What happened

The stock market is in the green on Monday, but stocks that stand to gain the most from a quick rebound in the economy are leading the way higher. As of 10:30 a.m. EDT, retail REIT Tanger Factory Outlet Centers (NYSE:SKT) was up by more than 10% for the day, while Seritage Growth Properties (NYSE:SRG) was having an even better morning, up by more than 30%.

Other retail real estate investment trusts were outperforming the market as well. Notably, STORE Capital (NYSE:STOR), the net-lease REIT that has been beaten down in the COVID-19 market crash, had also gained 5% for the day.

Man, woman, and child shopping at a mail.

Image source: Getty Images.

These are just the latest moves higher by these beaten-down retail REITs. Seritage has risen by nearly 160% over the past week alone, while Tanger is up by more than 55% in that time. STORE Capital (which wasn't quite as hard-hit by the pandemic as the other two) has rebounded by 35% in a week.

SKT Chart

Data by YCharts.

So what

Retail REITs are getting a tailwind from strong economic data, such as last week's jobs report. And the lack of significant spikes in COVID-19 case numbers is certainly helping as well.

There has been tremendous uncertainty surrounding brick-and-mortar retail. Questions like "how long will the closures last?" "will retailers be able to pay rent and/or survive the pandemic?" and "will consumer demand rebound quickly or slowly?" have justifiably caused retail REITs to become some of the hardest-hit stocks in the market. While we don't have complete answers to any of these questions yet, the recent economic and consumer data indicates that retailers are reopening sooner than many experts had predicted, rent collection has been rather strong, and consumer demand is coming back very strong.

Seritage recently gave investors a reason to smile when it announced better-than-expected data on its business. As of June 3, about 80% of the company's in-place tenants were open for business to one extent or another, and more than 60% are fully open (not just for pickup or curbside). The company has collected 65% and 52% of its April and May rent, respectively, and has agreed to defer an additional 6% for both months.

Furthermore, Seritage reported that during the second quarter it had closed on $45 million in additional asset sales, which provided a much-needed liquidity boost. And the company announced that it would terminate the leases on 12 of its 17 remaining Sears and Kmart stores, and collect a $5.3 million termination payment.

Now what

Seritage and Tanger were among the hardest-hit stocks during the COVID-19 pandemic, but also stand to gain a lot from a V-shaped economic recovery. As recent data points toward the likelihood of a rapid recovery, it's not terribly surprising that investors are showing renewed optimism in both of these companies.

In Seritage's case, not only is the recovery leading to faster reopening of stores and relatively strong rent collection activity, but the move to further reduce its Sears exposure will create more possibilities for redevelopment activity.

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