E-commerce hits Chicago retail REITs harder than national average: report

E-commerce continues to slam the brick-and-mortar retail sector, with Chicago-area real estate investment trusts getting hit particularly hard, according to the latest figures.

Retail REITs saw a 5.5 percent decrease in returns over the past 12 months, worse than the 1.9 percent national drop, according to numbers released by SNL Financial, a unit of S&P Global Market Intelligence.

The industrial side was a different story. That sector saw a jump in returns, according to SNL Financial, which may indicate a shift in investment strategy, Peter Rothemund, senior analyst at Green Street Advisors, told Crain’s.

“Sometime over the past two years, people kind of woke up (and realized), ‘Hey, I’m doing all my shopping at Amazon,’ ” Rothemund said. The trend has hurt retail investors but bolstered REITs with holdings in warehouse space and distribution, he said.

According to the SNL Financial analysis, Oak Brook-based shopping center owner Retail Properties of America dropped 15.6 percent in total returns, including dividends for the one-year period that ended March 22. Mall owner GGP, meanwhile, posted a 3.1 percent drop in returns during the same period.

Conversely, Chicago-based First Industrial Realty Trust reported a 13.9 percent increase in returns over the past year, thanks to the demand for distribution and warehouse space. Nationwide, industrial REITs posted a 15.5 percent return over the past year, the analysis showed.

Retail Properties of America wasn’t the worst performer among local REITs. That dubious title belonged to Medical real estate investor Ventasm, which whose returns fell by 18.1 percent, after a 16.5 increase in 2016.[Crain’s] — John O’Brien