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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regional tenants. Brixmor, which told analysts that its centers are 93 percent occupied, says it plans to reposition an- chor spaces at 160 locations by 2018, with an investment of $450 million. There is speculation in the industry that additional public REITS will go private in the wake of open-air devel- oper Inland Real Estate Corp.'s agree- ment in December to be bought for $2.3 billion by funds managed by DRA Advisors. The Inland board needed to address the disparity between the long-term discount at which the REIT traded and the private-market value of its assets; management said the best way to bridge the gap and provide share- holder value was to take Inland private in a merger, according to Chairman Thomas P. D'Arcy. The deal is expected to close by late this spring. Forest City Enterprises went the other direction, converting from a pri- vate to a public REIT on Jan. 1. The move stemmed from a streamlining initiative suggesting an exclusive focus on core real estate assets. As part of the process, the Cleveland-based com- pany divested its stakes in the Brooklyn (N.Y.) Nets basketball team and that team's Barclays Center home, in Brook- lyn, to team majority owner Mikhail Prokhorov. High prices on open-air centers in major markets are driving Kimco Realty Corp. to focus on improving its existing properties instead of looking for new ones to buy, according to Kimco CEO Conor C. Flynn. When the firm does cut a deal, it is to buy out its joint-ven- ture partners and wholly own a property, Flynn told investors on a fourth-quarter earnings call. Kimco spent some $2.1 bil- lion last year buying out partners in 57 properties. In contrast, Kimco bought only two assets in the open market, for a total purchase price of $155 million. Meanwhile, the firm is taking advan- tage of low cap rates to offload properties in secondary markets. "We have some as- sets on the West Coast that we've sold at very aggressive pricing," Flynn said. "And when you look at the statistics for our fourth-quarter sales, our average cap rate was 6.5 percent, which was the low- est cap rate that we've had on our dispo- sitions that we've tracked." The REIT reported surprisingly strong leasing to independent retailers for the year. "It's all about supply and demand," he said. "Right now we see retailer interest in all categories, whether it's small-shop, midsize, junior boxes or the big-box anchors. They all have been very aggressive in growing store count, and that continues to lead to bidding wars, which will bid up rents." Many of the enclosed-mall REITs are developing open-air centers of their own or adding open-air components. In Janu- ary Taubman Centers canceled plans for an enclosed regional mall for the mixed- use Miami Worldcenter development, announcing that it will pursue instead an open-air high-street concept more condu- cive to the site, with partner Forbes Co. "We've invested a significant amount of time on the project," said Chairman, President and CEO Robert S. Taubman. "Unfortunately, we were unable to struc- ture an enclosed-mall program that meets our investment criteria." Taubman's deci- M a r c h 2 0 1 6 / S C T 35 w e s t l a e s h O p p I n g C e n t e r , I n d a l y C I t y , C a l I f .

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