Shopping Center Business

MAY 2015

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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274 • SHOPPING CENTER BUSINESS • MAY 2015 Randall Shearin With a major leasing effort underway, the nation's largest grocery-anchored shopping center owner, Brixmor, looks to raise value and quality at its centers. Brixmor Raises The Bar A s the owner of the largest wholly owned portfolio of grocery-an- chored community and neigh- borhood shopping centers in the United States, Brixmor Property Group garners a lot of attention in the industry. Active in most markets across the country, the company has a strong presence with its more than 500 shopping centers. In 2015, Brixmor is emerging from a time of transition, and is in a position to harvest a lot of growth without building or acquiring any centers. The vehicle for that internal growth is the volume of leases expiring in the company's portfolio: 40 percent of Brixmor's gross leasable space will be coming due over the next three years. That will allow Brixmor to increase its revenue stream while improving the quality of its portfolio and delivering value to shareholders. Shopping Center Business recently met with Michael Carroll, Brixmor's CEO, at the company's corporate office in New York City to find out what lies ahead for the REIT. Timing Brixmor is not only in a good position, but an interesting one. While Brixmor is a relatively new name in the industry, its core portfolio and its leadership are not new. Brixmor is somewhat of an amalga- mation of many years of successful port- folios. The company's roots stem from the former New Plan Excel Realty Trust — once the nation's largest community shopping center REIT. New Plan spent much of the 1990s and early 2000s acquir- ing individual companies, including Cen- ter America Property Trust in 2002. New Plan, along with Kramont Realty Trust and Heritage Property Investment Trust, were eventually purchased by Australian company Centro, becoming Centro Prop- erties Group U.S. That company was later taken private by Blackstone in 2011, when it became Brixmor. During Black- stone's investment pe- riod, it invested more than $300 million in leasing and portfo- lio upgrades. Aside from the focus on the portfolio, Blackstone also prepared the company to go pub- lic. Throughout that period, Carroll remained the company's CEO, and many of its key officers have been with the company and its predeces- sors for more than a decade [see sidebar on page 280]. At the end of 2013, Blackstone took Brixmor public in what was the larg- est REIT IPO that year and the largest community and neighborhood shopping center REIT IPO to date, raising $950 million in gross proceeds. While Blackstone's investment allowed the company to begin leasing and anchor space repositioning work on its portfo- lio to create value, accessing the capital markets as a public company will allow Brixmor to invest further in its portfolio. With so many leases set to expire — and with those older leases at below market rents — the company is actively carrying out a major initiative called Raising the Bar. The program will renew and sign new mark-to-market leases and upgrade the merchandising mix at Brixmor's prop- erties, as well as invest even more money in anchor space repositioning at a large percentage of its shopping center assets. The program demonstrates Brixmor's unified effort to execute new leases, and generally raise quality and revenue from its efforts. Brixmor has estimated $450 million will be spent in capital expendi- tures for build-outs, renovations and some new structures as part of Raising the Bar. "Our focus today is on operating the portfolio," says Carroll. "We are really Brixmor razed about 75 percent of a center to build Liberty Plaza in Randallstown, Maryland, now anchored by Walmart. Michael Carroll, CEO

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