The broader US equities market had a terrible day due to a strengthening dollar, which reduces dollar denominated revenue from the international businesses of US-based companies, and reduces the attractiveness of US exports. The increase in the dollar can likely be attributed to expectations for rate increase by the Fed in the coming months. The S&P 500 declined -1.7%.
Despite the weakness of the broader market, the REITs held their own as the RMZ index only decreased -0.13% today and is now up +0.7% this week. We believe the increase is due to excitement over SPG proposed acquisition of MAC, which would be the second largest acquisition of a public REIT, and the largest since the financial recession. The acquisition could be a sign of future REIT M&A — as such, other Mall REITs outperformed today, including: TCO (+2.8%), RSE (+3.0%), and PEI (+1.8%). Additionally, MAC is likely to ultimately gain a higher price from SPG. The initial offer was $91 per share, but analysts have suggested that the final price could top $100 per share as MAC will probably reject the offer and demand a higher amount. MAC closed the day at $92.39, which suggests that the market agrees with analyst sentiment.