The Townsend Group is advising its US pension fund clients to steer clear of opportunistic strategies targeting regional shopping mall in the US.

The real estate investment consultant stated in a board meeting document for the $3.3bn (€3bn) San Antonio Fire and Police Pension Fund that asset pricing combined with repositioning costs remained “too high for an attractive distressed pay”.

The negative effects of e-commerce were very strong, it said, adding that the number of store closures so far this year had already exceeded those in 2018, while S&P had forecast default rates to be four times above the historical average.

According to Townsend, there have been almost no transactions for malls in the US and the lack of transactions had prevented any significant movement in appraisal cap rates, despite declining public market valuations.

This had been compounded by a tightening of lending standards for poorer quality assets, Townsend said.