US equity real estate investment trusts posted a decline in average short interest in October, led by the shopping center segment.
Average short interest in US REITs dropped 23 basis points (bps) to 3.6% of shares outstanding as of month-end, according to S&P Global Market Intelligence data. The drop in short interest follows a modest increase in September after the metric was relatively unchanged for three consecutive months.
Plunge in average short interest in shopping center sector
The shopping center sector logged the biggest drop in average short interest across all property types, declining 1.2 percentage points from the preceding month to 2.8% of shares outstanding as of Oct. 31.
Wheeler REIT Inc. mainly contributed to the plunge, as the shopping center REIT's short interest fell 19.2 percentage points to 4% as of month-end, the largest decline across all US REITs during October. The company booked a huge gain in short interest in the previous month.
In the same sector, seven other REITs posted a decrease in short interest. SITE Centers Corp., Acadia Realty Trust, Phillips Edison & Co. Inc., Federal Realty Investment Trust and Regency Centers Corp. all posted double-digit bps drops in short interest. Short interest was down 9 bps for Urban Edge Properties and 1 basis point for Kimco Realty Corp.
The casino segment had the second-largest decline in average short interest by October-end, dropping 70 bps to 2.1% of shares outstanding. Healthcare REITs followed with a 50-basis-point drop to 3.8% of shares outstanding.
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On the other hand, the hotel segment had the largest gain in average short interest across all property types, increasing 51 bps from the previous month to 5.8% of shares outstanding as of Oct. 31. Hotel-focused Apple Hospitality REIT Inc. had the biggest increase in short interest across the entire REIT industry, posting a hike of 2.1 percentage points to 7.8% of outstanding shares. Three other hotel REITs landed on the list of top 10 REITs with the most short interest gains as of October-end: RLJ Lodging Trust, Sunstone Hotel Investors Inc. and DiamondRock Hospitality Co.
Farmland REITs reported the second-highest increase in short interest with a 37-basis-point hike to 3.9% of shares outstanding as of October-end.
REITs with largest short positions
Office-focused SL Green Realty Corp. was the most shorted US REIT stock with 18.1 million shares sold short as of Oct. 31, or 28.1% of shares outstanding. Healthcare REIT Medical Properties Trust Inc. was the second most shorted REIT stock, at 22.4% of shares outstanding.
Hotel landlord Pebblebrook Hotel Trust and office REIT Hudson Pacific Properties Inc. followed, with short interests of 16.3% and 15.8%, respectively.
