Mall Short Sellers Feel Some Pain
November 14 2017 - 5:39PM
Dow Jones News
By Esther Fung
Short sellers of mall operators have gotten pounded over the
past week as expectations of corporate takeouts and heightened
activist investor interest in landlords of class-A malls drives up
share prices.
Short sellers of the seven U.S. mall real-estate investment
trusts suffered declines in their positions of $280 million from
Nov. 4 to Nov. 13, according to data from financial analytics firm
S3 Partners. Through Nov. 3 of this year, they had been sitting on
profits of $981 million.
On Nov. 3, Santa Monica, Calif.-based mall REIT Macerich Co.
announced changes to severance pay for senior executives in the
event of a change in control of the company.
In the past week, speculation that Brookfield Property Partners
could make an offer for Chicago-based mall REIT GGP Inc. and news
that activist investor Daniel Loeb's hedge fund Third Point had
acquired a 1.2% stake in Macerich fueled gains in the shares of
A-mall REITs, which generally own the most productive malls in the
country.
Another hedge fund, Elliott Management, also has taken a stake
in Bloomingfield, Mich-based luxury mall REIT Taubman Centers Inc.
and has spoken with the company executives, according to a person
familiar with the matter.
On Monday, Brookfield Property confirmed it is making an offer
to pay $23 a share for the remaining 66% of GGP it doesn't already
own, driving up GGP shares further. The stock closed at $24.05
Monday and $23.95 on Tuesday.
Since Nov. 3, shares of Macerich have risen 19%, while GGP is up
25% and Taubman Centers has jumped 22%. Shares of Simon Property
Group, the world's largest REIT, have climbed 4%.
The short sellers "are licking their wounds now," said Ihor
Dusaniwsky, managing director and head of research at S3
Partners.
Short sellers borrow shares of a company and sell them, in hopes
of buying the shares later at a lower price, repaying the loan and
pocketing the difference. Some short sellers have been targeting
retail-focused landlords, betting they would struggle with higher
vacancies and higher costs of replacing tenants following an
increase in retailer bankruptcies and store closures this year.
Write to Esther Fung at esther.fung@wsj.com
(END) Dow Jones Newswires
November 14, 2017 17:24 ET (22:24 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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