Amazon Interested in Sears & JCPenny Locations

[KodyWallice]

Now, this is interesting. Just as I was beginning to think that malls were going the way of the Dodo bird, a surprise pops up. Get this - I just read an article that says Amazon has been in talks for months with Simon Properties (the mall people) to convert some of their Sears and JCPenny locations into Amazon distribution centers. If you think about it, it actually makes sense. The locations are there and Simon has already done all the legwork. They've chosen the most prime of prime locations and have made the malls as famous as possible. Both the stores who rent space in the malls as well as Amazon are in the retail business, so if Amazon can capitalize on location and proximity to people, they can use these spaces to get their products to consumers as quickly and efficiently as possible. Very interesting news.

 

[KristinaW]

I read that same article. I saw in on Fox News. I was just thinking a few nights ago about how the Coronavirus has got to have decimated retail stores located in malls. These stores have been suffering before the virus hit and have now got to be close to bankruptcy. Because of this, I've been worried about my real estate ETF, VNQ. It's pretty diversified though, but still. Malls play a large part of the holdings in such ETFs.

The good thing about malls is that they're very versatile. Even if a retail store decides to leave, the mall can still rent the space to someone else. In this case, it would be Amazon. Years ago, I read that RackSpace, the giant web hosting company, is located in a mall somewhere down in Texas. I used to host with them, so I can confirm they're in Texas (and Virginia). I can't confirm the mall part though. I also read that many malls are now renting space to doctors, accountants, and other service types since they've got the room. I always liked that idea. Maybe they can even rent some of their anchor stores' space to use as schools. I bet that would save the taxpayer some money.

But yeah, it's a good move by Amazon. They've got all that parking space and retail space. It's almost a no brainer.

 

[KodyWallice]

Because of this, I've been worried about my real estate ETF, VNQ. It's pretty diversified though, but still. Malls play a large part of the holdings in such ETFs.

I've been thinking about the effect Simon Properties has had on ETFs as well as I always thought they played a large part in them. I just took a quick look at the top ten holdings in VNQ (Vanguard Real Estate ETF) though and Simon isn't in the top ten. It's actually number 12 and just one in 181 holdings.

Vanguard Real Estate II Index Fund Institutional Plus Shares
American Tower Corp.
Crown Castle International Corp.
Prologis Inc.
Equinix Inc.
Digital Realty Trust Inc.
SBA Communications Corp. Class A
Public Storage
Equity Residential
AvalonBay Communities Inc.
Welltower Inc.
Simon Property Group Inc.

And if you'll notice, Vanguard Real Estate II Index Fund Institutional Plus Shares is the number one holding of this ETF, so I looked at Simon's position there too. It's eleventh. The top 11 holdings of VRTPX are:

American Tower Corp.
Crown Castle International Corp.
Prologis Inc.
Equinix Inc.
Digital Realty Trust Inc.
SBA Communications Corp. Class A
Public Storage
Equity Residential
AvalonBay Communities Inc.
Welltower Inc.
Simon Property Group Inc.

Weird how they make a fund with the same holdings a holding in an ETF, but then again, I'm not a finance guy. Anyway, my point is, being the 11th and 12th holding in some pretty large real estate funds would have an impact, but not a huge one like I thought this morning before looking into this stuff.