American Eagle Outfitters (NYSE:AEO), National Retail Props (NYSE:NNN) – These 3 Mall REITs Provide Steady Dividends: But What's Next As Stores Like Zumiez Get Hit With Inflation


Now that we’re firmly in the second half of the year, we can analyze the impact rising interest rates and inflationary pressures have had on real estate investment trusts (REITs) that own large shopping centers and malls.

For instance, trending teenage specialty retail chains such as Zumiez Inc ZUMZ and American Eagle Outfitters Inc AEO posted second quarter earnings per share results that were lower than the prior year’s second quarter. Furthermore, both companies missed their second quarter earnings per share consensus estimate by over 60%.

The miss in earnings per share can be attributed to worse-than-expected sales, as Zumiez and American Eagles Outfitters recorded revenues below the prior year’s second quarter. As the consumer price index was at 8.5% for the last twelve months ended July, consumer sentiment has been diminishing along with purchasing power.

Going into the third quarter of 2022, Zumiez issued sales guidance below analysts estimates. Although the second half of the year is typically a positive time for brick-and-mortar retailers as we head into the holidays, this could potentially be beneficial for these three mall REITs offering high dividend yields.

Simon Property Group Inc SPG is offering a dividend yield of 6.73% or $7.00 per share annually, through quarterly payments, with a decent track record of increasing its dividends over the past two years. Simon Property Group is the second-largest real estate investment trust in the United States, and 12 months prior to the pandemic, the company averaged $693 in sales per square foot.

Simon’s portfolio includes an interest in 222 properties – including 95 malls, 69 premium outlets, 33 international outlets, 14 Mills centers (a combination of a traditional mall, outlet center, and big-box retailers), six lifestyle centers, and five other retail properties, as of Dec. 31, 2021.

National Retail Properties Inc NNN is offering a dividend yield of 4.90% or $2.20 per share annually, utilizing quarterly payments, with an aristocratic track record of increasing its dividends for 34 consecutive years. National Retail Properties is a real estate investment trust that invests in and develops properties throughout the United States, primarily in the South and Southeast.

This REIT generates revenue from leasing properties to tenants, including convenience stores, automotive services, fitness centers, theaters, restaurants, and banks. As of 2022, National Retail Properties has over 380 tenants, 3,305 properties, 99.1% occupancy, and its top tenant is 7-Eleven accounting for 138 properties.

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Tanger Factory Outlet Centers Inc SKT is offering a dividend yield of 6.73% or $7.00 per share annually, making quarterly payments, with a track record of increasing its dividends once in the past year. Tanger Factory Outlet Centers is the owner and operator of outlet centers in the United States and Canada, and is a fully-integrated, self-administered and self-managed REIT, which focuses on developing, acquiring, owning, operating and managing outlet shopping centers.

Tanger Outlets operates approximately 37 outlet centers, with a total gross leasable area of about 14 million square feet, which holds over 2,700 stores with more than 600 brand names, as of 2022.


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