The holiday season is the strongest time of year for many retailers, but Evercore ISI analyst Steve Sakwa predicts that this will be a difficult year for retailers. While this thesis is bad news for retailers, Sakwa believes that the weak holiday spending will also have a major impact on mall REITs.

Downgrades

Sakwa sees little impact to funds from operations (FFO) for the class A mall REITs in Q4 or into 2016, but he believes that negative holiday headlines from Macy’s, Inc. M 2.72%, Nordstrom, Inc. JWN 1.85% and Gap Inc GPS 1.52% will produce selling pressure in the mall REIT space.

Evercore has downgraded mall REITs Simon Property Group Inc SPG 1.72%, General Growth Properties Inc GGP 0.96% and Taubman Centers, Inc. TCO 0.01% from Buy to Hold ahead of the holiday season.

Other REIT Groups

Sakwa believes…

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