Average short interest in US REITs relatively flat in July

Average short interest across US equity real estate investment trusts barely moved in July, falling by 4 basis points from the previous month to 3.6% of shares outstanding, according to S&P Global Market Intelligence data.

Self-storage sector logs largest short-interest drop

The self-storage segment posted the largest decline in average short interest across all property types with a drop of 1.1 percentage points from the prior month to 2.4% of shares outstanding as of July 31.

The fall was mainly attributed to the significant drop in Extra Space Storage Inc.'s short interest, down 6.0 percentage points to 3.0% of the self-storage landlord's shares outstanding, the biggest loss in short interest among all US REITs in July.

During the month, Extra Space Storage acquired self-storage REIT Life Storage Inc. in an all-stock deal completed July 20.

Within the same sector, Public Storage logged a drop in short interest of about 16 basis points.

The remaining three REITs in the self-storage sector each posted an increase in short interest: National Storage Affiliates Trust with 27 basis points to 2.6% of its shares outstanding, CubeSmart with 21 basis points to 4.2% of its shares outstanding, and Global Self Storage with 7 basis points to 0.1% of its shares outstanding.

The second-biggest decline was seen in the industrial REIT segment, which fell 53 basis points to 2.7% of shares outstanding. The farmland segment logged the third-biggest decline, down 50 basis points to 3.2% of shares outstanding.

In contrast, the hotel sector had the biggest gain in average short interest across all property types, increasing 59 basis points over the preceding month to 5.5% of shares outstanding as of the end of July. The regional mall and shopping center segments also posted hikes in average short interest during the same period, increasing 36 and 7 basis points, respectively.

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REITs with largest change in short interest

Healthcare-focused CareTrust REIT Inc. had the largest increase in short interest, up 3.5 percentage points to 13.2% of shares outstanding. Specialty REIT Postal Realty Trust Inc. followed with a hike of 3.2 percentage points to 5.2% of shares outstanding, while hotel REIT DiamondRock Hospitality Co. rounded out the top three with an increase of 2.6 percentage points.

Behind Extra Space Storage, office landlord Hudson Pacific Properties Inc. recorded the second-largest drop in short interest, losing 2.3 percentage points to 11.5% of its outstanding shares as of July-end.

REITs with largest short positions

Office-focused SL Green Realty Corp. is still the most-shorted US REIT stock, with 16.1 million shares sold short as of July 31, or 25.0% of its shares outstanding. Hotel owner Pebblebrook Hotel Trust followed with short interest of 20.9%, and healthcare REIT Medical Properties Trust Inc. came in third at 20.7%.