Real estate has been one of the worst-performing sectors of the stock market during the COVID-19 pandemic, and mall REITs and hotel REITs are two big reasons why. Mall retail was struggling even before the pandemic caused retailers to shut down earlier this year. While some people are traveling, hotel booking rates are far from normal levels.

In this October 22, 2020 clip from Fool Live, three of our REIT experts -- Matt Frankel, CFP, Matt DiLallo, and Kevin Vandenboss -- discuss which of these beaten-down REIT subsectors could be the best place for investors to find value. 

Matt Frankel: I'm going to combine the next few. I'm going to call an audible and combine the next two into one topic. So the other two that people are afraid are going to go away forever are malls and hotels. Malls were in trouble before the pandemic let's be honest. Everyone's town has some mall that there's no storage anymore essentially. I know mine does. Hotels are struggling right now for obvious reasons. There's really no business travel, leisure travelers even just starting to come back. If you had to pick one that will be the long-term winner out of the two, would you say malls or hotels? Assuming you find a great quality company, a well-run company, would you pick malls or hotels to invest in?

Matt DiLallo: I'd go with malls. I think hotels are going to really struggle for a long time. They talked about how much liquidity they have. A lot of that's their borrowing capacity and their credit facility. They're taking a debt to basically operate right now and it's going to take a long time to go back. We're talking years before they'll have the cash flow that they used to, to pay the dividend that people were used to seeing. Malls in the other hand, they were already prepared for this kind of thing with the retail apocalypse, switching up their buildings, adding offices, and hotels and things like that. I see retail evolving more. Buy online pickup in stores becoming a huge thing and a lot of mall REITs are picking up on that as, "Hey, we can have dedicated curbside pickup places," and really become that last mile distribution is a lot of the online retailers benefit from. I'm more bullish on malls and I'm on hotels.

Kevin Vandenboss: I'm going to go the opposite way. Yeah, I would go with hotels messed up. Some of the larger ones I'm a little more leery of because if anything, there are more exposure, obviously. But from what I've seen looking at some of the hotel REITs through this is, the larger ones have had trouble implementing changes across the board easily. Malls, to me, everything I'm seeing it's a lot of best case scenario and how are we going to mitigate the losses? Again, I don't see any really coming back. How do we stop the bleeding? How do we make the best of what we have? Meanwhile more and more large tenants are leaving. I think some mall properties I've seen evolve and done well. But to me, it's not something I would bet on. Let me just stay on the sidelines I guess, and let's see what happens with some of the mall REITs.

Matt Frankel: Fair enough. I would have to say both, if it was me because I do own some shares of both type of REITs. But with both mall and hotels, I would have to say quality matters more than ever right now. You don't want to invest in a B level hotel operator at the moment, even if you're bullish on the industry, and same with the mall operator.