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Retail: U.S.' Most Shorted Real Estate Stocks

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Equity REITs have underperformed the broad stock market much of this year, and short sellers are taking note.

Of last week’s top 10 shorted U.S. real estate stocks, shopping center REITs took the cake. The retail industry is in the throes of a seismic shift fueled by online shopping and consumer demand for experience. That shift is putting pressure on retail center owners to restructure their portfolios to create value for shareholders amid the challenging retail environment, and is impacting stocks. 

Retail: U.S.' Most Shorted Real Estate Stocks

“In general high short interest is associated with a bearish view on a stock, as the short seller is set to profit from a decline in share price,” IHS Markit Director of Securities Finance Samuel Pierson told Bisnow. “Over time highly shorted stocks tend to underperform relative to stocks with low short interest, but there are certainly times when that hasn’t been true, June of 2018 being a stark example of highly shorted stocks outperforming the broader market.”

Short sellers are largely looking to retail companies to turn a profit during the industry’s time of flux, with retail REITs accounting for six of the top 10 shorted real estate companies in the nation, according to data from London-based global information provider IHS Markit. Read the full list below. 

Tanger Factory Outlet Centers Inc.

Share Price: $23.66

% Of Shares On Loan: 31.8%

Greensboro, North Carolina-based shopping center REIT Tanger Factory Outlet Centers was the most shorted stock of the week. The company owns and operates 44 high-end shopping centers in North America totaling roughly 15.3M SF. The REIT closed Friday down 0.29% to $23.66, and roughly 31.8% of its shares are out on loan — meaning investors have shorted nearly a third of the company’s stock, banking on the assumption prices will fall. 

CBL & Associates Properties Inc. 

Share Price: $5.29

% Of Shares On Loan: 27.1%

CBL & Associates owns and operates 117 retail locations across 73.4M SF in the U.S. The shopping center REIT has been working to revamp properties impacted by major store and anchor closures, and reported Q1 same-center earnings that were up 4.1% compared to the year-ago quarter.  Shares closed down 1.67% to $5.29 Friday and about 27% of its stock is being shorted. 

Easterly Government Properties Inc.

Share Price: $19.48

% Of Shares On Loan: 24%

Developer and operator Easterly Government Properties Inc. largely owns and manages Class-A office assets. Much of the Washington, D.C.-based company’s properties are leased to U.S. government agencies through the General Services Administration. Roughly 24% of the REIT’s stock has been shorted, and the company’s stock fell 0.71% to $19.48 after the closing bell Friday.

Realogy Holdings Corp.

Shopping bag, consumers retail

Share Price: $23.47

% Of Shares On Loan: 20.6% 

Realogy Holdings Corp. is a real estate services and brokerage firm based in Chicago. The residential brokerage was dubbed No. 1 in the country in March, with Warren Buffett’s HomeServices of America Inc. trailing closely behind as No. 2. Short sellers took out 20.6% of the company’s stock on loan as of last week, and its shares fell 0.04% to $23.47 after closing Friday.

Agree Realty Corp.

Share Price: $54.42

% Of Shares On Loan: 19.9%

Farmington Hills, Michigan-based Agree Realty Corp. is a retail REIT. Founded in 1971, it has developed more than 40 community shopping centers throughout the U.S., primarily in the Midwest and Southeast. With nearly 20% of its stock out on loan, the company’s shares fell 1.71% to $53.49 Friday.

Seritage Growth Properties

Share Price: $42.69

% Of Shares On Loan: 19.8%

Sears spinoff Seritage Growth Properties has 230 wholly owned retail assets in its portfolio, and nearly 30 assets through joint ventures with partners including GGP Inc., Simon Property Group and Macerich. The REIT was created in 2015 by Sears CEO Eddie Lampert to raise capital for the ailing retailer. The company has the right to recapture space from Sears Holding in order to re-tenant or redevelop properties. Shares closed down 0.35% to $42.69 after the closing bell Friday.

Pennsylvania Real Estate Investment Trust

Share Price: $10.75

% Of Shares On Loan: 18.5% 

Philadelphia-based Pennsylvania Real Estate Investment Trust is a shopping center REIT that owns and manages about 22.5M SF throughout the mid-Atlantic. The company’s shares closed down 0.92% to $10.75 Friday with roughly 18.5% of its stock out on loan.

Redfin Corp. 

Share Price: $24.53

% Of Shares On Loan: 15.3%

Residential brokerage firm Redfin helped closed deals for 120,000 homes in 2017, generating $370M in revenue. The firm, which also provides housing research and market data, went public in August under CEO Glenn Kelman. The firm’s shares closed down 1.01% to $24.53 Friday with short sellers taking out 15.3% of its shares. 

Washington Prime Group Inc.

Share Price: $7.69

% Of Shares On Loan: 15.1%

Washington Prime Group Inc. is the sixth retail REIT to make the top 10 shorted real estate stocks list. Based in Columbus, Ohio, the company was formed after a 2014 spinoff from Simon Property Group; it acquired Glimcher Realty Trust the year after. The shopping center owner has also joined the coworking craze and recently announced it is partnering with COhatch to bring coworking space to its Polaris Fashion Center in central Ohio. As of Friday, short sellers had 15.1% of the company’s stock out on loan and shares fell 0.39% to $7.69.

Omega Healthcare Investors Inc. 

Share Price: $30.49

% Of Shares On Loan: 14%

The only healthcare REIT in the top 10 last week, Omega Health Investors is based in Hunt Valley, Maryland, and focuses on triple-net skilled nursing and assisted living facilities. The REIT owns roughly 70 assets in partnership with operators in the U.S. and U.K. Shares closed down 1.45% to $30.49 Friday, with roughly 14% of its stock out on loan.