Real-Estate Losers in 2020, Like Hotel and Mall Owners, Starred in the First Quarter

Shares of companies that own shopping centers, hotels and New York office buildings were decimated most of last year but mounted a first-quarter comeback, as investors bet that a vaccine rollout can revitalize these hard-hit businesses.

Real-estate investment trusts overall rose 9{28ab41d673507bfe0daf970418d2e81f9476b3e139564442359ad7402c370b16} during the three months, beating the S&P 500’s 6{28ab41d673507bfe0daf970418d2e81f9476b3e139564442359ad7402c370b16} gain, according to data-analytics firm Green Street. Fueling the REIT rally was an 18{28ab41d673507bfe0daf970418d2e81f9476b3e139564442359ad7402c370b16} rise in the shares of lodging owners and a 32{28ab41d673507bfe0daf970418d2e81f9476b3e139564442359ad7402c370b16} gain by mall owners.

The real-estate recovery was part of a broader market surge that lifted many beaten-down sectors starting late last year, when investors gained confidence that the pandemic would start coming to an end this year. “Investors started saying, ‘give me as much of a reopening theme as you possibly can,’ ” said Michael Knott, Green Street’s head of U.S. research.

Other top property performers in the first quarter, including companies that own downtown office and apartment buildings, were buoyed after firms began signaling plans to send more employees back to the workplace. Shares of SL Green Realty Corp. , a big owner of Manhattan office property like the new development at One Vanderbilt, were up 16{28ab41d673507bfe0daf970418d2e81f9476b3e139564442359ad7402c370b16}.

Meanwhile, the real-estate laggards during the first quarter included some of the top performers during most of the pandemic. For example, companies that own industrial real-estate shares rose 12{28ab41d673507bfe0daf970418d2e81f9476b3e139564442359ad7402c370b16} in 2020 because of strong demand from online retailers like Inc., according to Evercore ISI.