Real estate companies in the Lower Hudson Valley followed the national trend in recording sharp stock price declines last year and struggling to navigate a slowing economy, rising vacancies and a credit crisis.
The All REIT Index, which tracks publicly traded real estate investment trusts with stakes in commercial properties, including offices, shopping malls, hotels and industrial sites, was down 37.3 percent in 2008, according to a report released yesterday. Last year’s slide came after a decline of 17.8 percent in 2007.
Such losing streaks are unusual for the index, sponsored by the National Association of Real Estate Investment Trusts in Washington. The index had been up 14 out of the 17 years before the 2007-2008 downturn.
The worst performing local REIT last year was SL Green Realty Corp., down 72 percent. The company, a major office landlord in New York City and Westchester County, recently said that it would cut its dividend by more than half. Analysts have been concerned that the company could be hurt by a large number of office leases to financial companies that have announced big layoffs during the credit crisis.
For the real estate companies in general, the coming year is full of uncertainties.
“The REIT market continues to face the same challenges as other industries—the need to revitalize the frozen credit markets enabling companies to refinance debt coming due, and weathering the uncertain and challenging economy,” read the report from the National Association of Real Estate Investment Trusts.
Regional mall REITs fell 60.6 percent last year in response to worries about sluggish consumer spending, retail store closings and increased mall vacancies, according to the report. The poor investor sentiment hurt Simon Property Group Inc., the Indianapolis-based operator of the Jefferson Valley Mall in Yorktown Heights, and the Galleria and The Westchester in White Plains. Simon’s shares dropped 38.8 percent for the year.
Lodging/resort REITs plunged 59.7 percent as hotels faced declining business and vacation travel in a slowing economy, the report said. Starwood Hotels & Resorts Worldwide Inc., the White Plains-based operator of the Westin and Sheraton chains, converted from a REIT to a corporation in the late 1990s. Yet the lodging slump contributed to a 59.4 percent drop in its share price last year.
Other REITs with a local presence also performed poorly last year. Mack-Cali Realty Corp., a major owner of office space in Westchester and the metropolitan area, fell 28 percent; Presidential Realty Corp., a White Plains-based real estate investment trust that owns commercial and residential buildings, dropped 50.8 percent; and Acadia Realty Trust, a real estate investment trust in White Plains that specializes in shopping centers, fell 42 percent.