Shopping Centers Today

JUL 2014

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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T H E B O T T O M L I N E $14.6 million A nontraded public REIT bought the 146,600-square- foot, Kroger- anchored Central Station Shopping Center, in Louisville, Ky., from Stream Central Station Investors $17.4 million Bethesda, Md.– based Finmarc Management sold the 28,070-square- foot Silo Inn Shopping Center, in Montgomery County, Md., to Taylor Georgia. Roots Market anchors the center $22 million Wharton Realty Group sold the 99,000-square- foot, ShopRite- anchored Montgomery (N.Y.) Town Center to Montgomery Grocery Owners $81.7 million A group led by St. Louis Rams owner Stanley Kroenke bought El Con Mall, Tucson, Ariz. The half-century- old mall, which two local families owned, has a Home Depot, a Target and a Walmart as anchors $120 million Gibraltar Limited Partnership sold the Debenhams- anchored Leamington (U.K.) Shopping Park to Ignis UK Property Fund $130.5 million Vision Ventures, Mount Vernon Asset Management and an institu- tional partner sold The EpiCentre, a 305,150-square- foot, mixed-use center in Charlotte, N.C., to Los Angeles–based CIM Group $210 million Retail Opportunity Investments bought the 1.1 million-square-foot Fallbrook Shopping Center, in West Hills, Calif., from General Growth Properties DEAL OF THE MONTH Deal Barometer W H O I S P A Y I N G H O W M U C H F O R W H A T Top markets for retail acquisitions New rules could hurt retail Industry insiders fear the Tax Reform Act of 2014 could gut investment incentives for decades to come. Cit- ing the devastating consequences on commercial real estate of the last major effort to simplify the tax code, the Tax Reform Act of 1986, a panel of three Congressmen, all former mayors, implored attendees at RECon, in Las Vegas, to educate their local legis- lators on the potential impact that regulations would have on their businesses and investment in their communities. The most problematic of them, said panelists, would be restrictions on 1031 tax exchanges (which defer invest- ment-property capital-gains taxes), elimination of some interest deductions and of state and local real estate tax deductions, and the taxation of public-private Tax Incre- ment Financing (TIF) Districts. "These regulations would impose significant hits on the industry," said Nicholas Giordano, principal of Ernst & Young's Washington D.C. Council. He added that most legislators don't grasp the full content of the un- wieldy 979-page Tax Reform Act draft, nor its implications. Despite stagnant consumer confidence and newly-announced store closings, the U.S. retail sector has continued on its solid recovery and is exhibiting tightening market conditions, according to JLL. The firm reports cap rates compressed by ap- proximately 20 basis points in 2013 as rent growth is expected to increase to 2.7 percent in 2014. Vacancy rates are also expected to compress another 20 basis points by the end of this year. Right now, power centers, in particular, are punch- ing above their weight class, experiencing the tightest overall market conditions with a total vacancy rate of just 5.1 percent. Power centers lead U.S. sectors 58 S C T / J U L Y 2 0 1 4 Retail sq. ft. purchased by public U.S. equity REITs during 2013Ð14, as of 5/30/14 Market (acquirers) Regional mall Shopping center Other retail Total sq. ft. Chicago 1.7 million 3.3 million 2.2 million 7.2 million New York City 3.1 million 2 million 1.2 million 6.3 million Orlando, Fla. 1.1 million 3.4 million 1.3 million 5.8 million Atlanta 963,134 1.2 million 2.9 million 5 million Los Angleles 1.2 million 777,737 2 million 4 million Dallas 1 million 1.5 million 1.3 million 3.8 million Austin - 2.5 million 1.2 million 3.7 million Houston - 1.1 million 1.7 million 2.8 million Cleveland 2.2 million 293,244 297,736 2.8 million Washington, D.C. 578,372 1.5 million 185,216 2.3 million 12 million 17.5 million 14.3 million 44 million N u m b e r s r o u n d e d . " M a r k e t " r e p r e s e n t s m e t r o p o l i t a n s t a t i s t i c a l a r e a o r m i c r o p o l i t a n s t a t i s t i c a l a r e a . S i z e d a t a n o t a v a i l a b l e f o r a l l p r o p e r t i e s . S O U R C E : S N L F i N a N C i a L S O U R C E : S N L F i N a N C i a L –20 –15 –10 –5 0 5 10 15 20 25% Equity Retail Russell 3000 4/13 6/13 8/13 10/13 12/13 2/14 4/14 One-year total returns 58A_SCT_JUL14_Bottom Line.indd 58 6/12/14 6:01 PM

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