The stocks of mall real estate investment trusts tumbled Wednesday, as the U.S. saw a record drop in retail sales last month.
While the S&P 500 and Dow Jones Industrial Average fell about 2 percent each, major mall stocks nosedived, performing worse than the broader market and REITs in general.
Macerich, for instance, closed down over 13 percent, and CBL & Associates Properties fell almost 11 percent. Washington Prime Group plunged over 15 percent, and Simon Property Group fell just under 10 percent Wednesday. Taubman Centers, which is being acquired by Simon, dropped by about 5 percent.
Meanwhile, the FTSE Nareit All REITs index, which tracks all publicly traded REITs, fell Wednesday by a little more than 4 percent. As of 3:45 p.m., Nareit’s regional mall index was down 9.32 percent, the largest daily drop among all the REIT indices the industry group tracks.
After the Federal Reserve announced another round of lending assistance to individuals and businesses last week, REITs outperformed the broader market. But Wednesday, stocks fell as the U.S. Census Bureau reported that retail sales plunged by 8.7 percent in March from February, the worst monthly decline on record, and by 6.2 percent from the year before.
Government shutdowns because of the coronavirus have disproportionately impacted the hotel and retail sectors. Clothing stores, a retail sector already struggling with changing consumer preferences, recorded the steepest monthly drop off in sales, down almost 51 percent. Car dealerships followed, down almost 27 percent. Sales at food establishments were down over 26 percent.
Mall owners have already taken steps to preserve funds. Macerich last month upped the amount of stock it would pay out to investors in lieu of cash. David Simon of Simon Property Group took a pay cut and furloughed staff. And on Wednesday, Washington Prime Group said it was suspending its quarterly cash dividend, furloughing 20 percent of its staff and cutting senior pay.
Write to Mary Diduch at md@therealdeal.com