Shopping Centers Today International

FEB 2016

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 $5.3 million East Coast Acquisitions acquired the 81,000-square- foot, Winn- Dixie-anchored Providence Plaza, in Deltona, Fla., from The Brandywine Cos. Tenants include Pet Supermarket $15.5 million Hollywood Western Holding Co. bought a 46,800-square- foot building in Santa Barbara, Calif., that houses a Saks Off 5th, from State Street Properties $20 million Sterling Organization, of Palm Beach, Fla., bought Smith's Shopping Center, a 108,700-square- foot Smiths Food & Drug–anchored cen- ter in Las Vegas, from Kirkorian Enterprises $35.8 million Blackstone and DDR Corp. purchased the 147,300-square- foot, Home Depot– anchored Fountains of Miramar (Fla.) from Prologis. Additional tenants include Panera Bread and Ross Dress for Less $49 million Retail Opportunity Investments Corp., bought Sternco Shopping Center, a 113,223-square foot center in Bellevue, Wash. The seller was Sternco Center, formerly known as NE 20th Street Properties $65 million Publix Super Markets bought the 138,572-square- foot Hillsboro Square, in Deerfield Beach, Fla., from DDR. The deal includes four out- parcels. $578 million France's Klépierre SA and Norway's Entra ASA will buy the 33,000-square- metre Oslo City mixed-use complex from DNB ASA. Klépierre will take the retail portion, while Entra will have the offices 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 Foreign investors can take bigger stakes in U.S. REITs U.S. legislation passed Dec. 18 will allow U.S.-based REITs to attract more capital from foreign investors. The new law, which relaxes the strict tax rules that govern foreign investment in real estate, had the sup- port of ICSC and other commercial real estate trade associations. As an offset for this provision, there were updates to the REIT rules, including limits on REIT spinoffs from non-real-estate holding companies. Both provisions were part of a two-year tax-extenders pack- age titled the Tax Increase Prevention and Real Estate Investment Act of 2015. The first provision changes the Foreign Investment in Real Property Tax Act (FIRPTA) to increase the opportuni- ties for U.S.-based real estate companies to attract foreign capital. Besides increasing the size of the stake a foreign investor may take in a REIT, this bill would modify the rules for determining whether an entity is domestically controlled for FIRPTA purposes, and also exempt U.S. real-property interests held by foreign pension funds from FIRPTA altogether. The second provision, which limits the types of entities that may spin real estate holdings off into a REIT, is designed to pay for the FIRPTA changes, according to ICSC's Office of Global Public Policy. The provision will not affect companies that have already started the process to spin off their real estate holdings. "It is important to note that this change will not stop real estate companies from electing REIT status," said Jennifer Platt, ICSC's vice president of federal opera- tions. "But will make it exceedingly difficult for a non- real-estate company to spin off its real estate portfolio into a REIT." — Stephanie Spooner 58 S C T / F e B r u a r y 2 0 1 6 S O U R C E : S N L F i N a N C i a L '15 1Q '15 3Q '14 3Q '14 1Q '13 3Q '13 1Q '12 3Q '12 1Q 1 2 3 4 5% All REITs Retail REITs Same-store NOI change One-year total returns S O U R C E : S N L F i N a N C i a L –5 0 5 10 15 20 25 30% Retail REITs All REITs 11/15 1/16 9/15 7/15 5/15 3/15 1/15 Retail loans lag overall CMBS The U.S. CMBS delinquency rate ended 2015 at 5.17 percent, down from 5.75 percent at the end of 2014, according to Trepp. But the delinquency rate for retail CMBS jumped by 12 basis points year-on-year, to 5.76 percent. The retail sector was the only one of the five major commercial property types not to improve. It was off by 10 basis points, Trepp reports.

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