Done Deals: “Commercial Real Estate Show” Interviews Successful Retail REIT CEOs

Tuesday, June 4, 2013

“Commercial Real Estate Show” Interviews Successful Retail REIT CEOs

Michael Bull

ATLANTA, GA – Optimism in the retail sector’s future. High-quality tenants. Significant growth plans. Strong balance sheets.

Those are some of the characteristics of the retail REITs highlighted in the most recent episode of the “Commercial Real Estate Show,” hosted by Michael Bull of Bull Realty.

The episode featured interviews with the REITs' CEOs conducted by Bull Realty's Brad Thomas at the recent RECon 2013 convention in Las Vegas. Thomas, senior vice president of capital markets at Bull Realty, writes about REITs for Forbes, Seeking Alpha and The Street.

Brad Thomas

“Overall, the shopping center industry – month by month, quarter by quarter – has been getting a lot better,” said David Henry of Kimco Realty. “You see it in our key metrics. Occupancy, same-store net operating income, leasing spreads, effective rents: they’re all getting better for us.”

David Henry

“There’s a lot less new supply that’s being added to the market, so it’s a good demand-and-supply equation for the shopping center business,” said Hap Stein of Regency Centers. “It’s vastly improved over the last several years.”

Stand-alone, triple-net-leased retail properties are especially appealing to both tenants and investors in today’s marketplace, according to Tom Lewis of Realty Income, which focuses on net-leased sites.

Hap Stein

“A lot of America’s corporations have decided they don’t need to own real estate,” he said. Instead, “they can lease it, and we’re buying it and leasing it back to them under long-term leases … The cost of capital is low, and that’s the perfect storm for companies like ours.”

Federal Realty Trust has grown its cash flow by concentrating its retail portfolio in core, densely populated markets such as Boston, Northern California, Southern California and Washington D.C., said Don Wood of Federal Realty Trust. “How do you keep cash flow growing?” he said. “You’ve got to be in high-quality markets where there’s lots of people with money to spend.”

Don Wood

Taubman Centers is feeling bullish enough about the sector that it is currently undertaking $1.2 billion of new development, said Robert Taubman. The new projects include regional malls in San Juan, Puerto Rico; suburban St. Louis; and Sarasota, Fla., as well as three retail projects inAsia.

“Our DNA is about development,” Taubman said.

Robert Taubman

Tanger Factory Outlets also is building new properties, including new centers in Charlotte, N.C.; Columbus, Ohio; and Grand Rapids,Mich. “This growth is based on demand,” said Steve Tanger. “We don’t build on speculation.”

Having executives own part of a REIT can make the company more successful, said Stuart Tanz of Retail Opportunity Investment Corp. “I believe I’m the single largest individual shareholder in the company,” he said.

Steve Tanger

“That’s critical, in my view, of looking at any company. You want management to have skin in the game. Everyone is making decisions for the future in terms of their own vested interests.”

The entire episode on retail REITs is available for download at www.CREshow.com. The next “Commercial Real Estate Show” will be available June 6 and will feature more interviews from the recent RECon 2013 retail show in Las Vegas.