“For the first time in almost five years now, we’ll have…more new stores opening in the U.S. than closures,’’ Brian Kingston, managing partner at Brookfield Property Group, said on a recent call with investors. “And these net new 2,600 stores will require an estimated 23 million square feet of space.”
That’s about 100,000 jobs too!
While many middle- and lower-quality malls are still struggling, operators of high-end, Class A malls—such as Brookfield, Simon Property Group and Macerich Co.—have seen occupancy rates recover from pandemic dips to more than 90%, according to the companies and Morgan Stanley.
Time to dip back into our old pals at SKT, who are back down to $14 and still paying an 0.80 dividend (5.7%). That’s good enough for the Dividend Portfolio:
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- Buy 2,000 shares SKT at $14.02 ($28,040)
- Sell 20 2025 $13 calls for $4 ($8,000)
- Sell 20 2025 $13 puts for $2.50 ($5,000)
That’s net $15,040 out of pocket, netting us in for $7.51/share and, if assigned 2,000 more at $13, our average would be $10.255 on 4,000 shares.
Since we know we love them, for the LTP, let’s:
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- Sell 20 SKT 2025 $15 puts for $3.80 ($7,600)
- Buy 30 SKT 2025 $8 calls for $7.15 ($21,450)
- Sell 30 SKT 2025 $15 calls for $3.30 ($9,900)
That’s net $3,950 on the $21,000 spread with $17,050 (431%) upside potential at $15 – no too much to ask. We’re aggressive on the short puts but, as noted in the Dividend Portfolio, we certainly don’t mind being assigned and doubling down – so not really that risky.
