Lower mall sales mean lower tax receipts for states, Compass Point says

The drastic drop in shopping at malls caused by the pandemic lockdowns is likely to hurt states’ revenue, according to a note by Compass Point analyst Floris van Dijkum.

Before the pandemic, the top 30 malls in the U.S., based on tenants’ annual sales and the underlying real estate, were valued at more than $57B and contributed an ~$1.8B of annual tax revenue to states, Compass Point estimates.

“The pandemic will have a significant impact on tenant sales and tax collection as the government mandated shutdown could reduce sales this year by up to 33%, based on our estimates,” van Dijkum writes.

The lower tax receipts at the state level “will likely pressure budgets and force cutbacks to services,” he wrote.

Ranking high in the list of the U.S.’s biggest malls are Simon Property Group (NYSE:SPG) and Brookfield Asset Management (NYSE:BAM).

Simon either owns or holds stakes in seven of the biggest U.S. malls.

Earlier this week, a Goldman note outlined the case for higher risk for owners of enclosed malls vs. REITs with mostly open-air shopping centers.

Other mall REITs: SKT, PEI, MAC, TCO

Municipal bond ETFs: MUB, NVG, NEA, PML


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