Shopping Center Business

MAY 2016

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

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RAMCO-GERSHENSON 304 • SHOPPING CENTER BUSINESS • May 2016 I n 1996, Midwestern shopping center owner and management company Ramco-Gershenson, Inc. and 22 of its primary shopping centers merged with RPS Realty Trust to form Ramco-Gersh- enson Properties Trust (NYSE: RPT). At the onset, the Farmington Hills, Michi- gan-based REIT had a vision for growing its portfolio. "We started out with 26 assets, and by 2010 we had grown to 90," says Dennis Gershenson, president and CEO of RPT. "Over the years, the retail space has trans- formed dramatically. We saw some con- cepts grow and prosper, while some of the traditional concepts faltered. We've had to change our philosophy to transform with the industry." Today, 20 years since its formation, RPT is more concerned with quality ver- sus quantity. During the last six years, it has reduced its portfolio size from 90 to 70 shopping centers — with a particular emphasis on larger, multi-anchored shop- ping centers averaging 450,000 square feet. Though, Ger- shenson is quick to point out that these aren't power centers. Instead, RPT's cen- ters include a mix of large-scale anchors and significant small shop space. In fact, its largest centers, on average, have ap- proximately 100,000 square feet of small-shop retail space. "We have multiple anchors to draw in the customer and specialty tenants to round out the experience," he says. "In the past, we were somewhat eclectic in our ownership of assets. Today, we are more focused on large, market dominant cen- ters that have a strong merchandise mix." The transition to this preferred asset focus appears to be paying off for RPT. "Twenty of the largest centers we own account for 50 percent of our minimum rent," Gershenson says. "Since 2010, we have doubled the size of our asset value, but own fewer centers." Now, RPT is using its strong founda- tion as a launching point for its strategy for future growth. FUTURE OF RETAIL "Our theme for our 20th anniversary is Envisioning the Future of Retail To- day," says Dawn Hendershot, vice pres- ident, investor relations and corporate communications. Though Gershenson says RPT would be short-sighted to claim it knows exactly where the retail industry is going, he feels confident in his organization's ability to be nimble and creative and spot new trends that will constantly deliver strong returns for its shareholders. As of December 31, 2015, the compa- ny's portfolio was 94.6 percent leased, but, for Gershenson, that doesn't neces- sarily mean RPT's centers are all perform- ing to their highest potential. "One of the things I continue to empha- size with our team is that just because a center is 95 percent leased doesn't mean we can rest on our laurels," he says. "We need to be looking at who are the retailers that aren't responsive to the marketplace, and who are the new guys on the block that would be more enticing to shoppers." For example, RPT recently made several changes at West Oaks Shopping Center in Novi, Michigan, to keep the tenant mix fresh and add value. First, the company replaced Kmart with a Gander Mountain and David's Bridal. Then, RPT moved Gander Mountain to a smaller space and signed a lease with Nordstrom Rack to take the open spot. RPT also brought in The Container Store — Michigan's first — to take over a prime space previously occupied by Best Buy. "The ongoing success of our West Oaks shopping center is indicative of our abili- ty to continue to deliver additional value A Fresh Approach Ramco-Gershenson Properties Trust looks at how to grow income and drive value within its current portfolio. Lindsey Walker Marcec Dennis Gershenson Woodbury Lakes is a 317,600-square-foot lifestyle center that Ramco-Gershenson owns in Woodbury, Minnesota.

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