Nareit conducts a monthly survey of REIT rent collections in the wake of the COVID-19 pandemic and related economic dislocation. The improvement in the shopping center segment in August was more notable as it continued to show a positive impact of the economic reopening.
Given that rent collections in the industrial, office, and healthcare sectors have stabilized at high levels, the August survey focuses on three property subsectors: apartments, free standing retail, and shopping center retail. The results show gains made last month for retail have held steady for free standing and improved further for shopping centers. Apartments show no change despite the expiry of federally subsidized unemployment. Rent collections for apartments have remained high and steady over the whole five-month period.
Nareit’s survey includes listed equity REITs that combined own and operate between 10% and 20% of commercial real estate in the U.S.
- Apartment collections remained substantially the same at 96% of typical rents collected in August. Since May, rent collections have hovered around the 95-96% mark.
- August survey respondents reported an uptick in rent deferrals granted. Deferrals had been declining since May’s high of 3% of rent owed, falling to less than 1% of rent in July by equity market cap. August deferrals increased slightly to 1.4%.
- There are more than 16,000 REIT-owned free standing retail establishments across the U.S., including big box stores, pharmacies, convenience stores and restaurants. Free standing held onto gains made in July at 91%. While May and June survey respondents in free standing reported granting rent deferrals for over 17% of their May and June rent, July deferrals were down to 7%. August deferrals remained at 7%.
- The U.S. has nearly 2,700 REIT-owned shopping centers. Shopping center REITs continued to make gains in August up to 80% of typical August rent collected, up almost 8 percentage points. Rent deferrals showed improvement, down to 5.2% in August from 6.5% in July. However, the sector’s forbearance rate for August survey respondents was up to 1.9% in August from 0.9% in July.