Source: Ben Schuman.

The retail apparel sector, especially teen retail, is filled with flame outs and rock stars, but figuring out which company is which -- and when -- is hard to do. One constant, however, is the malls in which these retailers sell their clothing.

If you like the idea of owning a retailer, but don't want to ride a share price roller coaster, consider buying leading mall real estate investment trusts (REITs) like Simon Property Group (SPG -0.26%), Taubman Centers (TCO), and Tanger Factory Outlet Centers (SKT 0.73%).

Case in point
The Gap (NYSE: GPS) is doing well right now, with same-store sales up 5% in fiscal 2012 and 2% in 2013. Same-store sales is a key metric for a retailer because it helps differentiate between underlying performance and store expansion, which can cover up weak sales at existing locations. The Gap's same-store sales fell in four of the five years between 2007 and 2011. But even during that difficult stretch its total store count barely budged. 

Investors appear convinced that this is the start of a streak (the shares are up almost 100% over the past 24 months), but fickle consumer tastes have a bad habit of changing just when you don't expect them to. Ask Gap competitor American Eagle Outfitters (AEO 6.32%).

American Eagle just saw its CEO depart in the middle of its struggles to improve merchandising and break free of the discounting spiral it's been in. The shares fell nearly 8% on the news of the CEO's departure and are down about 30% over the past year. Despite American Eagle's troubles, it was still on pace to open more stores than it shut in fiscal 2013.

Leading mall owners
The Gap and American Eagle may be toughing it out through trouble spots, but it would take real nerve for investors to do the same. The fact that the store counts at this pair didn't fall off a cliff, however, shows why owning Simon, Taubman, and Tanger could be the perfect "sleep well at night" alternative.

Simon is the largest mall owner, using acquisitions to quickly boost its scale -- particularly during the deep 2007 to 2009 recession when it bought Mills Corporation and Prime Outlets. It operates across both the enclosed mall and outlet mall spaces, with a focus on higher-end properties.

Taubman takes an almost completely different approach. This REIT owns just under 30 malls compared to Simon's around 325. The smaller portfolio lets Taubman focus on the details of its high-end properties, trying to build the best customer experiences at every mall. It's also an active property developer and manager, building 14 since its 1992 IPO and selling 18 (it's bought only 10 properties along the way).

Source: Flickr / Prayitno.

Tanger's focus is on outlet malls, an area that Simon has been getting into. Like Taubman, however, Tanger's portfolio is relatively small at just 44 properties. That gives both of these smaller REITs notable growth opportunities, while at the same time allowing them to pay attention to the details at each property. It's worth noting that outlet malls tend to hold up better through the entire economic cycle than other malls, since consumers look for bargains in good years and need bargains in bad years.

Expensive, but worth it
This trio of retail REITs is hardly cheap. For example, Tanger yields just 2.7%, Taubman 2.9%, and Simon 3.2%. The Vanguard REIT Index ETF (VNQ 0.05%) yields around 4.1%. Tanger and Taubman are leaders in their respective niches, however, and Simon is a dominant player in each sector it plays in. In other words, they deserve premium pricing.

If you are looking for a one-stop shop, put Simon on your watch list. Select Tanger or Taubman if you have a penchant for outlets or malls, respectively. That said, if you believe smaller is better and want Simon-like diversification but more property-level focus, consider adding Tanger and Taubman to your portfolio.