Shopping Centers Today International

MAR 2016

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

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RBC Capital Markets. New anchors as well as shopping center expansions and reconfigurations offer landlords the opportu- nity to extract additional value from already strong centers, ac- cording to Moore. "These usually yield double-digit returns," he said. Lack of supply has made it harder to achieve cap-rate compression, says Steven Grimes, president and CEO of Re- tail Properties of America, Oak Brook, Ill. "And that causes developers to really focus on the value of growing centers organically," said Grimes. Meanwhile, buyers seeking prime properties continue to outnumber sellers. "Open-air centers are such a hot ticket for investors that it's hard to find good properties to buy these days," said Andrea Olshan, CEO of New York City–based Olshan Prop- erties. Strong industry fundamentals have institutional capital sources — pension funds, insurance companies, mutual funds and investment banks — chasing top-tier retail assets at robust prices, says Grimes. Open-air REITs are also taking ad- vantage of the up market to fine-tune and deleverage their holdings. DDR Corp., which completed two power centers in the past few years — at Seabrook Commons, on the Massachusetts–New Hampshire border, and Belgate Shopping Center, in Char- lotte, N.C. — is improving its asset base by parceling off parts of its portfolio. DDR closed on some $564 million in acquisi- tions last year, including seven prime shopping centers in the fourth quarter alone that totaled $404 million, while dispos- ing of some $1 billion worth of shopping centers. "We expect to continue to take advantage of the competitive transactional market," said CFO and Treasurer Luke J. Petherbridge. "We will use sale proceeds to selectively ac- quire prime assets and further reduce leverage." Small-shop space is faring well, thanks to a resurgence of mom-and- pop leasing. Regency Centers says it posted a 96 percent occupancy rate in the fourth quarter, with small- shop space at a respectable 91.5 percent. Brixmor Property Group, whose 522-property U.S. portfolio is 70 percent grocery-anchored, said in February that some 40 percent of its small-shop space is leased by local busi- nesses and 60 percent by national and 34 S C T / M a r c h 2 0 1 6 i n v e n t r u s t b o u g h t t h e 4 2 , 4 9 2 - s q u a r e - f o o t s o n t e r r a v i l l a g e , i n s a n a n t o n i o , f o r $ 2 1 . 5 m i l l i o n . 8 4 % o f U . S . R E T A I L G L A I S o p E n - A I R Source: ICSC Research

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