Easter is an American quintessential family holiday. We started Ash Wednesday for the beginning of Lent. This is a quite important holiday for me as an American Jew. Not in a religious sense per se. Instead, it is the starting point of Spring Cleaning for the upcoming eight days of Passover. To celebrate the misery of no bread for a week, one has to clean their house up until there is not one crumb of anything leavened in their house.
But, both holidays have one thing in mind: bring family back into what is supposed to be the American family like we see on The Brady Bunch. While the American family values get rebuilt from its slow and painful death from the 1960′s, there is an even bigger slow and painful death since then: Shopping Malls. Just like the family values of today, the shopping mall is suffering a long, long death. the industry took the MRI examination and it was confirmed they have an incurable Online Shopping Disease (OSD).
Renowned hedge fund manager Bill Ackman helped save mall real estate investment trust General Growth Properties (GGP) from bankruptcy in 2009 . He turned $60 million into $1.6 billion in those 5 years of crisis in real estate. But, Bloomberg reported last week that Ackman sold his final 28 million shares back to GGP via a buyback for $556 million. It looks like Ackman is taking his money and running from mall real estate. A good example is his loss of hope on JCPenney’s, one of the many dying retail companies. Sears, Macy’s, Radio Shack, and Kmart are a few of the next followers of Border’s, Caldor, and Woolworth’s.
Online retailers are basically transforming the way we shop in all advanced countries today. Mall real estate owners can always raise funds and money in three ways:
- Raise their rental rate
- Loan costs go down reducing interest payments
- Market value of real estate goes up
Shopping malls have risen to the peak of their capacity in all three ways. They would lose tenants or lose capital assets. When you are at the top of Mount Hood, there is only one way to go: STRAIGHT DOWN! The picture above was the Canton Center Mall in Canton, Ohio. It gives a vision of what 2020 would look like when Cyber Monday puts Black Friday out of business.
So, where do we put our hard earned savings for investing? There exist very few Walmart, Kohl’s, TJ Maxx, or Target stores in malls. These big four retailers have a long way to compete with the online shopping revolution. They all have been vaccinated from OSD because they do a lot of online shopping services. I still prefer shopping at your local small retailer in my neighborhood. Yet, the convenience of these four retailers is amazing because they ship the product free of charge to the store of my designation the next day. Your local store would be a wait of up to a week to order a product because their inventory operations is on a much smaller scale.
Retail is not dead. Instead, it is transforming to keep up with our fast paced life. Make sure your investing ideas are also transforming with the new wave of shopping services. When companies grow, so do your dividends every 3 months.
To Your Health…
To Your Wealth…
To Your Wisdom.
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