Shopping center REIT performance continued to erode during the third quarter. Nearly half of the shopping center REITs missed analyst estimates and several lowered their guidance for the remainder of the year.

Retail real estate typically lags behind the broader economy. So the full brunt of the rising number of bankruptcies and store closings has yet to reverberate through the shopping center sector. As a result, with a harsh recession and continued store closures and bankruptcies on the horizon, shopping center REIT performance could continue to erode, analysts warn.

“Nobody is showing that much pain yet,” says Joel Bloomer, an analyst with investment researcher Morningstar, “Our take is it's going to deteriorate over the next several years as there will be more pressure on rents as supply continues to increase while demand decreases.”

Of the 14 shopping center REITs, six — Equity One, Developers Diversified Realty, Weingarten Realty Investors, Cedar Shopping Centers, Inland Real Estate and AmREIT — missed analysts' consensus estimates for the quarter ended Sept. 30. Three firms — Kimco Realty, Ramco-Gershenson Properties Trust and Federal Realty Investment Trust — met expectations. And five companies, Regency Centers, Kite Realty Group, Urstadt Biddle Properties, Saul Centers and Acadia Realty Trust, beat estimates.

REITs lowering guidance for the balance of 2008 included Developers Diversified, Equity One, Weingarten Realty, Inland, Kimco, Kite and Regency.