TrafficCourt

Edward Glickman, president & COO and Robert F. McCadden, executive vice president and CFO, are presenting for Pennsylvania REIT at NAREIT’s REIT Week.

Refresh page for updates.

Below are notes from the session:

3:48: Glickman: The company continues on plan. … Expecting year-end occupancy in the high 80s. Same-store NOI growth plus-or-minus 1.0 percent. … On the capital side, on the last five years decade the company spent more than $1 billion in repositioning. Much of this was financed by debt. … We found ourselves in an overlevered position. Since early 2010 the company has taken a number of steps to repair the balance sheet. … Our intermediate goal is to bring the debt-to-gross-asset-value ratio down to about 60 percent.

3:50: McCadden: For the balance of ‘11 and into ‘12, we have a large number of expirations due to doing short-term leases in the 2008-2009 period. We have 60 percent near-term expirations at malls doing less than $350 per square foot. … We’ve made an upward movement in overall portfolio occupancy and stabilized occupancy at these lower-sales assets. … There is interest from retailers to open locations in some of those lower assets, but mostly looking at 2012. … We see flattish renewal spreads in short term and sustained growth beyond that.

3:52: Glickman: One example is parent of Kay Jewelers, which has many stores with PREIT and they are looking for additional stores with the company. I use that as an example because jewelry was hurt deeply during the recession and has now staged a comeback. … The mall is a place where jewelers can do well, even if sales for the property are below the national average. … It’s a good use for malls and one we see expanding. … ICSC was interesting because after two years of pretty negative comments from retailers about their outlook, at this ICSC we saw a shift in momentum and the dialogue in past years was about protecting profits and cutting back and how to survive the recession. Now it’s all about how to get growth.

3:55: McCadden: (In response to question about turning short-term leases into long-term ones.) At end of Q1 at $357 per square foot. … As of the end of December and into first quarter, we have a fair amount of tenants in holdover. … We are keeping tenants on in month-to-month basis. … In many cases, our view is that we are negotiating for renewal terms that are more commensurate with an improving economy than one that is in a downward cycle. … We would hope we could grab part of that uplift in renewal spreads in the latter part of 2011 and into 2012.

3:56: McCadden: (In breaking down the sales recovery at its malls.) You saw a lot more volatility at the higher end—steeper decreases and now greater improvements. Below $350 per square foot, they didn’t fall as much and haven’t risen as much. … Most of the volatility has been on the upper end of the portfolio.

4:01: Glickman: There have been two major portfolios that have been on the market—one by Westfield and one by GGP. PREIT has looked at a distance at both of those portfolios. We are not an immediate candidate for either portfolio, there might be assets in one or both portfolios that might be attractive to the company. … We’re more focused on organic growth and improving NOI. … The positive fact of having these portfolios trading is that it will set a benchmark and will (help improve the financing market for B and C malls)…. The more trading in these assets, the more vibrant the market is, the better it is for the company. Our thinking is that it will start help revaluing other assets and help in two ways—valuation and help us in trading assets out of our portfolio.

4:11: Glickman: The highest-concentration of sales-per-square-foot would be Apple, which is probably without peer. It might be a multiple of 30X its next competitor. Beyond that it might be jewelers, who can get (a lot out of small spaces). … We mix all sorts of products to have a merchandise mix that will make a productive, efficient, but utilitarian shopping experience. … People want to experience shopping, have a good time, but get what they need done. So we provide a panoply of services. … In many properties we are expanding to a Town Center concept to add uses that are not traditional retail. … We view it as the future of the business in all but the rarified atmosphere of the highest-productivity malls. … We view mixed-use as a future direction for some of our projects. … We’ve already put into some of our properties—and intend to do more—health care (i.e. places to get well care, not acute care) as well as wellness related things like fitness centers. Beyond that we’re talking about county or community services where you can pay a bill. … Community colleges are becoming important, so they’re looking for additional space. Think about taking an old theater and turning it into community college space. It has lecture halls and our food court becomes their dining hall.

End of session

David Simon, chairman & CEO, is presenting for Simon Property Group at NAREIT’s REIT Week.

Refresh page for updates.

Below are notes from the session:

3:02: Simon: Fundamentals in the business are pretty good. We just came back from several meetings with retailers, including the ICSC. General demand is picking up. Our first quarter results were excellent. … Our revenues increased 10.2 percent. Our spreads were up and our comparable property NOI was up more than 2 percent. Fundamentals are decent and getting better. There is still a lot of workout work to do. Retailers are still cautious, but feeling more comfortable in opening stores. … Our balance sheet is generally in great shape and I think things are headed in the right direction.

3:04 Simon: We expect to send $2 billion to $3 billion on the existing portfolio—redeveloping, expanding, modernizing and adding … amenities. … We started that a year-plus ago. Some of our peers are talking about starting that now, but we’re already well into that process. … Generally we still think we have a lot of upside in our leases, especially in our outlet portfolio. Including Mills and properties in construction, we have 99 dedicated to value-oriented retail. That’s a pretty good spot to be.

3:05: What are we going to do to grow? Show me in the retail real estate world who is growing more than us? … This year first quarter was 14.2 percent FFO per share growth. This year I expect to have record earnings for the company. … Most people have growth, but are not going to get back to record earnings. They may grow off ’10 or ’09, but are still off their peek. … We will have the highest FFO in our company history.

3:07: (In response to question about redevelopment and potential of mixed-use.) Simon: There are unique asset intensifications available to us. For instance, Copley Place in Boston is a unique opportunity to add some retail square footage, but also potentially a residential tower. There are going to be some residential and hotel opportunities in our portfolio as we intensify the use. But I agree that the vast majority will be to further reposition assets from a retail perspective.

3:10: (In response to question about Calloway JV.) Simon: We are excited about the Canadian opportunity. I think we are off to a good start. Hopefully we can get a commitment from an anchor that is very interesting. … A lot of the very successful outlets are in the Northern part of the U.S. So it’s not as if Canadians don’t understand it. … I think if you can end up building 15, it’s a pretty good size. It would be a good build-out considering what’s out there now.

3:13: Simon: Almost every retailer goes through the evolution of store sizes. They start small, go a little bigger, biggest, then head back in the other direction. … That’s a natural evolution. What we have to do is keep the center fresh, looking great, driving customer traffic and look to see that they don’t reach for too much space.

3:16: Simon: Where we envision being able to communicate to our customer is that they know they’re in a Simon mall. We want to communicate with them and we’ll give our best retailers the ability to communicate with them. … We’re going to try and do it in a coordinated fashion where they have the best that we have to offer and the best the retailers have to offer. We want to treat our best customers specially. … We’ve never done that. But we want to treat our best mall customers better than just any other guy that shows up.

3:24: Simon: (On question about Internet sales taxation.) We need federal legislation to change what we consider one of the most unfair taxation situations. Pure Internet retailers do not have to collect sales tax. But Gap has to collect sales tax on online sales, even in the same states. … It’s not a new tax. It’s just a tax that the online guys ignore and do not collect. … We are hoping that logic prevails and it levels the playing field and leave it up to the states to decide what to do. … We need Congress to act. … It’s not an ideological issue. It’s going to take an act of Congress and I’m going to work my tail off to make it happen. … There’s no reason to treat a mom & pop shop different from an Amazon. … Why does Amazon get the benefit over the mom & pop?

3:30: Simon: (In response to a question about new concepts and weaker players.) The weaker retailers evolve. Some get better. Some get worse. There always seem to be a new class of retailers to take up the slack. … Some are going through tough times. At the same time, we’re seeing some others take the market share. … Let’s face it, there is a lot of retail real estate. There will be some obsolescence. … That obsolescence now comes pretty quick. I think long run, it is good, let’s clean out the excess capacity and get to where we need to be.

End of session.

Arthur Coppola, chairman & CEO; Ed Coppola, president and Thomas E. O’Hern, senior executive vice president, CFO and treasurer are presenting for Macerich at NAREIT’s REIT Week.

Refresh page for updates.

Below are notes from the session:

2:18: Art Coppola: For our business, the consumer is OK. The consumer is not feeling tremendously healthy. They don’t feel different from what they felt 10 days ago or three months ago. Those that are unemployed or underemployed are not feeling so robust. But at the high end, the consumer is active again. At the necessity level, they have remained active. … All of that tends to reflect itself in the sales at the shopping centers and the rents we can get. … Retailers are looking to expand and they are willing to pay higher rents. In the last 10 days, there have been stats about employment, foreclosures, housing, but that doesn’t have that much impact on discretionary spending.

2:20: Art Coppola: Retailers almost across the board are looking to expand. It’s hard to imagine a more universal situation of retailers being more in expansion mode. … One of the reasons they talk so much about expanding is that they have put a certain quality collar on where they will expand. … Two or three years ago retailers found that they opened locations in ill-conceived lifestyle centers and those are where they’ve had the most problems.

2:22: Art Coppola: On the ground-up side, we are leasing and will open three years from now a new mall in Goodyear, Ariz., … called Estrella Falls. … We are building a fashion outlet center in North Scottsdale and anticipate it will open two years from now. There will mostly likely another outlet center we are looking to build in the U.S. over the next two or three years. (Also work ongoing at Tyson’s Corner.)

2:24: Art Coppola: Also some redevelopment opportunities. Looking at Walnut Creek. Have a great department store lineup, but really don’t have enough small shop space. We only have about 120,000 square feet of shop space and the market could support a lot more than that. … It could be as dramatic as tearing down buildings and building new ones. … When you add it all up, it’s all very healthy in markets of L.A., San Francisco, New York and D.C. area. … We’re pretty bullish on the opportunities.

2:34: O’Hern: (Responding to question about re-leasing spreads) Looking over trailing 12-month period. In 12 months ending March 31, up 9.5 percent. That’s consistent with the guidance we gave for 2011 where we projected a 10 percent increase in leasing for the year. … At ICSC, leasing team was very positive on the conversations they had the convention. All indications are that it will continue to be a strong year on the leasing front.

2:36: Art Coppola: (Responding to question about retailer trend of shrinking average store sizes.) We are talking to JC Penney about their urban initiative, which could include having stores as small as 30,000 to 70,000 square feet. We did a deal with Walmart for a 60,000 or 70,000-square-foot store. We are trying to help them serve markets they are not presently serving. … The good thing about retailers is that it generally means a new location, which creates a backfill opportunity on the old space.

2:41: Art Coppola: The goal is not so much to sell the bottom 20 percent of your portfolio. The goal is to have 95 percent of your income coming from high-barrier-to-entry or fortress real estate. … That’s really the overriding goal. Dispositions are a tool to get us to that goal.

End of session.

Michael Glimcher, chairman & CEO, Mark Yale, executive vice president, CFO & Treasurer and Melissa Indest, senior vice president, finance and accounting are presenting for Glimcher Realty Trust at NAREIT’s REIT Week.

Refresh page for updates.

Below are notes from the session:

11:48: Glimcher: We’re coming off ICSC convention and it’s an interesting time. … It’s really the first time where we’ve seen some nice pricing pressure and a lack of development. … Retailers are concerned about getting space. Saw positive leasing spreads–expect 5 to 10 percent for the year. We have a sales goal of $400 per square foot goal. … We’re feeling good about the portfolio and that we’re upgrading it. … We’ve got significant lease roll and bringing in higher-quality tenants. … What’s really interesting is not just the Pearl Ridges, Scottsdale or Polaris … we’re seeing across the portfolio leasing activity. We’re seeing inline activity and good anchor activity.

11:50: Glimcher: We’re feeling good about the fact that it’s not just the top of the portfolio. With positive 1 percent NOI, with positive releasing spreads … the fundamentals keep getting better and the performance of the Glimcher portfolio keeps getting better.

11:53: Glimcher: (Responding to question about acquisition environment.) There are several opportunities on the market. There are two buckets. There are large groups of B or B- assets that are properties that are historically what we would be associated with that today don’t fit where we’re going. … The volume of what’s out there, we’re not looking at. … There are a few opportunities—less than a hand—with aggressive pricing (low single-digit cap rates) that might make sense. We could go alone or go with a joint venture. … There are few opportunities and a lot of people looking and you don’t know if the pricing is going to be beyond what you’re comfortable with.

12:04: Glimcher: (Responding to question about leasing activity and internal growth prospects.) In normalized times, we look at our leasing activity—2/3 is new deals and 1/3 renewals. When things were absolute worst, it was 1/3 new deals and 2/3 renewals. This year it is about 50/50. … I think we have a benefit of Polaris Center is on a 10-year anniversary and added an Apple, which will boost sales $50 per square foot overnight and that will benefit the center.

12:05: Yale: In 2008-2009, there was a lot of rent relief that we will now be able to recapture.

12:11: Yale: Our overall leverage—that gets into how you value assets. We are focused on debt-to-EBITDA. We are looking at 7X or 8X and would like to eventually migrate to 7X.

12:13: I think monikers have become much less important. It’s more about having a critical mass of great retail. We are doing a number of box deals in our enclosed regional malls. Part of it is that new power centers aren’t being built. Part of it is (coming from tenants). Part of it is that power center developers don’t want to put money into the box. … So there are a lot of things that are driving it. So we are seeing across the portfolio a lot of box activity—Dick’s Sporting Goods, Ulta are very active. … It’s about where are the people, what are the retailers there and what kind of business can they do?

Session ends. We’re heading into the lunch break now. The remaining live blogs for today will be some of the big regional mall players: Macerich at 2:15 PM, Simon Property Group at 3:00 PM and PREIT at 3:45 PM.

(There was a lot of discussion about the Scottsdale, Ariz., market and Glimcher’s Scottsdale Quarter that did not include in this live blog.)

Craig Macnab, chairman & CEO, Julian Whitehurst, president and COO Kevin Habicht, executive vice president and CFO are presenting for National Retail Properties at NAREIT’s REIT Week.

Refresh page for updates.

Below are notes from the session:

11:05: Macnab: We have high levels of occupancy and very little volatility. In each of the last eight years, our portfolio has been more than 96 percent occupied.

11:07: Macnab: In terms of building value for shareholders, we need to make acquisitions. Every year–other than 2009–we’ve made more than $250 million in acquisitions. The triple-net space is a very large sandbox. We think making that level of acquisitions is very attainable. We have a target of $200 million of acquisitions in 2011. … Over a 15-year lease, our average yield from new acquisitions is 10.25 percent–clearly a wide spread over our cost of capital.

11:11: Macnab: (Are you seeing retailers asking for less space) While we do have some big-box tenants in our portfolio, we are not doing new business with those tenants. With an average of $2.5 million per property, we are doing business with tenants that are right-sizing their properties. With bigger shopping center owners, that is more of an issue. … When we are making acquisitions, by buying properties directly from retailer, there is a level of self selection at work. … Retailers entering 15-year leases have to have a high confidence that they are going to be in that space for a long time. … Given that we’re not in the development business, we’ve got to “catch as catch can.” One of the reasons we have high levels of occupancy is that our underwriting is looking at one property at a time and the tenant at hand has to be confident that they’re going to be in that location for a long period of time.

11:15: Macnab: Internally as management we take great pride that we’re in the real estate business. … Unlike some of our competitors, we have good in-house leasing capability, typically people that did this as big shopping center companies. If we have a vacant property, we lease it up before we sell it. We do not sell vacant properties. … Our strategy is to lease it up and maximize the value.

11:19: Macnab: In 2010, we had about 25 different leasing events—some of those were renewals and on our renewals we renewed at over 100 percent of what the base rent was previously. In terms of releasing vacancy, we didn’t have much of that. In some cases it was done at higher than the vacancy and in a few cases it was done at less than what the previous tenant paid. It was maybe 5. Given that we have 1,200 properties, it was not enough to move the needle.

11:21: Macnab: We have very little secured debt on our properties. Occasionally we buy a property that has existing debt. We have $24 million in secured debt. … We choose to not put property level debt on our assets. … Tenants like that if they want to do something, it’s just one phone call as opposed to having to bring in the secured lender into that conversation.

11:25: Macnab: (asked about the book category) Ten to 12 years ago we were doing some build-to-suit development work with Barnes and Noble. … In general, it’s extremely good real estate and Barnes & Noble is making money in those stores. Having said that, the category is under duress. … The long-term outlook for the book business is not promising. When we look at real estate where Barnes & Noble is located, the market rent is generally more than what they are paying. So we are in good shape. We have three Borders that are going dark. Two of them are going to retailer committees in the next 45 days. In both case we’re talking about A+ national retailers, excellent credits. We’re not putting any capital expenditures or TI dollars. We’re going to do just fine. On the third property, in Richmond, Va., it’s well-located. We have tenant interest, although we don’t have a letter-of-intent yet.

At broader level, with 1,200 properties there’s going to be some level of noise. A year from now might be talking about office supplies. But generally if you have well-located properties with rents at our about market and you have other potential tenants, you’re going to be just fine.

Session ends

President & CEO Dan Hurwitz and David Oakes, CFO and Senior Executive Vice President are presenting for Developers Diversified Realty at NAREIT’s REIT Week.

Refresh page for updates.

Below are notes from the session:

10:11: Hurwitz: As a company, we’re very excited about where we sit today. … As a company, we’ve leased in 2009 and 2010 combined 22 million square feet of space and on track to do another 10 million square feet in 2011. That provides us with considerable organic growth. … We are no longer a company that’s just focused on FFO. We think it’s important and it’s a metric we track very carefully. But NAV growth is really the driver of decisions we make internally. … We’ve sold more than $2B in dispositions since 2007 and most recently we’ve become an acquirer and have made $100M in acquisitions in the last three quarters. … Our primary focus in the past two years has been to reduce the risk profile. Debt duration has been(lengthened) and we have been upgraded by Moody’s, S&P and Fitch.

10:15: Hurwitz: We are extremely optimistic coming out of Las Vegas. Tenant demand is extraordinarily high and clearly outstripping the supply for space. The positive trends that you have seen in our operating metrics … will continue for the foreseeable future.

10:17: Oakes: On leasing side, positive spread the last several quarters. … On new leases, high single digits and could go into double-digits. On renewals, low-to-mid single digits. … Seeing positive trends that are getting better in terms of headline rents and net effective rents.

10:18: Hurwitz: One of biggest surprises we had at RECon is view that reduction of store size is negative. We like smaller store sizes. (Greater efficiencies, higher merchandise turnovers, other positive factors.) … One of the things that is happening is that in our prime portfolio we are 94 percent leased and will be higher at the end of the year. So there’s not a lot of space to lease. So if you have tenants looking to reduce, you can free up space to bring in a new tenant at a higher rate. … The operating metrics, the financial metrics will improve for tenants and it will give us opportunity for organic growth on assets where it otherwise would be muted by the high occupancy rates.

10:25: Hurwitz: (Small shop space) has improved dramatically. … There’s a couple indicators that are very exciting. We met with a number of franchisees and franchisors and business is picking up in that area. Franchisors are offering a lot of financial stability to franchisees, which is important because it’s not easy to get a lot of financing today. … SBA loan volume is up as well. That’s good for us. Franchisee will use that to secure space and inventory. … Have to keep in mind that we’re coming off a low base. Numbers are positive, but we’re not quite back to where we were.

10:28: Hurwitz: It’s fashionable to talk about development, but don’t think we’ll see a lot of it. … We will have in our case some projects that we’ll proceed with where we already own the land. But overall to go out and find new sites to provide growth opportunities for retailers, it’s much wiser to do that in redevelopment play than a development play. … Projects are zoned and entitled. And retailers are being flexible in prototypes to accommodate redevelopment. … We’re better off focusing on redevelopment than development.

10:30: Oakes: We would lean more to duration issue than overall level of debt. The duration was what hit us harder than others. That’s huge focus and continues to be a huge focus. Taken duration out from less than three years to more than four years today. … We will push that out further. Our largest year of maturities is still 2012. … Still have more than $1 billion maturing in 2012. There is a $550 million term loan that is the major focus. … On overall leverage level, debt-to-EBITDA down from more than 10X to low 8X, with plans to bring it down further. … You’ll continue to see continued progress on that metric, largely driven by EBITDA growth.

10:35: Oakes: Are seeing more buyers and more capital being raised and debt being more available, so we will continue down a path to sell our non-prime assets.

10:37: Hurwitz: Seeing a lot more financial engineering coming back to the market. … We think the operational risk is sometimes being ignored. There’s a very good chance that there will be a decline in NOI on some of these assets. … What has encouraged us is that there are more people ignoring the operational risk and focusing on the financial risk and the financial risk is lower today than it’s been in a while.

10:40: Hurwitz: With the exception of Centro, there are no big portfolios. … Where you see people talking about selling lots of assets, it’s a process, not an event. … You have to be realistic about. Realistically, we are going to see many one-off transactions.

10:45: (What makes assets non-prime?) Hurwitz: They are the assets that do not meet our growth aspirations or won’t make the most money going forward. Some of them can be highly leased. Maybe we brought them from 85 percent to 92 percent occupied. But going forward, we may think it’s more likely that it goes back to 85 percent than it rises to 95 percent. … Very often the time it takes to work on non-prime assets is not appropriate for the return. … Retail is not a commodity. It is a build-to-suit business. … If an apartment or office goes empty, there is a big roster of tenants that can take that space. That is not true in retail.

Session ends

Steven B. Tanger, President and CEO, and James Williams, SVP and Controller are presenting for Tanger Outlet Centers at NAREIT’s REIT Week.

Refresh page for updates.

Below are notes from the session:

9:30: Tanger starts off recapping details of a new line of credit that the firm announced yesterday.

9:33: Tanger: Growth strategy includes not only organic growth … but also ground-up developments in the United States and Canada. … (Tanger also recaps the firm’s recent development announcements, including its JV with Peterson Cos. for a project in National Harbor and its joint venture with RioCan REIT to build outlet centers throughout Canada.) … Tanger is pursuing acquisitions. It has entered agreements to purchases three outlets on deals it expects to close in the third quarter. Overall, it has transactions in the works worth $490 million that would expand its portfolio by about 2 million square feet. These deals are not yet finalized, however. (Tanger also runs through updates

9:42: Tanger: On new deals we target 10 to 12 percent cost of occupancy. When leases come for renewal–and you can see large spreads of 49 percent in first quarter–that’s our mark-to-market. We are able to bring in new tenants at market rents.

9:45: Tanger: Outlets are now a distribution channel for virtually every one of brand name manufacturers and retailers we work with. … We work with tenant partners to understand their long-term view. I’m interested in their three-to-five year strategic plan. .. Their plan is to grow outlet distribution along with … regular retail stores. The business model is simple and elegant for our industry. It is brand names sold directly to consumers. It cuts out the middle man and the consumer gets a great deal every day. … If five years ago there were going to open 10 stores, they may have opened three outlets and seven full price. Now they are talking about seven outlets and three full price. … IN our market, we are under-retailed. It’s probably the only sector that is under-retailed. … Our centers at the end of the first quarter were 97 percent occupied. … There is demand for new space. … The tenant partners we’ve worked with are happy to work with us and the one or two other specialists who know how to own and operate an outlet center, which is a different kind of skill than other centers.

9:52: Tanger: I can only worry about what our plans are. It’s relatively easy for someone to announce an outlet center. … If you are to go a year from now or two years ago and look, you’ll see maybe 5 percent to 10 percent of those actually built. … It’s a very specific industry with specific skill sets and with tenants that are major corporations. We are not dealing with mom & pops and entrepreneurs. We’re dealing with NYSE-traded retailers—the largest corporations in the world. … It’s much more difficult to build than it is to announce.

9:55: Tanger: (When asked about the potential for redevelopment.) We’re contrarian. In the time of 2005 to 2007, when everybody was building on speculation and money was cheap and they were leveraging, we did not. We could not make the returns we wanted. We put $60 million into portfolio with capital improvements, renovation and redevelopment. … We’ve already made that investment. We don’t have to do that again. … We have no plans to do a take down or major renovation. Our portfolio looks great. We’re way ahead of everyone.

10:00: Tanger: 2012 is an election year. All bets are off. Interest rates—because of the election—will stay stable and fairly low. I’m hoping people will go back to work and Congress will not overregulate and strangle the growth that’s going on now. We certainly feel that the markets will remain strong. There is virtually no new construction in our industry. The outlet center industry only has 150 quality outlet centers with 50 million square feet. … Compare that with 176 million square feet of total retail in Chicago market alone. … There is room for growth. … We’re all excited about the future. We’re a growth company. … We feel these are non-replaceable, world-class assets that—would they come to market—there would be a feeding frenzy.

Session ends.