Short sellers of mall operators have gotten pounded over the past week as expectations of corporate takeouts and heightened activist investor interest in landlords of class-A malls drives up share prices.
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Short sellers of the seven U.S. mall real-estate investment trusts suffered declines in their positions of $280 million from Nov. 4 to Nov. 13, according to data from financial analytics firm S3 Partners. Through Nov. 3 of this year, they had been sitting on profits of $981 million.
On Nov. 3, Santa Monica, Calif.-based mall REIT Macerich Co. announced changes to severance pay for senior executives in the event of a change in control of the company.
In the past week, speculation that Brookfield Property Partners could make an offer for Chicago-based mall REIT GGP Inc. and news that activist investor Daniel Loeb's hedge fund Third Point had acquired a 1.2% stake in Macerich fueled gains in the shares of A-mall REITs, which generally own the most productive malls in the country.
Another hedge fund, Elliott Management, also has taken a stake in Bloomingfield, Mich-based luxury mall REIT Taubman Centers Inc. and has spoken with the company executives, according to a person familiar with the matter.
On Monday, Brookfield Property confirmed it is making an offer to pay $23 a share for the remaining 66% of GGP it doesn't already own, driving up GGP shares further. The stock closed at $24.05 Monday and $23.95 on Tuesday.
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Since Nov. 3, shares of Macerich have risen 19%, while GGP is up 25% and Taubman Centers has jumped 22%. Shares of Simon Property Group, the world's largest REIT, have climbed 4%.
The short sellers "are licking their wounds now," said Ihor Dusaniwsky, managing director and head of research at S3 Partners.
Short sellers borrow shares of a company and sell them, in hopes of buying the shares later at a lower price, repaying the loan and pocketing the difference. Some short sellers have been targeting retail-focused landlords, betting they would struggle with higher vacancies and higher costs of replacing tenants following an increase in retailer bankruptcies and store closures this year.
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(END) Dow Jones Newswires
November 14, 2017 17:24 ET (22:24 GMT)