Common stock: Let’s say a company makes $2.00/share in net income.Let’s take a moment to look at a hypothetical scenario between a common stock and a REIT. Also because of this structure, the company can pay out more money to the owners, but the flip side is that you and I would pay ordinary income taxes on these dividends. An effect of this is that in order to fund growth, REITs often look to the debt markets and credit markets. In the U.S., REITs must pay out at least 90% of their taxable income to shareholders (different laws in other countries). REITs do not pay corporate taxes, and thus as “pass through” entities.REITs are legally bound to derive the vast majority of their income from real property (could be owned directly, could be a stake in a partnership or joint venture, could be in the form of a mortgage on property).This is a type of security that, though it trades on the public markets just like regular common stock, operates a bit differently. SPG is organized as a REIT, or Real Estate Investment Trust.Anchor tenants are typically placed as far apart as possible from each other in order maximize traffic flow throughout the entire retail space.Which store are you more likely to go to more frequently? Macy’s or Bath & Body Works? These tenants take up a disproportionate amount of square footage, make up more of the sales for a mall, and in turn provide more rents to the mall owner (like SPG). Every mall has a few “anchor” tenants, that exist as the major draw for people to come into a mall.Specialty stores and traditional retail stores (especially anchor stores) were becoming increasingly irrelevant as more and more purchases of consumer goods shifted online.The global recession happened in 2008, causing credit to dry up for large, commercial construction projects.In 2007 no new malls were built, and a new one wasn’t built after that until 2012. By the early 2000s though, the “dead mall” phenomenon started to become an emerging trend. Mall growth generally continued deep into the 20th century, even into the 1990s.New features such as air conditioning and restaurants were added. The first enclosed shopping mall didn’t really appear until the 1950s.They gradually got bigger and bigger, and were designed to accommodate people traveling by car. As the suburbs in America grew throughout the 1900s (especially after WWII), larger shopping centers were created outside of city centers.The first precursor to what we know as a mall today started at a place called The Arcade, in Providence, Rhode Island in 1828.Evidence of places of trade existing go back to 3000 B.C.! One example are the bazaars that have existed in the Middle East for centuries…and even millenia. Ever since commerce has existed, merchants have needed a place to set up shop. Where did malls come from and what is their significance?
0 Comments
Leave a Reply. |