The fallout in the retail industry is wide and continues to grow.

There will certainly be more bankruptcies among the retail industry .

That doesn’t mean investors can’t capitalize on the uncertainty in the industry .

Retail Real Estate: What Goes Around, Comes Around

Safest Way To Play Retail

The retail industry is all but “dead.” However, there is one area of the market that has become increasingly interesting from an investment perspective — the landlords of these retailers. That is, the mall and shopping outlet real estate investment trusts, i.e. REITs.

So much of the retail industry is suffering near fatal wounds, and it certainly comes as no surprise that retail malls are hurting just as bad. Major chains like Sears (NASDAQ:SHLD) and Macy’s (NYSE:M) are closing hundreds of stores, and malls could even be losing more than one anchor store at a time.

There are over 1,000 malls in the United States today, and there is general agreement within the industry that this number needs to be pruned way back. But are all malls, and the companies who own them, now bad bets? Wall Street seems to think so.

Shares for the top 4 mall owners in the country — GGP (NYSE:GGP), Macerich (NYSE:MAC), Simon (NYSE:SPG), Taubman (NYSE:TCO) — have dropped an average of 30% in the last year.

This is not completely unreasonable. At their peak, these companies were trading about 20x FFO (funds from operations, which is the figure real estate investment funds — or REITs — use to define the cash flow from their operations). But these days, we’ve seen a major overcorrection as those multiples have fallen to the mid-teens.

Is this just karma?

After all, the mall is what killed downtown shopping streets all over the country, now Amazon (NASDAQ:AMZN) is killing retailers and malls are getting a taste of their own medicine.

Except…a lot of downtown areas managed to reinvent themselves into prosperity. If malls can do the same, then these share prices could possibly represent buying opportunities, even at these FFO multiples. So, what are the chances?

The cheapest, the highest dividend yield, the best?

For investors that don’t want to take the risk of buying up individual retailers, retail REITs are interesting right now. They’re very cheap, especially relative to other areas in the REIT space. However, occupancy rates remain high, with Simon Property group and GGP keeping occupancy above 95% despite the recent retail struggles.

But for investors looking to take advantage of the retail fallout and “cheapness,” Simon Property — the biggest REIT in any sector — and GGP are the best bets. In particular, GGP is very enticing based on valuation and dividend.

On a price-to-FFO basis, GGP trans at less than 13x, while Simon is at 14x and both Macerich and Taubman are at over 16x. GGP offers a solid 3.6%, which isn’t as high as Taubman, Simon Property or Macerich — all yielding over 4% — but…