Per today’s WSJ article, there are $700bn in securitized loans backed by office buildings, hotels, stores and other investment property, and the delinquency rate has more than doubled over six months to near 2%. The implications for retail-retailed REITs is obvious (check out the charts for Simon, General Growth and Taubman). As the stability of ownership becomes a greater focus, we whipped up a little analysis showing the percent of stores leased versus owned for a select group of retailers. Note that even the owned properties are not completely out of the woods (i.e. Sears) as there’s no reason why an owned property cannot default – similarly a lease is not broken just because the deed changes hands. But there certainly is a greater margin of error for those that lease the majority of their stores.
