New State Closures Place Additional Strain on REIT Tenants

A rollback of state reopening plans across the United States is placing additional strain on REIT tenants, especially those in the retail real estate segment, according to Jim Sullivan, managing director and REIT analyst at BTIG.On July 13, California announced a statewide closure of all indoor operations of dine-in restaurants, movie theaters, and family entertainment centers, among others. County indoor closures include fitness centers, hair salons and barbershops, and malls, if those counties have been on a county monitoring list for three consecutive days.Speaking July 14 on the Nareit REIT Report, Sullivan said certain types of retail will be particularly hard hit by the reclosure orders.“For retailers of apparel, footwear, and accessories, particularly if there’s a seasonal element, it’s going to be very, very difficult for the retailers in the malls to be open on an effective, efficient basis to generate levels of revenue comparable to pre-COVID levels,” Sullivan said.