Regional mall REITs have also done well. The performance of these companies has been somewhat tied to that of their retail tenants. When the Federal Reserve started cutting interest rates, which is deemed to be positive for the economy and the consumer, retailers did well, and regional mall REITs have benefited as well. These stocks were also very cheap in the fourth quarter of 2000, just coming off of a period of rising interest rates and declines in consumer confidence and spending. Regional malls will continue to do well in the next six to 12 months, as a result of rate cuts, not only because of stimulated consumer spending but also due to the reduced cost of debt.
Regional malls are usually the most leveraged and have the most debt per share among property REITs.
And the economy will be stronger in 2002 than it has been this year. This group is very cheap, operating at six times earnings. Read our conflicts and disclosure policy . Order reprints of TSC articles. Inc. All rights reserved.