Retail REITs Continue Their Rent Collections Surge

Article originally posted on Globe St. on July 27, 2020

Buoyed by continuing retail re-openings nationally, rent collections for free standing and shopping mall-focused REITs trended upwards in July after gains in June.

The trend was highlighted in the fourth monthly survey of REIT rents across six property sectors by the National Association of Real Estate Investment Trusts (Nareit).

The Nareit report—which culled data from April, May, June and July rent surveys and combined them with publicly disclosed data matched to June’s month-end equity market capitalization—covered a broad spectrum of commercial real estate amidst the COVID-19 pandemic and its economic impact.

In addition to the retail subsectors, industrial, office, apartments and healthcare were also surveyed and they showed consistently strong rent collections in June and July that hovered between 94 and 99 percent.

But the biggest gain in full rent collections was with free standing retail, which reported a 12.1 percentage points jump from 79.3 percent in June to 91.4 percent in July. Shopping centers had the second largest spike, rising 8.9 percentage points from 60.6 percent in June to 69.5 percent in July.

There are more than 16,000 REIT-owned free standing retail establishments across the US, including big box stores, pharmacies, convenience stores and restaurants, and roughly 2,700 shopping center REITs, according to Nareit.

The note attributed the positive surge among the retail subsectors to the prevalence of essential businesses, such as grocery and drug stores as tenants. Nareit cited such businesses as “a stabilizing factor,” as well as reliable rent payers for these properties.

Free standing and shopping center REITs also reported decreases in deferred rent and forbearance. The former reported granting rent deferrals for over 17 percent in May and June rent, but only 7 percent of July rent. Meanwhile, the forbearance rate for shopping center REITs plunged 8 percentage points from 9 percent of rent owed in June to 1 percent in July.

Find Complete Article Here: