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03/10/2021

Retail REITs’ losses declined by half in Q4 2020

Al Urbanski
Real Estate Editor & Manager
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While the road ahead is still bumpy, retail REITs posted a strong increase in funds during Q4 2020.

Though retail real estate investment trusts continue to tread a rough road back to normalcy, strong advancement was made by them during the holiday season.

According to the National Association of Real Estate Investment Trusts, retail REITs reported a 23.6% decline in funds from operations during the fourth quarter of 2020. Yet that shortfall was less than half of what it was during the store and mall shutdowns of Q2.

Nareit president Steven A. Wechsler was optimistic about the healthy recovery of consumer traffic patterns as vaccine distribution gains speed.

“These companies have the financial strength — including lower leverage, long debt maturities, and significant resources of cash, securities and access to credit — to sustain operations until their respective segments of the economy reopen further and more customers return,” Wechsler said.

Residential, office, health care and other REITs have experienced stronger comebacks than their retail counterparts. Their average fourth-quarter FFO was 9.6% lower than the year-earlier period. In Q2 2020, as the pandemic spread, funds were off by 19.6%.