To say that retailers have been hit hard by the recent stock market crash would be a massive understatement. Virtually all "non-essential" brick-and-mortar retailers are currently generating zero revenue, and this has sent the stocks of retail real estate owners plummeting to fire-sale prices.

However, there could be some serious value here for patient long-term investors who have a high risk tolerance. Here's why mall real estate investment trusts, or REITs, Tanger Factory Outlet Centers (NYSE:SKT) and Simon Property Group (NYSE:SPG) could be worth a look while the economy is still mostly shut down.

Two people holding shopping bags.

Image source: Getty Images.

Priced for the worst, but that's highly unlikely

Tanger Factory Outlet Centers is the only pure-play outlet shopping REIT, with a portfolio of 39 outlet centers in the U.S. and Canada with a total of 14.3 million square feet of space.

First, the good news. Tanger's properties entered 2020 with a higher occupancy rate (97%) than any major mall REIT, tenant sales were up in 2019, and in January the company declared its 27th consecutive annual dividend increase. Then the COVID-19 pandemic happened, and virtually all of Tanger's retail locations were shuttered for an indefinite amount of time.

Tanger has taken prudent steps to make it through the tough times. In a recent COVID-19 business update, the company announced that it had drawn down all of its borrowing capacity (about $600 million) and had cut certain expenses to save money.

Once the dust settles, there could be quite a bit of growth potential. The outlet retail industry is still rather small when compared with traditional malls and shopping centers, making up less than 1% of U.S. retail space. Plus, outlets are one of the least vulnerable types of discretionary retail when it comes to e-commerce competition. Shopping at the outlets has a "treasure hunt" aspect to it that can't be effectively duplicated online, and I don't see people losing interest in bargains on their favorite brands anytime soon. With shares down by more than 60% since early February, Tanger's current share price could look like a bargain once the pandemic starts to subside.

The best-in-breed mall operator

When it comes to U.S. mall operators, there's Simon Property Group, and there's everyone else. Simon is the largest mall operator in the U.S. with over 200 properties and owns some of the most valuable retail properties in the world. Simon owns a massive portfolio of high-end malls, mostly operated under its "The Mills" brand, as well as the largest portfolio of outlet malls in the industry, operated under the "Premium Outlets" brand.

I've already touched on why the outlet industry should do well long-term. And if you're curious, Simon's outlet portfolio is far larger than Tanger's -- the company has about two-thirds of the entire outlet market. And all of the same long-tailed, e-commerce-resistant growth tailwinds that apply to Tanger should help Simon's portfolio keep growing.

Simon's recent strategy has been to transform its properties into mixed-use destinations, incorporating things like hotels, entertainment venues, office spaces, unique dining options, and more into its malls. And while many mall operators have seen foot traffic plunge as department stores like Sears and J.C. Penney (NYSE: JCP) have gradually closed locations, Simon has used this as an opportunity to add these elements in their former spaces at a significantly lower cost that building completely new additions.

Like most mall operators, Simon's properties are currently closed, and there's no reopening date in sight just yet. However, the company has plenty of liquidity to get through the tough time. Simon ended the year with $670 million in cash and (more importantly) recently increased its total borrowing capacity to $9.5 billion. Even though it's set to acquire Taubman Centers (NYSE:TCO) for $3.6 billion, that should still leave plenty of room to cover all of its 2020 financial obligations. So, even in a longer-than-expected shutdown, Simon should have no issues with making it through. And when it does, it's still the best-in-breed mall operator and I don't see that changing anytime soon. At 58% less than it was trading for just a couple months ago, Simon could be an incredible bargain for patient investors who believe in the company's business model.

It's going to be a bumpy ride

Since the COVID-19 pandemic broke out, moves of 10% or more in these stocks on a daily basis has become the rule, rather than the exception. Every time there's good news that indicates the economic shutdown could be over sooner than we think, these stocks rocket higher. On the other hand, every time there's a setback, they drop like a rock.

To be clear, I see this continuing until we not only get some more clarification in regards to when malls and outlets might be able to get back to business, but also some numbers that show just how much financial damage the recession does to these companies.

Here's the point. While I think that both of these stocks could produce excellent returns for investors with a long-term focus, I also think investors should expect a roller-coaster ride in the meantime. These stocks are for long-term focused investors with a high risk tolerance and the willingness to ride out the ups and downs. Keep that in mind before considering either for your portfolio.