Retail REIT shares rally as fear of e-commerce competition ebbs

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By Herbert LashNEW YORK, May 25 (Reuters) - Strong earnings from the
battered U.S. retail sector, which helped lift Wall Street on
Thursday, also boosted shares of the hard-hit real estate
investment trusts (REITs) that own the properties where the
retailers are located.
    Sears Holdings Corp <SHLD.O>, which reported on Thursday its
first quarterly profit in nearly two years, brought the retail
REITs rally to roughly 7 percent since early least week.
    Retail REITs pushed the overall sector to just shy of an
all-time high on Thursday, with Macerich Co <MAC.N> rising 1.6
percent and GGP Inc <GGP.N> gaining 1.5 percent.
    Both Macerich and GGB own high-end Class A malls. Close
behind was Simon Property Group <SPG.N>, the largest retail
property owner among the REITs, which rose 0.58 percent.
    "We got a snap-back," said Scott Crowe, chief investment
strategist at CenterSquare Investment Management, a unit of the
Bank of New York Mellon Corp <BK.N>. "We're getting a little
bottom put into the sector."
    Stocks of the retail REITs, a small sub-sector, have been
crushed by more than 30 percent since last summer. They have
started to turn higher as investors focus on those expected to
survive the e-commerce onslaught, which has robbed their tenants
of foot traffic and sales.
    Analysts said fears that malls and shopping centers were
engulfed in a death spiral were overdone. Lower quality centers,
with low foot traffic and undesirable stores, will bear the
brunt of downsizing.
    "There will be some winnowing in this space and it's largely
going to happen in Class B and C malls in outer suburban
locations where you just don't have the foot traffic or the
barriers of entry," said Jay Leupp, who helps oversee some $1.4
billion in global real estate assets at Lazard Asset Management.

    TOP PROPERTIES HOLD UP
    The owners of...

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