Brixmor Property Group (BRX, Financial) (BRX - $9.50 - NYSE) shares declined significantly during Q1 as government-imposed measures in response to coronavirus caused the closure of numerous retail tenants whose businesses were deemed nonessential by local governments. While 70% of this retail REIT’s shopping centers are anchored by grocers that remain open for business, just 14% of its rental income comes from grocers. That sparked investor worries about the health and status of Brixmor’s other tenants. While some of Brixmor’s non-essential, small-shop tenants are in jeopardy from continued closure, such tenants make up just 10% of Brixmor’s tenant base and many of those may well be eligible for government assistance. There also is a misperception that Brixmor has greater exposure to coronavirus-hit New York City MSA (just 8% of rent) than it actually does. Brixmor’s balance sheet is in great shape and should help the firm weather the storm. Also, Brixmor’s tenant mix is more robust than popularly believed – some 60% of its space is leased to so-called “essential” retailers which still operate.
From Keeley Asset Management's Mid Cap Dividend Valud Fund's first-quarter 2020 shareholder commentary.
