Authors: Justin McBride*, UCLA Luskin School of Public Affairs Department of Urban Planning, Brianne Logasa, UCLA Luskin School of Public Affairs Department of Urban Planning, Jessica Prieto, UCLA Luskin School of Public Affairs Department of Urban Planning, Justine Pascual, UCLA Luskin School of Public Affairs Department of Urban Planning, Landy Joseph, UCLA Luskin School of Public Affairs Department of Urban Planning
Topics: Economic Geography, Urban and Regional Planning
Keywords: REITs, retail malls
Session Type: Paper
Presentation File: No File Uploaded
Recent scholarship around Real Estate Investment Trusts (REITs) focuses on housing markets. This paper looks at recent REIT activity in their original sector – the retail mall. Retail property REITs are the largest single segment of publicly traded REITs by market capitalization. Recent trends in this sector may inform researchers on REIT behavior in other sectors. We use a combination of public filings and industry data to examine the largest subsegment, mall REITs, through three lenses. First, mall REITs and their shareholders have consolidated drastically – only 7 mall REITs remain in the US. The shareholders of these REITs are also highly concentrated, and are brushing up on IRS limits designed to prevent owner overconcentration. The largest foreign mall REIT operating in the US also shares many of the same owners. Thus, REITs cannot be considered to be market competitors; interviews with mall managers reinforce this idea. Second, REITs are consolidating ownership of high-end mall properties and spending millions in rehabilitation despite the so-called retailpocalypse. Mall REITs are ‘reimagining’ malls into mixed-use properties, frequently including luxury housing, and sometimes located in historically disadvantaged neighborhoods. Finally, in the key Southern California market mall REITs have historically been experts in accessing public redevelopment funds. As REITs try to shift the regional mall into mixed use developments including luxury apartment units, we expect this trend to continue, whether through direct subsidy or targeting transportation development funds towards key malls. We close with speculation about possible avenues for community intervention.