Real estate stocks plunge as coronavirus fears batter market

Trading was temporarily halted Monday morning after S&P 500 sank 7%

Mar.March 09, 2020 10:51 AM
Real estate stocks sank Monday morning (Credit: Vectorios2016/iStock)

Real estate stocks sank Monday morning (Credit: Vectorios2016/iStock)

As new cases of the coronavirus proliferated around the globe, U.S. stocks plummeted Monday morning — and real estate stocks followed suit.

The S&P 500 was down over 6 percent, and the Dow Jones Industrial Average plunged over 1,600 points, or 6.21 percent shortly after 10 a.m.

An early-morning 7 percent plunge in the S&P triggered a 15-minute halt in trading, as the New York Stock Exchange automatically stops trading if it detects severe drops. Trading resumed after that.

Real estate investment trusts, which have long been considered safe investments in times of market volatility, also were down Monday morning. The FTSE Nareit All REITs index was down 6.24 percent.

The price drops appeared to impact a range of REIT sectors. For instance, industrial giant Prologis was down almost 6.7 percent; hotel chain Hilton around 4.2 percent. Mall owner Simon Property Group’s stock had plunged over 11 percent.

Other real estate stocks also were taking a hit. Brookfield Property Partners’ stock was down 6.8 percent and CBRE down almost 7 percent.

Financial markets have been on a rollercoaster ride over the past several weeks, as outbreaks of COVID-19, a respiratory illness that originated in China in December, continues to spread around the globe.

Worldwide, the flu-like virus has sickened almost 112,000 and killed almost 3,900 people. Cases in the U.S. also have been accelerating.

In a note, Mizuho Securities USA analyst Omotayo Okysanya said the well-known view that REITs are considered a safe haven will be tested, as the performance of REITs, which came off a banner year in 2019, has largely mirrored the broader market.

The Federal Reserve issued an emergency interest rate cut last week in an effort to stave off the economic impact from the virus, which has led to a massive travel slowdown and pressures on China’s behemoth manufacturing sector.

Office landlords have pledged keeping buildings clean and safe for their tenants, and hotel owners have been bracing for the impact travel reductions and event cancellations will have on their bottom lines.

Write to Mary Diduch at [email protected]

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