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Shopping Center REITs Trail Behind Mall Sector in Fourth Quarter

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Shopping center REITs closed 2010 in stable condition, though their performance was more mixed than that posted by regional mall REITs. The sector seemed to be experiencing the lingering impact of multiple big-box closings in 2009, as well as some troubles in re-leasing smaller shop space to mom-and-pop retailers.

Out of the 15 REITs that have reported, eight beat consensus analyst estimates on FFO per share, six missed and one met expectations. The outperformers included the largest sector players like Kimco Realty Corp. and Developers Diversified Realty, as well as Inland Real Estate Corp., Federal Realty Investment Trust, Acadia Realty Trust, Urstadt Biddle and Whitestone REIT. The range of their outperformance, however, was modest--from $0.01 per share to $0.06 per share.

On the other hand, Cedar Shopping Centers, Regency Centers, Ramco-Gershenson Properties, Weingarten Realty, Saul Centers and National Retail Properties missed by a larger margin, starting at $0.05 per share for Ramco.

Kite Realty Group was in line with consensus estimates.

The good news, according to a March 8 note by RBC Capital Markets analyst Rich Moore is that the worst of the closings appear to be over. He wrote:

Retailer bankruptcies outside Ultimate Electronics and Borders are light and appear likely to remain so for the remainder of the post 4Q holiday bankruptcy season. As a result, we expect operations to continue to improve into 1Q11 and throughout the year.

During an earnings call with analysts a few weeks ago, Kimco Realty president and CEO Dave Henry also noted that in aggregate, leasing activity and rent growth were coming back to the sector, though there are still wide differences between the best and worst markets.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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