• We're not malls, we promise! Open-air Shopping Center REITs have delivered a relatively strong year despite the reacceleration in store closings and fears of a 'retail apocalypse 2.0'.
• Dodging bullets: shopping center REITs have generally avoided the wave of store closings in 2019, which have been primarily concentrated in the enclosed mall-based category.
• Embracing the "bricks and click"s model including in-store pickup, open-air shopping centers have proven to be more adaptable to the rapidly changing retail distribution chain.
• After underperforming the REIT averages for the last decade, shopping center REITs delivered same-store NOI growth that was only fractionally below the broader REIT average in 2Q19.
• The bifurcation between high and low-quality retail centers continues to widen. We continue to see well-located grocery and hardline-anchored centers as the few engines of growth in the retail sector.
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REIT Rankings: Shopping Centers

One of the four major real estate sectors, the retail real estate sector can be divided into three subsectors: enclosed malls, open-air shopping centers, and free-standing. In the Hoya Capital Shopping Center REIT Index, we track the fourteen largest open-air shopping center REITs, which account for roughly $60 billion in market value: Regency Centers (REG), Federal Realty (FRT), Kimco (KIM), Brixmor (BRX), Weingarten (WRI), American Assets (AAT), SITE Centers (SITC), Retail Properties of America (RPAI), Acadia Realty (AKR), Urban Edge (UE), Retail Opportunity Investments (ROIC), Kite Realty (KRG), RPT Realty (RPT), and Urstadt Biddle (UBA).

After underperforming the REIT averages for the last decade, shopping center REITs delivered same-store NOI growth that was only fractionally below the broader REIT average in 2Q19. According to NAREIT's T-Tracker, over the last twelve months, shopping center REITs grew same-store NOI by 2.5%, the best rate since early 2015 and essentially in-line with the broader REIT average of 2.6%. Mall REITs, meanwhile, saw same-store NOI growth of just 0.9%. For now, it appears that much of the pain from big-box store closings may be in the rear-view for the sector as leasing spreads have accelerated modestly over the last several quarters. That said, we recall a similar sense of stability-turning-to-growth in 2016 before the unexpected Sports Authority bankruptcy and again in 2018 before the Toys "R" Us closing.

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For an in-depth analysis of all real estate sectors, be sure to check out all of our quarterly reports: Apartments, Homebuilders, Student Housing, Single-Family Rentals, Manufactured Housing, Cell Towers, Healthcare, Industrial, Data Center, Malls, Net Lease, Shopping Centers, Hotels, Office, Storage, Timber, and Real Estate Crowdfunding.

Disclosure: An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. We consider the information in this presentation to be accurate, but we do not represent that it is complete. It should not be relied upon as the sole source of suitability for investment. Please consult with your investment, tax or legal adviser regarding your individual circumstances before investing. Visit our website for a complete definition of all indexes cited in this report. Investing involves risk and loss of principal is possible.