Same-store sales took a decided upturn in June, a phenomenon Wall Street analysts say will prove beneficial to retail REITs. Median same-store sales for the month were up 4%. "Given the better than expected same-store sales performance in June, we now believe that many retail REITs could experience modest gains in percentage rent during 2002," wrote Merrill Lynch analysts Paul Snushall and Matt Bertram in a report on the state of the REIT industry released yesterday.

Mall-based specialty tenants, which posted monthly sales trends of approximately –5% in the past five months, saw only a –0.3% drop in June. And same-store sales trends for open-air formats ranged from +4.5% to +8.2%.

"These positive sales trends reinforce our overweight position in retail REITs, particularly the regional mall REITs due to their low valuations," Snushall and Bertram wrote.