SKT is a mall REIT that owns and operates factory outlet centres. Mall REITs are one of the worst performing sectors this year and SKT is an exciting turnaround play here. Footfalls data shows turnaround is already in place. Yet SKT is ~ -60% YTD with over 50% of float short.
I noticed SKT as it stood out among mall REITs when I was looking at retail footfalls data at placer.ai
https://www.placer.ai/the-square/brand-tracker/
Placer.ai data shows SKT footfalls for Sep is +ve YOY. No other mall REIT comes even close to this.
SKT footfalls YOY for Sep: Week1 +29%, W2 +2.4%, W3 -1.7%, W4 +0.4%
Compare that to Sep W4 footfalls YOY (W4 used for ease) of other mall REITs below:
Simon property group -28%
Brookfield property retail group -34%
Macerich -31%
CBL -28%
Washington Prime -25%
While footfalls at all other mall REITs for Sep is about -30% YOY, SKT is +ve YOY. That’s a massive outperformance. Management has not yet updated Sep performance.
SKTs operational outperformance started in July as seen in the below table from JP Morgan. SKT has the highest rent collection % for July among mall REITS at 81%. This improved to 85% in August.
With September footfalls +ve YOY for the first time since COVID, SKTs rent collection should improve further pulling SKT further away from the sector.
So what’s driving this extreme outperformance in footfalls?
A report from Keybanc anticipates that the “open-air nature” of SKT’s properties may see “continued support” as consumers may seek “safer outdoor weekend activities in lieu of indoor activities and other leisure travel”.
Another report comes to the same conclusion.
Open-air nature of SKT seems to the key driver of footfall divergence vs other indoor mall REITs.
This gives SKT huge advantage till COVID ends. I expect +ve footfalls YOY to continue and % rent collection near or over 90% for Sep/Oct. I also expect dividend to be reinstated soon.
Their last quarterly dividend was declared in Jan at 35.75 cents. At 50% of the last dividend(17cents) the dividend yield would be 10% at current prices.
I would not be surprised if they reinstate a higher dividend given % rent collection should be close to 90%.
None of this inflection in data is in SKT stock price which is down ytd in line with sector leader Simon. Next update from management will make SKT stand out among mall REITs. Rerating should send the stock 50% higher very quickly.