News
REIT WEEK ROLLS ON
June 9, 2011
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| Our NY reporter Amanda Marsh continued her REITWeek coverage yesterday (1,000 investors and 100 REITs at the Waldorf-Astoria Hotel). Despite mega retailers like Walmart and Target honing in on grocery sales, grocery-anchored assets in Regency Centers’ portfolio (like Heritage Center in Irvine, Calif., above) aren’t feeling the heat, despite traditional markets only doing 70% of today’s grocery biz (eight years ago, it was 90%). Instead, it’s competing with independents that are lowering prices to compete with the Walmarts, we learned from CEO Hap Stein, prez/COO Brian Smith, and SVP Lisa Palmer. In fact, Regency just signed a lease for a 51k SF Mariano's in their Riverview Center in Roscoe Village. The 93% leased center is undergoing a $14M renovation and will be renamed Roscoe Square this summer. The positive leasing at Regency Centers has continued, even with 100k SF of Blockbuster stores closing. Move-outs are lowering to historical norms, and if leasing prospects turn into signed contracts, its portfolio will be 93% occupied this year. Regency scaled back development plans the past few years, but has done a few grocery-anchored infill projects, and plans $25M to $75M of new starts this year and close to $100M next. |
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| A few years ago, Home Properties sold $600M to $700M worth of multifamily assets in the rustbelt regions of Detroit, Ohio, and upstate NY (it maintained several suburban Chicago properties) and turning the capital to toward the Mid-Atlantic (it purchased Ellicott City, Md.’s Charleston Place, above, for $103M in October)—now its NOI is well on the way to be at a minimum 1% better than the last recession, says CEO Ed Pettinella and CFO David Gardner. We’re still in the early stages of recovery, but out of the trough and into the middle. However, the ability for the resident base to pay more is there, with its rent-to-income on the lower end of the industry at 17.1% (it’s been over 20% in the past). There’s been no substantial pullback from residents, and pushing rents means even greater growth yet to come. Last year, turnover was 38%, compared to the industry’s 57%, and in Q1, it was 7.5%, the lowest the REIT has recorded. In May, new leases jumped 6.1%, while renewals increased 4.3%. |
