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Amazons Whole Foods Buy Puts Shopping Centers at Risk as Real Estate Stocks Slump

Amazon's Whole Foods Buy Puts Shopping Centers at Risk as Real Estate Stocks Slump (06/16/17) Thomas, Lauren

REITs took a beating in the equities market late last week following Amazon's announcement that it plans to acquire Whole Foods. Shopping center REITs tumbled more than their peers in the commercial real estate sector, with Regency Centers seeing its stock dip more than 5 percent at one point Friday afternoon. Also down were Kimco Realty, Brixmor Property, and Weingarten Realty. These various REITs own and operate shopping centers nationwide with grocery-store anchors. "This confirms ultimately that online e-commerce guys are going to have to go to brick and mortar," Boenning & Scattergood Managing Director Floris van Dijkum remarked.

This is going to be a problem for many REITs that considered supermarket anchors to be safe havens. "How safe is Kroger now?" Dijkum asked. "Grocery was perceived as being safer. Now it's like . . . if you don't have the best grocer, you are not safe." Less-grocery-exposed REITs like Acadia and Federal Realty appear to be stable for now. "What is unclear is what the Amazon strategy will be and how it will leverage this asset," concluded analyst Daniel Binder in a note to clients.