Shopping Center Business is the leading monthly business magazine for the retail real estate industry.
Issue link: http://shoppingcenterbusiness.epubxp.com/i/752067
INSTITUTIONAL INVESTORS 114 • SHOPPING CENTER BUSINESS • December 2016 a significant portion of that was our exit from Canada. We have spent the past five years transforming the quality of our port- folio. We have changed the locations from a demographic standpoint to focus on the top 25 to 30 MSAs in the country. We have been much more selective on acquisitions as of late than we have been historically. Lauren Holden: Lauren Holden with Clarion Partners. We are an investment management firm with approximately $40 billion of real estate assets under management, about $8 billion of that is in retail. We have 112 retail assets. Over the last 12 months we have acquired approx- imately $400 million in retail; and have another $200 million or so scheduled to close before year end. We target major metropolitan areas for grocery-anchored and urban/transit oriented retail. Jon Wheeler: Jon Wheeler, chairman and CEO of Wheeler Real Estate Investment Trust. We went public in November 2012. We were probably the smallest REIT IPO in history; we had eight assets valued at a market cap of $15.8 million. Today, we have a market cap of $125 million and we have 66 assets in 11 states. Our biggest ac- quisition to date was this year, when we acquired 14 properties in South Carolina and Georgia from one company. As a pub- licly traded REIT, we feel this a good time to acquire. I call it a positive perfect storm. The product, the equity and the debt all have very favorable factors like I have not seen in my 34 years in business. Joel Murphy: Joel Murphy, I am the CEO of NewMarket Properties in Atlanta. We started this company about two years ago. Prior to that, I ran the retail division of Cousins Properties. NewMarket has been very active this year. We acquired 17 gro- cery-anchored shopping centers, all in sunbelt states. We own and operate 31 grocery-anchored shopping centers in sev- en states totaling 3.3 million square feet. We are 100 percent grocery-anchored shopping centers in suburban markets with anchors that have high sales per square foot. Our anchors include Publix, Kroger, Harris Teeter, HEB and a collec- tion of other strong performing grocers. John Ragland: John Ragland, I am head of U.S. retail for TH Real Estate, which is a division of TIAA Global Asset Man- agement. We have had a few changes over the past several months. We have unified our U.S. business with our European and our Pan-Asian teams, creating one of the world's largest real estate investment managers with nearly $100 billion under management. We are one of the leading retail investors in the U.S. with a $15 bil- lion, 64 million-square-foot equity and debt portfolio comprised of malls, gro- cery-anchored centers and urban retail. Approximately half of both our equity and debt portfolio is regional malls and half is open-air centers. George Fryer: George Fryer, I am re- sponsible for retail acquisitions with AEW Capital Management. AEW man- ages about $54 billion of real estate as- sets around the globe; half of that is in the United States, and a quarter of that is in retail. Within retail, half is regional malls and half is open-air centers. Over the past 12 months, we have acquired about $600 million in shopping centers; a large portion of that was our acquisition in December 2015 of Tempe Marketplace in Arizona, which was about $360 million. For 2016, we are on track to complete about $200 million in acquisitions. That is roughly 50 percent of our normal pace, which is somewhat by design and mostly by discipline. SCB: Why is retail still of interest to your firms? What compels you to keep acquir- ing retail? Ragland: We are big investors in re- tail, and there are four primary reasons why. First, there is basically no growth in supply in the sector today — it's well below 1 percent of existing stock. That has brought vacancies to well below their historic levels. Our second reason is that because occupancy is so high, rents are growing. We are getting decent growth in net operating income. Third, if you look at it from a capital markets perspective, there is a 400 basis point spread today between treasuries and average retail cap rates, and we still think there is room for cap rate compression. Last but not least, retail also has the lowest volatility of any of the real estate sectors. Fryer: Retail continues to do what it is intended to do. A retail portfolio is an efficient income producer. It provides bond-like characteristics that become more highly valued as our economic cy- cle ages. With millennials outnumbering baby boomers, potential increased con- sumer demand may restore some growth attributes atop the bond qualities as well. Cooper: When Kimco looks at retail, we break it down to a more micro lev- el. We feel very good about the type of retail that we acquire and own: open-air, neighborhood, necessity-based retail. From left, Tom Falatko, VEREIT; Joe Dykstra, Westwood Financial; Whitney Knoll, Crossman & Company; David Harvey, Fairbourn Properties; Ed Senenman, The Sterling Organization; Barry Carty, Federal Realty Investment Trust; and Laura Nguyen, Wheeler Real Estate Investment Trust.