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TheStreet Open House

All I Want for Christmas Is a Few Good REITs

NEW YORK ( TheStreet) -- It's clear that the battle for retail supremacy can be best viewed by the vast number of Black Friday promotions being offered across the planet. With an emphasis on bolstering both online and in-store promotions, the brick-and-mortar players are lining up this year earlier to take advantage of the limited days until Christmas.

It appears that consumers are gaining some confidence this year due to better employment, lower gas prices and somewhat better economic conditions. The real test comes in four more days when the real party gets started.

A good indication of that confidence so far has been the third-quarter results of the major retailers, many of which are doing well or better than expected. For example, Macy's (M) sailed past estimates as it reported third-quarter earnings per share rose by 31% to 47 cents in the third quarter, compared with 36 cents per share in last year's third quarter.

Other retailers that cater to the upper-income crowd such as Michael Kors (KORS) and upscale jeweler Tiffany & Co. (TIF) are also seeing demand increase.

Other bright spots this year include the retail players that are benefiting from the housing recovery. Spurred by consumers looking to spend on their homes and spruce up the decor, the two major home improvement chains, Home Depot (HD) and Lowe's (LOW) are luring in more holiday shoppers.

Many consumers will be flocking to area malls this week and with limited construction reported since the Great Recession, the mall REITs have been actively focused on internal growth. As the largest retail subsector, the mall REITs are comprised of eight companies with a combined market capitalization of around $87 billion, according to the National Association of Real Estate Investment Trusts, or NAREIT.

In addition, many of the mall REITs have been expanding into the outlet sector as a means to provide new growth opportunities for the bargain priced retailers.

Simon Property Group (SPG), with a portfolio value of around $57 billion, is the largest retail REIT and the only real estate company in the S&P 100. REITs make up just around 2% of the S&P sector constituents percentage based on market cap and Simon has a 1.9% S&P 500 weighting.

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