The commercial real estate industry has been discussing a larger role for grocery anchor tenants this year in the wake of several traditional mall anchors closing stores.
One of the most important takeaways is that the grocery market may not be as safe as was previously thought. Regency Centers, Kimco Realty, Brixmore Property, and Weingarten Realty were all down 4 to 6 percent each. This shift in investor expectations has carried over into shopping center REITs, especially those that have a heavy exposure to grocery anchors. Walmart and Target each took a 5 percent shave. SuperValu, a grocery chain that owns about 2,000 stores across the country, took a massive 14 percent hit on Friday, and Kroger fell by 9 percent. More dramatically, competing grocery owners lost significant amounts of stock in the hours after the deal. The company making the purchase usually loses a bit of value on the stock market following a deal. Counter to established trends, Amazon’s stock also increased by about 2 percent. Further trading pushed that figure up another 2 percentage points to a 29 percent premium.
Let’s take a look at both.Īmazon is paying a 27 percent premium to obtain Whole Foods shares, which naturally pushed up the grocer’s value. Taking the long view, there may be still more disruptions as a result of this corporate marriage. In the short term, the deal exerted upward pressure on both companies’ stocks and downward pressures on competitors’. This is Amazon’s biggest deal to date, and it could mean long-term changes in the commercial real estate industry. Though it won’t close until later this year, markets have already had a significant reaction to Amazon’s Whole Foods purchase.