Office REITs notch biggest gain in average short interest in March

US equity real estate investment trusts posted an increase in average short interest in March, rising 36 basis points to 3.5% of shares outstanding, according to S&P Global Market Intelligence data.

SL Green was top gainer as offices got big boost in short interest

Office REITs bagged the biggest gain in average short interest across all property types, with an increase of 1.5 percentage points from the previous month to 6.2% of shares outstanding as of March 31.

Office-focused SL Green Realty Corp. had the biggest hike in short interest across all US REITs, up 7.2 percentage points to 22.6% of its shares outstanding. This recent increase made the company the most shorted REIT stock by month-end, overtaking healthcare REIT Medical Properties Trust Inc., which previously held the top spot.

Four other office REITs made the list of the 10 biggest gainers in short interest relative to shares outstanding. Douglas Emmett Inc. posted the second-highest increase, both within its sector and across all US REITs, up 4 percentage points to 9.0% of its shares outstanding as of March 31.

Hudson Pacific Properties Inc. logged a 3.9-percentage-point increase to 10% of its shares outstanding, while Vornado Realty Trust and Office Properties Income Trust posted gains of 3 and 2.8 percentage points, respectively.

The regional mall REIT segment had the second-biggest increase, posting a 1.1-percentage-point hike in average short interest to 4.5% of shares outstanding as of March-end. Hotel REITs notched the third-highest gain with a 57-basis-point increase to 4.8% of shares outstanding.

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On the other hand, the "other retail" sector, which includes outlet center, single-tenant and other retail REITs, had the biggest drop in average short interest across all property types, losing 34 basis points (bps) over the preceding month to 3.7% of shares outstanding as of March 31. The shopping center and residential sectors also pared their average short interests during the same period, posting declines of 13 bps and 10 bps, respectively.

Top REITs by change in short interest

Apart from office REITs SL Green Realty and Douglas Emmett, hotel owner Ashford Hospitality Trust Inc. also had one of the largest increases in short interest during the month, with a 4-percentage-point hike to 7.6% of its shares outstanding.

By contrast, three single tenant-focused REITs logged the biggest cuts in short interest in March, led by NETSTREIT Corp., which posted a decline of 2.7 percentage points to 7.9% of its shares outstanding. Essential Properties Realty Trust Inc. followed with a 2-percentage-point drop to 4.1% of its shares outstanding, while Agree Realty Corp. posted a 1.7-percentage-point decline to 4.2% of its shares outstanding.

REITs with largest short positions

After SL Green Realty, healthcare-focused Medical Properties Trust was the second-most shorted US REIT stock, with 114.3 million shares sold short as of March 31, or 19.1% of its shares outstanding. Hotel-focused Pebblebrook Hotel Trust followed, with short interest at 16.4% of shares outstanding.