shares now trade at $154.34 with a P/FFO multiple of 13.5x. The dividend yield is now 5.1%.
&l;a href=&q;https://blogs.forbes.com/bradthomas/files/2018/03/spg-1.jpg&q; target=&q;_blank&q;&g;&l;img class=&q;size-medium wp-image-2998&q; src=&q;http://blogs-images.forbes.com/bradthomas/files/2018/03/spg-1-300×234.jpg?width=960&q; alt=&q;&q; data-height=&q;234&q; data-width=&q;300&q;&g;&l;/a&g; Source: FAST Graphs
&l;strong&g;&l;u&g;Tanger&l;/u&g;&l;u&g; Factory Outlets (SKT) &l;/u&g;&l;/strong&g;
Tanger offers a different narrative when it comes to retail. Aside from Simon, the REIT is the only publicly-traded owner of outlet centers across the U.S (that&a;rsquo;s why SKT is called a &a;ldquo;pure play&a;rdquo; outlet center REIT).
For shoppers, Tanger becomes a destination. Instead of quick trips throughout the week (like folks might be making at Kimco&a;rsquo;s centers, or even Simon&a;rsquo;s malls), shoppers are visiting Tanger&a;rsquo;s centers for an all-day haul — maybe it&a;rsquo;s back to school season, part of a planned vacation, or just a weekend adventure.
This alone sets Tanger apart from the rest. Like Simon, Tanger has also kept its occupancy rates above par. It continues to hike its dividend payout to investors (over 25 years in a row). And it&a;rsquo;s tenant mix includes some of the strongest retailers today: Coach, Lululemon, Michael Kors and Nike. According to CEO Steve Tanger, &a;ldquo;In good times people love a bargain, in bad times people need a bargain.&a;rdquo;
I&a;rsquo;m not much of a shopper (although I did receive my first shipment from&a;nbsp;&l;a href=&q;https://www.forbes.com/sites/ryanmac/2017/05/10/stitch-fix-continues-retail-warpath-with-730-million-in-revenue-ipo/#75e1b9a32604&q;&g;Stitch Fix&l;/a&g; this week), but when it comes to Tanger Outlets stock, I know a bargain when I see it. I am maintaining a &l;strong&g;STRONG BUY&l;/strong&g; on SKT shares (now trading at $22.00 with a P/FFO multiple of 10.0x). The dividend yield is 6.2%.
&l;a href=&q;https://blogs.forbes.com/bradthomas/files/2018/03/skt-1.jpg&q; target=&q;_blank&q;&g;&l;img class=&q;size-medium wp-image-2999&q; src=&q;http://blogs-images.forbes.com/bradthomas/files/2018/03/skt-1-300×234.jpg?width=960&q; alt=&q;&q; data-height=&q;234&q; data-width=&q;300&q;&g;&l;/a&g; Source: FAST Graphs
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I own shares in KIM, SKT, and SPG. I am on the Donald J. Trump Campaign Advisory Board.&l;/p&g;