Retail REITs Q2 Earnings On Jul 26: AKR, AAT, DDR, PEI, SKT

After just a handful of releases last week, the Q2 earnings for the real estate investment trust (“REIT”) have gathered pace this week. A spate of REITs is scheduled to release results tomorrow. Among these some important retail REITs are Acadia Realty Trust (NYSE:AKR) , American Assets Trust, Inc. (NYSE:AAT) , DDR Corp. (NYSE:DDR) , Pennsylvania Real Estate Investment Trust (NYSE:PEI) and Tanger Factory Outlet Centers Inc. (NYSE:SKT) .

Important REITs which are scheduled to release results today are American Campus Communities, Inc. (NYSE:ACC) and Avalonbay Communities, Inc. (NYSE:AVB) from the residential REIT category and Agree Realty Corp. (NYSE:ADC) and Brixmor Property Group, Inc. (NYSE:BRX) from the retail REIT category.

So far, the sentiments have been positive with last week releases of top-notch REITs like Prologis, Inc. (NYSE:PLD) and SL Green Realty Corp. (NYSE:SLG) recording positive surprises. In fact, industrial REIT Prologis recorded a positive surprise of 1.69% in Q2 and office REIT SL Green posted a positive surprise of 7.23%. However, the performance of retail REITs may vary widely from that of the performance of other REITs as retail REITs cater to the real estate needs of an entirely different asset class. So delving into the fundamentals of the retail real estate market becomes necessary.

Per a CBRE Group Inc. (NYSE:CBG) study, retail sales picked up in second-quarter 2016 and the expansion of omni-channel retailing has raised the demand for space in brick-and-mortar centers. Further, amid reviving retail sales, national retail availability rate declined to the lowest level since 2008. In second-quarter 2016, retail availability averaged 10.9%, down 10 basis points (bps) on a sequential basis and 30 bps year over year. Encouragingly, in two-third of the U.S. markets, retail availability tightened and this trend is expected to continue backed by the solid job market report for June and strong momentum in retail spending.

Now let’s take a look at what’s in store for these retail REITs which are slated to report tomorrow.

For doing this, we rely on the Zacks methodology, combining a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP, to predict the chances of a beat this quarter.

Our proprietary methodology, Earnings ESP, shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Research shows that with this combination of rank and ESP, chances of a positive earnings surprise are as high as 70% for the stocks.

Acadia Realty Trust is mainly focused on the ownership, acquisition, redevelopment and management of neighborhood and community shopping centers. Our model does not conclusively predict that the company will record a positive surprise. This is because the company has an Earnings ESP of 0.00% and a Zacks Rank #2, making surprise prediction difficult.

American Assets Trust is engaged in owning, operating, acquiring and developing retail and office properties mainly in Southern California, Northern California and Hawaii. The company has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell), lacking both the requirements of a positive earnings beat.

Beachwood, OH-based DDR Corp. acquires, owns, develops, redevelops, leases and manages shopping centers, especially in high-growth areas of the country. The company has an Earnings ESP of 0.00% and a Zacks Rank #3. Our model does not conclusively predict that the company will record a positive surprise.

Philadelphia, PA-based Pennsylvania Real Estate Investment Trust is engaged in acquiring and holding for investment interests in real estate. The company has an Earnings ESP of 0.00% and a Zacks Rank #3. Our model does not conclusively predict that the company will record a positive surprise.

Greensboro, NC-based Tanger Factory Outlet Centers focuses exclusively on developing, acquiring, owning and operating factory outlet centers. The company has an Earnings ESP of 0.00% and a Zacks Rank #2. Our model does not conclusively predict that the company will record a positive surprise.

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