– Let’s talk about the real estate behind
a lot of the retailers.
There are REITs and shopping malls.
What’s the future of the shopping mall?
Does that mean they’re not attractive investments
for our shareholders any longer?
Or how do we think about the interaction?
– Well, it’s complicated.
The B and C malls have been struggling for a while.
So, I think…
– Meaning the ones that are rated B or lower.
– Yeah, I’m sorry. Not in the credit rating,
but just the A malls — the marquee locations,
the best locations in high income, highly dense areas —
those malls have been doing well.
And the gap between the good and the bad
has continued to widen.
The ones in the periphery with a few random tenants
that don’t have the anchor tenants, like a Nordstrom
or some of the bigger concepts that maybe they’re
stuck with a Sears,
those malls have just been losing share and traffic
and many of them are dying.
People are just shopping differently —
we have too many malls.
So the A malls have been doing well up until now,
and I think the better locations will continue
to do well.
That having been said, the malls are reliant on apparel.
And apparel is a category that’s really not growing,
and Amazon continues to take share.
So I think it’s just gonna be harder for everyone.
Some of them aren’t attractive investments.
The A malls might be. It’s unclear to me.
– What’s gonna happen to all that real estate
if the B and C malls, as you say,
may kinda go away over time?
– Well, this is back to Home Depot and housing.
Some of those big parking lots could be repurposed
for residential real estate and/or apartment complexes,
mixed-use areas. So the real estate companies
that are sitting on some terrific property
in these, that you just couldn’t replace,
probably will be redeveloped.
But a strategy where a mall says,
“Oh, we’re gonna offer a bunch of food,
and you know, the gym,
and things that you need to come to the mall to do.”
Why are you gonna do that at a mall?
You don’t need to do that at a mall.
You can do that anywhere else.
– It’s always fascinating because one big trend
affects four other sectors, and then…
– Second, third.
– All these redevelopments and everything else.