Regional mall REITs see short interest increase in 2nd half of December 2021

Overall, U.S. equity real estate investment trusts saw a decline in average short interest as of the end of December 2021, recording a 10-basis-point drop to 3.0% of shares outstanding as compared to the 3.1% average as of Dec. 15, 2021.

Regional mall REITs saw the highest uptick in short interest compared to other property types, with a 65-basis-point growth over the last two weeks of 2021 to 9.0% of shares outstanding on average.

Within the mall segment, CBL & Associates Properties Inc. had the highest boost in short interest relative to shares outstanding as of Dec. 31, 2021, with a 1.6-percentage-point increase to 3.6% of its shares outstanding. Pennsylvania REIT was close behind, with a hike in short interest by 1.3 percentage points to 16.5% of shares outstanding. The two mall REITs were included in the top 10 U.S. REITs with the largest increase in short interest as a percentage of shares outstanding, ranking at second and fifth places, respectively.

Meanwhile, the two remaining mall REITs, Macerich Co. and Simon Property Group Inc., both saw a drop in short interest over the same period, to 12.4% and 3.5% of shares outstanding, respectively.

After the regional mall sector, the farmland sector had a 24-bps increase in average short interest to 1.5% of its shares outstanding as of December 2021-end. The "other retail" segment, which includes outlet centers, single tenants and other retail REITs, had the third-largest increase in short interest relative to shares outstanding during the same period, posting a 12-bps growth to 3.9% of shares outstanding on average.

In contrast, the energy infrastructure sector saw an overall 41-bps plunge in average short interest relative to shares outstanding. The healthcare segment followed with a 35-bps drop to 2.6% of shares outstanding, while the industrial sector was down by 26 bps to 2.9% of shares outstanding.

Diversified REIT iStar Inc. was the most-shorted U.S. REIT, with 16.8 million shares sold short as of December 2021-end, or about 24.2% of its shares outstanding. Private prison operator GEO Group Inc. followed, with short interest at 17.8% of its shares outstanding.

Retail-focused InvenTrust Properties Corp. saw the largest increase in short interest over the last two weeks of 2021, increasing by 2.2 percentage points to 2.8% of its shares outstanding. Regional mall REIT CBL & Associates Properties Inc. and hotel REIT CorePoint Lodging Inc. followed, posting short interest hikes of around 1.6 percentage points each.

Healthcare REIT Healthcare Trust of America Inc. and office REIT Easterly Government Properties Inc., on the other hand, occupied the top two list of biggest declines in short interest relative to shares outstanding across all REITs, with both posting short interest drops of roughly 4.0 percentage points.