a day ago
Why this analyst still likes shopping center stocks
There have been some concerns about consumer spending slowing, which could pose an issue for properties such as shopping centers. In the video above, Mizuho Americas senior REIT and homebuilders analyst Haendel St. Juste shares why he still likes the space and gives his top stock pick.
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What about shopping centers handled? Do you see an opportunity in that sector?
You know, we've we've liked the shopping centers here for the past couple years. The sector has certainly uh been on a multi-year run benefiting from historically low supply. Uh there was a purging of weaker uh tenant credits in the aftermath of COVID. So, the tenant credit uh picture has been fairly benign the last couple years. A few more names have been popping up here, but overall you know, it's manageable. The companies have reserves in place more than sufficient uh to incur uh these uh incremental uh spaces give being given back. And so, the landlords have pricing power, uh supply is nowhere near where it is in other subsectors. And so, we think it's a space where landlords can continue to enjoy pricing power for several years to come.
Is there a name specifically handling that space you prefer?
Absolutely. Our top pick today is a company called Regency Centers, ticker REG. Uh they are a national shopping center owner. Uh their demographics in terms of household income and uh just the uh the value of single-family homes in the neighborhoods that they own and operate assets in is in the top right quadrant uh where you want to be in this space. Uh they have below uh average exposure to a number of the uh tenant credit watch list names. Uh J. Crew ends, Party City, Big Lots, etc. Uh their balance sheet is in fantastic shape and they have an above-average growth profile with embedded growth from leases that have been signed, which are now starting to cash flow.
