- Shopping center REITs were tumbling more than their peers in the real estate sector Friday following the announcement of Amazon's plan to acquire Whole Foods.
- Shares of Regency Centers, which operates a portfolio of strip centers anchored by Kroger, Kimco Realty, Brixmor Property and Weingarten Realty were all dropping further into red territory.
- Wall Street fears traditional shopping center grocery anchors are no longer safe assets.
A traditional grocery store might not be the safest tenant in town, after all.
Shopping center REITs — those that operate open-air strip centers, where retailers are arranged in a row and often around a traditional grocery anchor like — were tumbling more than their peers in the real estate sector on Friday's announcement.
, which operates a portfolio of strip centers anchored by Kroger, among other traditional chains, saw its stock falling more than 5 percent at one point Friday afternoon. Shares of , which also has a hefty helping of grocers in its portfolio mix, were falling around 5 percent.
Meanwhile, and were down nearly 5 and 4 percent, respectively. These two REITs also own and operate shopping centers across the U.S., with grocery anchors.
"Number one, this confirms ultimately that online e-commerce guys are going to have to go to brick and mortar," Boenning & Scattergood Managing Director Floris van Dijkum told CNBC in an interview.
"Number two, we don't recommend Regency because it has grocery-anchored exposure," he went on. This is now going to be a problem for many REITs that considered grocery anchors to be safe havens of sorts. "How safe is Kroger now?," Dijkum asked.
"Grocery was perceived as being safer. Now it's like... if you don't have the best grocer, you are not safe," Dijkum added.
A lot of these REITs have grocery exposure, but the question now is to what extent and which grocers, he said.
Less-grocery-exposed REITs Acadia and Federal Realty, for example, which operate so-called street retail properties, saw their stocks trade off slightly Friday but not as much as their shopping center peers.
"What is unclear is what the Amazon strategy will be and how it will leverage this asset," Jeffereies analyst Daniel Binder wrote in a note to clients.
"With no investor calls planned, to our knowledge, investors, analysts, competitors and suppliers are left guessing what Amazon may do to evolve this business. One might argue that the stores will act as distribution points for more same-day delivery and pick-up and this will probably be done in a more cost effective fashion than the current Amazon model."
It's no surprise, Amazon has been in the food business for more than 10 years, Binder went on.
The digital company's decision to enter the brick-and-mortar space is a "pretty big deal," and "suggests stores are in fact important and not just some defensive point of view that traditional brick-and-mortar players have taken," he added.
"This is the biggest move we've ever seen Amazon make," Jan Kniffen, CEO of Worldwide Enterprises, told CNBC in an interview Friday morning.
Kniffen called the move by Amazon both exciting and scary for many.
"This is one more sector Amazon is going to put a lot of pressure on." Many grocers are going to be asking questions like "do you really need stores," and "how many do you really need," Kniffen said.
And REITs already began to see some of that ripple effect Friday.