Shares of mall landlord Macerich (NYSE: MAC) jumped as much as 10% in the early minutes of trading on Wednesday, April 29. Pennsylvania REIT (NYSE: PEI) took a little longer to get started, but by 10 a.m., it too was up more than 10%. Although other mall real estate investment trusts (REITs) also saw gains, they didn't rise quite as much as this pair. That said, Simon Property Group (NYSE: SPG) gained nearly as much as Macerich, which makes complete sense.
The big problem for the enclosed malls and factory outlet centers that Macerich and Simon own is pretty simple: They have been shut down because of COVID-19-related social distancing mandates. That's led many tenants to push back on rent, with some even refusing to pay. REITs have their own bills to deal with, so collecting less than their full rent rolls could quickly become a problem. Heavily leveraged Macerich, for example, swiftly trimmed its dividend by 33% (most of it to be paid in stock) to preserve cash. Penn REIT, which doesn't have as strong a portfolio of assets and is even more heavily leveraged, took its dividend down to a token $0.02 per share per quarter (a 90% cut).
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