Free Standing and Shopping Center Retail REIT Rent Collections Jump in June

While real estate is a durable investment that often performs well in economic downturns, the financial health of a landlord will ultimately impact the financial health of its tenants, according to John Worth, Nareit’s executive vice president of research and investor outreach.

In a video interview with Nareit, Worth said that to better assess how the pandemic has been financially impacting REITs, Nareit began conducting monthly rent collection surveys of its members in April.

“REITs, owning between 10% and 20% of the commercial real estate in the United States, provide a perfect sample for gauging the rent paying ability of tenants across the U.S.,” Worth said. “We think this has benefits for the REITs themselves, for commercial real estate operators more generally, [for] investors, and for policymakers.”

Worth said Nareit’s most recent June survey shows a marked improvement in free standing retail and shopping center rent collections. Other sectors continued to show strong performances, including industrial, apartments, office, and health care, he added.

Looking ahead, Worth said that although there are some question marks, foot traffic in retail locations and consumer spending will both jump as reopenings occur.

“Coming into this crisis, REITs were really in a position in terms of the strength of their balance sheets, their strong operating performance, and their access to credit and equity markets to really be quite resilient in this crisis,” he said. “We haven’t seen anything to make us think twice about that.”