US REITs see uptick in average short interest in August

Average short interest in US equity real estate investment trusts increased moderately in August, led by shopping center REITs.

REIT short interest was up 18 basis points from the previous month to 3.8% of shares outstanding, according to S&P Global Market Intelligence data.

Shopping center, other retail segments got big gains

The shopping center sector had the largest gain in average short interest across all property types, with a 73-basis-point increase from the prior month to 3.2% of shares outstanding as of Aug. 30.

The recent hike in the sector was mostly attributed to the jump in Wheeler REIT Inc.'s short interest. The shopping center landlord registered an 8.5-percentage-point boost in short interest to 16.4% of its shares outstanding as of August-end, the biggest short interest spike among all US REITs. This also moves Wheeler REIT's most-shorted REIT ranking to fourth place in August from 14th place at the end of July.

Another shopping center operator on the list of REITs with the highest increase in short interest was SITE Centers Corp. with a gain of 2.5 percentage points to 4.7% of its shares outstanding as of Aug. 30.

Five other shopping center REITs booked gains in short interest in August: Federal Realty Investment Trust by 20 basis points, Regency Centers Corp. by 17 basis points, Kite Realty Group Trust by 16 basis points, and Saul Centers Inc. and Urban Edge Properties each by 8 basis points.

The other retail segment — which consists of single tenant and outlet centers — had the second-biggest increase among all REIT sectors, posting a 57-basis-point hike in average short interest to 5.6% of shares outstanding as of Aug. 30. Single tenant REITs Agree Realty Corp., Essential Properties Realty Trust Inc. and Getty Realty Corp. were all on the overall list of REITs with the biggest short-interest gains.

The healthcare sector came in third, with an increase of 51 basis points in average short interest to 5.1% of shares outstanding at the end of August.

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Conversely, the advertising segment posted the steepest drop in average short interest across all property types, declining 40 basis points from the prior month to 2.6% of shares outstanding as of Aug. 30.

Within the sector, OUTFRONT Media Inc. reported the largest decline, falling 83 basis points to 3.0% of its outstanding shares, the sixth-biggest drop in short interest across the entire REIT industry. The other advertising REIT in the analysis, Lamar Advertising Co., barely rose during the same period, increasing only 3 basis points to 2.2% of its shares outstanding.

The communication sector logged the second-biggest decline, down 11 basis points to 2.6% of shares outstanding on average. The farmland segment came in third with a drop of 7 basis points in average short interest to 4.7% of shares outstanding.

REITs with the most change in short interest

After Wheeler REIT, multifamily-focused Centerspace had the next-largest increase in short interest among all US REITs in August, rising 4.7 percentage points from the previous month to 5.2% of its shares outstanding. Office REIT Net Lease Office Properties ranked third with a 3.3-percentage-point hike to 16.5% of shares outstanding as of Aug. 30.

Office-focused SL Green Realty Corp. posted the biggest short-interest loss in August, down 1.4 percentage points to 15.1% of shares outstanding. Healthcare REIT Healthcare Realty Trust Inc. followed with a short interest loss of 1.3 percentage points.

REITs with the largest short positions

Healthcare-focused Medical Properties Trust Inc. was still the most-shorted US REIT stock, with 236.7 million shares sold short, or 39.4% of shares outstanding.

Office REIT Hudson Pacific Properties Inc. was the second most-shorted US REIT stock with 17.2% of shares outstanding sold short. Another office REIT, Net Lease Office, followed at 16.5% of shares outstanding.