A clear buy if it stays more than 2 weeks above EUR 25 ps.Fundamentals for European shopping mall REITs have improved dramatically and they are coming out of a 9 year old long bear market, now appearing to break out out a consolidation pattern formed in the past 3 years.
What initially started as revenue cannibalization and retail death due to e-commerce was followed by COVID, and then a perfect storm of higher interest rates, lower consumer disposable income due to increased electricity prices, and portfolio mark-downs.
Though revenue cannibalization from e-commerce still persists, operators have re-shifted their portfolios more towards services, capitalizing on good locations, good infrastructure and parking opportunities. With interest rates having stabilized (for now at least) and consumer spending recovering due to wage increases and lower electricity prices, and the most leveraged REITs having successfully conluded deleverating operations, the massively marked down valuations of European REITs are set for a rebound.
This rebound has already started in some of Klepierre's peers, such as Mercialys, Olav Thon Gruppen, Unibail Rodamco Westfield, and NEPI Rockastle, which for the last two weeks have consistently held prices above breakout levels.
Priced at just 9.4x current year earnings with large potential for earnings upgrades, this is definely one to watch.
