For all the hype about the challenges facing physical stores, it seems that retail REITs — which own a large share of the malls, shopping centers and freestanding retail space in the U.S. — have performed robustly in recent years, according to a report completed for ICSC Research by Calvin Schnure, senior vice president of research and economic analysis at NAREIT.

Retail occupancy rates have risen — from 92 percent in 2010 to 95 percent in 2017 — outperforming all other property sectors except industrial REITs.

Retail REITs have posted steady gains in earnings, too. Funds from operations (FFO) within the sector have risen by more than 10 percent over the past five years. Net operating income (NOI), meanwhile, has made similar gains during this period, and retail REITs paid out nearly $10 billion in dividends to shareholders over the four quarters that ended with the third quarter of 2017, representing an 11.3 percent annualized growth rate over the past five years. In particular, same-store NOI—which report only the NOI for properties held for one year or longer—of retail REITs has grown at a 2 percent to 4 percent pace since 2011.

“There has been some slowing of same-store NOI growth since early 2016, but trends for retail REITs have generally been in line with, and have at times exceeded, those of other property sectors,” the report says.

As for share prices, these have frequently traded for less than REITs’ net asset values since mid-2015, perhaps owing to investor concerns about the retail sector, according to the report.

The anchor and tenant profile of malls has changed considerably in recent years, reflecting their ability to evolve. “One mark of the success that mall REITs have achieved in increasing their occupancy rates in the current retail environment is that fully one-third of the tenants were new retailers that did not have a presence in malls in 2011,” the report says.

Mall REITs have also attracted many nonretail tenants, thus diversifying their sources of rent. Many are adding food, entertainment and other services that were unavailable in the past and which cannot be easily replicated online.

Moreover, retailers and landlords are rising to the challenges of e-commerce, embracing and profiting from omni-channel retail.

“E-commerce is reshaping the way real estate is used by businesses and consumers,” the study concludes. “As older business models fade, new and more successful models for retailers and property owners are rising to take their place.”

The full report is available here.