In the crosshairs of America's response to the spread of the novel coronavirus, Simon (SPG) announced yesterday that all of its mall locations would close until at least March 29 (about two weeks). Simon is now in an unprecedented situation with a wide range of outcomes and a high level of uncertainty. It's anyone's guess how long stores will remain closed, though two weeks is likely optimistic. President Trump wouldn't offer a timeline today when asked by the media how long until Americans would be able to return to normal life. But already, AMC Theaters — not a tenant of Simon's, to be sure — has pledged to close its movie theaters for 6-12 weeks. Moreover, when stores do reopen, it's unclear how quickly [...]

National Retail Properties (NNN) is one of America's oldest triple net lease REITs and has grown its dividend each of the last thirty years. Triple net lease contracts shift most operating expenses (insurance, maintenance, utilities, and property taxes) to the tenant.  NNN simply collects rent and typically enjoys highly stable cash flow. However, the coronavirus outbreak has prompted a growing number of retailers to temporarily close their stores to help slow the spread of the virus, calling into question whether NNN's tenants will be able to meet their rent obligations in the near future. Moreover, it's unclear when stores will be able to reopen. Two weeks is when many governments and businesses plan to reevaluate the situation, and it would be unsurprising [...]

A dramatic slowdown in auto sales is becoming more likely as consumers brace for tough times and governments appear increasingly poised to implement drastic measures to slow the spread of the novel coronavirus. Yesterday, GM announced that the automaker would suspend production and idle factories until at least March 30 (about two weeks) in response to the expected decline in demand as well to protect workers' safety. Management said the situation would be reevaluated week-by-week. There's a lot of uncertainty as to how severe the outbreak of the coronavirus will be and how far the government will go to contain the virus' spread. However, the likelihood of the economy falling into a severe recession, auto sales taking a prolonged hit, and consumers [...]

The unprecedented crash in oil prices, fall in interest rates, and continued slowdown in the global economy due to the novel coronavirus outbreak have rattled the confidence of many bank investors.  Depending on their magnitude and duration, these issues have potential to increase pressure on banks to conserve capital, making it a more difficult task to evaluate the safety of dividends in this complex industry. Cullen/Frost (CFR) has an impeccable track record of paying higher dividends for more than 25 consecutive years and running its business conservatively.  However, the energy industry accounts for 11.2% of the firm's total loans. While that's down from the bank's 16% exposure during the 2014-16 oil crash, it's still one of the highest energy concentrations [...]