• Signs of Life: Mall REITs were the best-performing REIT sector in 2022 - nearly doubling in value amid hopeful signs of stabilizing fundamentals - snapping a dreadful six-year-long streak of underperformance.
• Last Man Standing? The lower-end mall segment was hollowed out by the pandemic with three REITs entering bankruptcy. The REITs that managed to survive - SPG, MAC, SKT - entered 2022 on stable footing.
• Traffic and sales levels at these higher-end mall properties were back to pre-pandemic levels during the holiday season. Store openings outpaced store closings in 2022 for the first time since 2014.
• Party Like It's 2019? Simon Property reported that its full-year Funds From Operations exceed its 2019 level in 2021, helped by strong return on non-mall investments. Tanger and Macerich remain 20-40% below pre-pandemic levels.
• Secular headwinds on the mall format will persist, but we see some targeted opportunities as the outlook for higher-tier retail assets has brightened while valuations and yields appear reasonably attractive.

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