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10 Retailers That Could Be a Retail REIT Investor's Best Friends


Dec 29, 2020 by Matt Frankel, CFP
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It seems like the retail headlines have been dominated by companies that have declared bankruptcy and others that are rapidly reducing their physical footprints. And it's true: Many brick-and-mortar retailers are struggling to adapt in the world of e-commerce disruption.

On the other hand, it's not accurate to put all physical retail in the same category. Here are 10 examples of companies that are actually expanding their physical footprints, according to The Real Deal, and what it could mean for retail REIT, or real estate investment trust, investors.

While many retailers are closing stores and increasingly shifting to an e-commerce model, these 10 well-known companies are planning to expand their physical footprints in 2021 and beyond.

Aldi

The low-cost grocery chain plans to expand its store count by about 25% by 2022.

At Home

With the coronavirus pandemic keeping everyone at home, there's a big trend toward home improvements, and home furnishings retailer At Home (NYSE: HOME) sees an opportunity to nearly triple its current store count.

Bank of America

One of the largest banks in the United States, Bank of America (NYSE: BAC) announced a plan in 2018 to open 500 new branch locations by 2022.

Casey's General Stores

The convenience store Casey's General Stores (NASDAQ: CASY) plans to add 350 stores to its footprint by 2023, starting in the third quarter of 2020.

Chase Bank

The largest bank in the United States by assets, JPMorgan Chase (NYSE: JPM) plans to expand its footprint into 10 more states by 2023 and open an additional 400 branches in the process.

Dollar General

Dollar General (NYSE: DG) added 500 stores to its chain in the first half of its current fiscal year and plans to add 1,000 altogether in the one-year period ending January 31, 2021.

Dollar Tree/Family Dollar

In the second half of 2020, discount retailer Dollar Tree/Family Dollar (NASDAQ: DLTR) planned to open 500 new locations, comprising 325 Dollar Trees and 175 Family Dollars.

7-Eleven

The convenience store chain recently acquired Speedway, which gives it about 14,000 locations. But the company has said that it plans to grow to about 20,000 stores, so we could see years of aggressive expansion ahead.

Sonic Drive-In

The fast-food drive-in plans to grow its store count by about 30% over the next decade, adding 1,000 new locations.

Starbucks

The massive coffee chain Starbucks (NASDAQ: SBUX) understandably pumped the brakes on growth in 2020 but plans to open 1,100 net new stores between the U.S. and international markets in 2021.

Which retail REITs could be the biggest winners?

One key takeaway for investors is that the retail landscape is certainly changing, but that doesn't mean that physical retail is dead. Companies that sell things people need, businesses that provide a service, and retailers that specialize in discounted merchandise are actually doing quite well in their physical locations, and the fact that all 10 of the retailers on the list fit into at least one of these categories is proof.

REITs that focus on these types of properties could still have very bright futures, even as e-commerce gradually captures a greater percentage of overall U.S. retail sales. For example, Realty Income (NYSE: O) has a top-10 tenant list that includes 7-Eleven, Dollar General, Dollar Tree, and Family Dollar. National Retail Properties' (NYSE: NNN) largest property type is convenience stores. And furniture stores and quick-service restaurants are some of STORE Capital's (NYSE: STOR) top tenant types.

The Millionacres bottom line

There are certainly some types of retail real estate that could be smart to avoid. For example, I wouldn't invest in a mall REIT unless it was actively transitioning its properties away from discretionary retail. But, despite what you may have read in the headlines, not all retail real estate is doomed, and some could even have lots of room to grow in the years ahead.

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Matthew Frankel, CFP owns shares of Bank of America, Realty Income, and STORE Capital. The Motley Fool owns shares of and recommends Starbucks and STORE Capital. The Motley Fool recommends Casey's General Stores and recommends the following options: short January 2021 $100 calls on Starbucks. The Motley Fool has a disclosure policy.