Strategic opportunities for mall investments

Executive Summary

USAA Real Estate believes there is an attractive investment opportunity in the mall sector due to significant mispricing of the risk across a number of these assets. This opportunity has been created, at least in part, by the emergence of a widely held view, frequently presented in the national media, regarding the negative impact e-commerce may have on the retail space. As a result, many investors have heavily discounted malls that are not in the “trophy” Class A category.

We believe the categorization of malls as troubled, or in decline, has been too broadly applied. While as many as half the malls in the United States (U.S.) may be destined for closure, or significant repurposing, we believe a large number of malls will survive and indeed thrive, working in concert with a maturing e-commerce industry.