The Reddit traders bailed out a major mall investor. But the throngs of retail investors who pushed up the shares of nostalgia businesses, from GameStop to Tootsie Roll, can’t save malls.

The most convincing evidence comes out of Canada, where Ontario Teachers’ Pension Plan cashed out its entire stake in the mall owner Macerich Cos. on Wednesday, selling nearly $500 million of shares into a Reddit-driven rally.

It was a striking capitulation. Ontario Teachers had stayed bullish on malls longer than many investors. It was the largest shareholder in Macerich, whose malls seemed better-positioned to withstand the appeal of e-commerce than more down-market properties.

The fund’s decision to exit the stock amid a January surge in shares serves as a grim judgment on the mall industry’s prospects in a post-COVID world.

“Macerich obviously faces significant challenges, some of which are related to the pandemic, but others have been hanging over the mall space for some time now,” said Lindsay Dutch, an analyst at Bloomberg Intelligence. “It’s possible that Teachers took the opportunity with the rise in the stock price to get out of that sector and maybe diversify their real estate investments further.”

There are plenty of reasons for the fund to be bearish on retail real estate. Government restrictions and fear of getting sick have made public spaces off-limits for many Americans and decimated revenue for restaurants and retailers.

Many key tenants in national malls stopped paying rent as sales dropped, adding to more than $50 billion in missed rent last year. And big chains including J.C. Penney and Ascena Retail Group, the owner of Ann Taylor, have filed for bankruptcy, leaving more and more empty space in already struggling malls.

That’s helped drive landlords like CBL & Associates Properties Inc. and Pennsylvania Real Estate Investment Trust to file for bankruptcy. The Bloomberg Reit Regional Mall Index, which includes Macerich, fell 41 percent last year, its fifth consecutive annual decline.

Individual property values have also taken a beating. Prizm Outlets, outside of Las Vegas, was auctioned off on Wednesday for $1.525 million – 95 percent less than the $28.2 million it was appraised at in July.

All that helps explain why Macerich and Tanger Factory Outlets Inc. have been mainstays on lists of struggling stocks discussed on Reddit – a group that also includes theater-owner AMC Entertainment Holdings Inc., Bed Bath & Beyond Inc. and Express Inc.

Those same names attracted a frenzy of bids this week as the WallStreetBets message board took aim at short sellers, sending GameStop Corp. on a wild rally, and causing retail brokerages including Robinhood Markets and E*Trade to halt transactions on a handful of companies.

The recent Reddit-fueled boost of REITs like Macerich and Tanger are at “sizable” premiums compared to the value of their assets, Green Street said in a report Thursday night.

Given both REITs have high leverage and the struggling outlook for malls, the “clear misplacing should presumably correct with time, even if the near-term is unpredictable,” the research firm said.

Ontario Teachers has longstanding ties to Macerich. The fund partnered with the company to own malls through a joint venture, and acquired an 11 percent stake in the real estate investment trust in 2014. Shares in Macerich were trading at $71 at the time, valuing the Teachers’ stake at $1.22 billion.

“We’ve been a long-term investor with Macerich and throughout this relationship they have been a valued partner,” Dan Madge, a spokesman for the Teachers fund, said in a statement. “Moving forward, we are focused on scaling and diversifying our global real estate platform, and growing our existing Canadian real estate business.”

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