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NREI: Retail REITs Insist the Business is “Solid,” as Wall Street Gives Them a Thumbs Down

According to NREI,

Nowadays, a mix of realism and optimism permeates the retail REIT sector, with landlords acknowledging the rocky atmosphere for brick-and-mortar retail while touting the rise of “experience” retailers that don’t rely heavily on e-commerce.

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As retail REITs struggle with outdated retail concepts and try to find compelling new retailers, they’re also coping with an overall thumbs-down from Wall Street. Year-to-date, retail REITs have underperformed the broader REIT index by roughly 1,400 basis points as retail woes, namely bankruptcies and store closures, have weighed down their stocks, according to Spenser Allaway, an equity research analyst at Green Street Advisors, a real estate research and advisory firm.

“While headwinds in the retail space are real, the share underperformance has been much larger than the actual asset value at risk,” Allaway says. “Hence, it appears the market is looking beyond the current disruption in the space and pricing in a much further deterioration of REIT fundamentals.”

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