What happened

Shares of mall-focused real estate investment trust Macerich (MAC -1.88%) advanced by as much as 24% this week,  according to data from S&P Global Market Intelligence. At the start of trading on Friday, the stock was still higher by around 20% or so. Credit earnings reports for its upward move -- and not just the report delivered by Macerich.

So what

Macerich is one of the best-positioned mall landlords in North America. It has a relatively small portfolio of around 45 properties, but they're very well located and very productive. Although Simon Property Group (SPG -1.72%) is much larger, it's probably Macerich's closest peer comparison. And while Tanger Factory Outlet Centers (SKT -1.18%) focuses on outlet centers, based on its successful track record and well-located assets, it's also viewed as a key competitor. (Macerich owns a couple of outlet centers, but it's mostly focused on malls.)

People walking in a busy enclosed mall.

Image source: Getty Images.

These comparison points are important because Simon and Tanger both reported their third-quarter earnings before Macerich, which didn't announce its results until Wednesday. But the REIT's stock started to move higher earlier this week as investors digested the earnings updates from its top competitors. This isn't unusual, per se, but it speaks to the bigger-picture issues facing the mall space today. 

Basically, malls were already dealing with the so-called "retail apocalypse" prior to 2020, when they got hit with the coronavirus pandemic and the economic shutdowns and social-distancing measures that were implemented to slow its spread. It would be an understatement to say that 2020 was a bad year for mall REITs. All three of the names discussed here cut or suspended their dividends.

However, their quarterly updates so far in 2021 have been much more positive. So much so, in fact, that Simon and Tanger have hiked their dividends -- Simon three times. Investors were expecting good things when Macerich reported on its third quarter based on its peers' results.

They were not disappointed, and a couple of key metrics help explain why. Occupancy at the end of September hit 90.3%, up from 89.4% at the end of June and 88.5% at the end of March. Clearly, retailers are starting to move back into malls. While the increase over that time span may seem small, the direction is the most important aspect here. It takes time to find the right tenants for a property and then move them in. That the process is moving forward is helping to quell investors' fears about the future of malls.

But it isn't just the retailers that are coming back. Customers are too. Stores with footprints smaller than 10,000 square feet (generally speaking, these are the non-anchor stores) saw sales improve by 14% compared to the third quarter of 2019 -- before the pandemic hit. Despite the remarkable growth of e-commerce, it seems that consumers still like to do some of their shopping in malls. 

Now what

Investors were not let down by Macerich's third-quarter results. However, there's one interesting difference between Macerich, Simon, and Tanger. Macerich remains the only one of these mall REITs that has yet to increase its dividend after cutting its payouts during the pandemic. Given that REITs are specifically designed to pass most of their income on to shareholders via dividends, this suggests that Simon and Tanger are doing at least a little better than Macerich is right now. That said, long-term investors should still be pleased with the trends Macerich is seeing in its underlying business.