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Can Retail REITs Win in an E-Commerce World?

Retail real estate investment trusts, or retail REITs, have rebounded nicely over the past few months. COVID-19 vaccine distribution is under way and the end of the pandemic is in sight. But what about in a post-pandemic world? Can retail REITs not only survive, but also thrive in a world where e-commerce makes up an increasingly large portion of the retail landscape?

In this Fool Live video clip recorded on Feb. 16, Millionacres real estate analyst Matt Frankel, CFP, and Millionacres editor Deidre Woollard discuss what retail REITs might need to do in order to win in the years ahead.

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Deidre Woollard: I think the other thing that I want to mention about these retailers to some extent also is the things that they've done during the pandemic and the ways that e-commerce is being integrated into these, especially Simon (NYSE: SPG) and Tanger (NYSE: SKT), because I think it's really interesting because you have the issue of curbside pickup and also BOPIS, buy online pickup in store. Simon that has been working with different providers to try to figure out how to make that easier for people. Because I think that's one of the things we've learned, is that e-commerce isn't going away but the ways in which we buy are shifting. So I think Simon has done some pretty interesting things with that. They didn't mention a lot of their e-commerce activity on the earnings call. I'm curious when Tanger has its earnings to find out about their virtual concierge system that they launched during the pandemic. I thought that was pretty innovative, interesting to see what results they've had so far. Because I think that's part of watching these retailers do, is watching these retail REITs, try to figure out how to better serve their tenants inside that traditional mall structure.

Matt Frankel: With Tanger, I'm glad you brought that up because I'm really interested to see how that's doing. That seems like it could drive tremendous value at its properties. The reason is because no two Tanger Outlet stores have the same stuff. What the Tanger Outlet in Myrtle Beach has is not what the Tanger Outlet in Orlando is going to have. What they're concierge does is it allows people to shop virtually from not just the outlet near them, from any of Tanger's outlets. A person would walk around and show them what they have. It's a really interesting concept and allows you to experience outlet shopping without leaving the house. If Tanger could really figure out how to crack into omnichannel retail with outlet shopping, that could be a pretty big driver of growth and value in their portfolio and make their physical space more valuable if there is constantly like these concierge just walking around with cameras showing everybody their products, it could be a really interesting thing. I'm curious to see if that's just a pandemic thing or if it's going to really have legs in a post-pandemic world.

Deidre Woollard has no position in any of the stocks mentioned. Matthew Frankel, CFP owns shares of Simon Property Group and Tanger Factory Outlet Centers. The Motley Fool recommends Tanger Factory Outlet Centers. The Motley Fool has a disclosure policy.


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