Shopping Centers - The Search For Incremental Alpha

Deutsche Bank maintains an overweight stance on the Shopping Center REIT sector due to robust demand-supply fundamentals but shifts its preference toward high-growth names, upgrading FRT to BUY and downgrading REG to HOLD. Brixmor (BRX) remains the top pick based on its significant signed-not-occupied pipeline and attractive valuation.

Key Takeaways

• 1.The Shopping Center REIT sector outlook remains bullish due to strong demand and limited supply, but future stock performance will be driven by earnings growth rather than broad valuation expansion.
• 2.Federal Realty Investment Trust (FRT) is upgraded to BUY, as it is expected to return to its historical superior growth profile via internal/external growth and capital recycling.
• 3.Regency Centers (REG) is downgraded to HOLD because its premium valuation is difficult to justify when peers are expected to deliver similar or faster earnings growth.

Table of Contents

• Key Takeaway
• Key changes
• Key Takeaways From ICSC - Demand/Supply Fundamentals Are Very Strong
• How Do We Pick Names Likely To Deliver Incremental Alpha From Here On?
• Going To Be All About Earnings Growth Relative To Valuation
• Company Commentary
• Appendix 1

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