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Shopping Center Vacancy Rates Rise Reuters 10-05 The vacancy rate for U.S. neighborhood shopping centers inched up in the third quarter, and rents posted their weakest rise in four years, reflecting retailers' concerns about the economy, real estate research firm Reis said. "There's uncertainty in the market about how consumers will react to the changing market conditions, how they'll react to the slowing market," Reis Chief Economist Sam Chandan said. "Retail sales are slower than they have been over the course of the cycle and that's certainly a concern. For the larger national chains and regional malls, it has yet to translate into a significant shift in the occupancy rate," he added. The national vacancy rate for local shopping centers rose to 7.4% in Q3-07 from 7.3% in Q2-07, according to the report released on Friday. During the quarter, the growth rate of effective rent -- the amount paid net of free months and tenant improvements -- fell to 0.4% from 0.8% the prior quarter, its weakest rise since Q2-03. That could reflect a downward trend or a temporary unwillingness among retailers to make commitments during a quarter in which a seizure in the credit and mortgage markets roiled the economy. "I think a lot of people were sitting on their hands delaying decisions as long as they could," said Joseph Betlej, vice president and portfolio manager, real estate securities, at Advantus Capital Management. "You had a slowdown in leasing transaction activity. Whether that bounces back or continues at this muted pace is the question." Regional malls also saw the pace of rent growth slow, rising 0.7% in the third quarter to $40.55 per square foot, compared with the second quarter's 0.9 percent increase. But the difficulty in obtaining approvals and the high cost of building large malls kept the vacancy rate low at 5.5%, compared with 5.6% the prior quarter. Q3 Earnings Releases AKR reported Q3-07 FFO of $13.1 million [$0.39/share] (which includes an extraordinary gain of $794 thousand related to its investment in Albertson’s) compared to $10.0 million [$0.30/share] in Q3-06. Net property operating income was $15.250 compared to $15.083 million in Q3-06. SSNOI increased 2.2%. Acadia realized an average rent increase of 71% on a cash basis on new leases totaling 39,000 square feet representing 0.8% of the portfolio’s gross leasable area. Renewal leases totaling 37,000 square feet had an average rent increase of 9% on a cash basis. BFS reported Q3-07 FFO of $16.481 million [$0.71/share] compared to $14.791 million [$0.65/share] in Q3-06. Same property operating income in the shopping center portfolio increased 1.8%. Same property operating income in the office portfolio grew 0.9%. CDR reported Q3-07 FFO of $14.2 million [$0.31/share compared to $10.7 million [$0.30/share] in Q3-06. SSNOI increased 3.5% to $22.6 million as compared to $21.8 million in Q3-06. CDR signed 21 renewal leases aggregating approximately 55,000 sq. ft. with an average increase in base rents of 7.8%, and signed 11 new leases aggregating approximately 31,000 sq. ft. with an average base rent of $17.04 per sq. ft. DDR reported Q3-07 FFO of $99.5 million [$0.80/share] as compared to $91.7 million [$0.83/share] for Q3-06. Excluding transactional activity relating to merchant building gains, land sale gains and joint venture promoted income aggregating $4.2 million in Q3-07 and $16.8 million in Q3-06, FFO per share increased approximately 12.8%. SSNOI for the nine-month period increased 2.3%. On a cash basis, base rental rates increased 41.8% on 179 new leases, 7.4% on 299 renewals and 13.8% overall. DDR had $1.013 billion wholly-owned and consolidated JV developments currently in progress and sold eight shopping center properties. EPR reported Q3-07 FFO of $29.6 million [$1.10/share] compared to $25.5 million [$0.95/share] in Q3-06. During the quarter EPR purchased the land and winery facilities associated with four vineyards under long-term triple-net leases for $41.5 million and completed development of a megaplex theatre property for a total development cost of $9.7 million. EPR had two theatre development projects under construction expected to have a total of 30 screens and their development costs are expected to be $25.6 million. EQY reported Q3-07 FFO of $22.2 million [$0.30/share] compared to $25.5 million [$0.35/share] in Q3-06. Q3-07 included $2.9 million [$0.04/share] of a non-cash impairment loss compared on two properties that are part of a pool of assets identified for sale. SSNOI growth excluding redevelopment was 4.1%. Rents on 34 new leases [219,718 square feet] were 41.5% higher than prior rents on a GAAP basis and 33.1% higher than prior rents on a cash basis. Rents on renewals of 85 leases [144,270 square feet] were 30.5% higher than prior rents on a GAAP basis and 18.3% higher than prior rents on a cash basis. EQY had 29 leases [162,085 square feet] subject to tenant renewal options where the leases were 14.4% higher than prior rents on a GAAP basis and 8.1% higher than prior rents on a cash basis.At the end of Q3-07 EQY had three developments at a gross cost of $58.5 million and five redevelopments at a gross cost of $32.8 million underway. FRT reported Q3-07 FFO of $52.5 million [$0.92/share] compared to $45.8 million [$0.85/share] in Q3-06. SSNOI increased 4.5% including redevelopments and expansions, and 3.7% excluding redevelopments and expansions. On a GAAP basis (including the impact of straight-line rents) rent increases per square foot for comparable retail space averaged 31%. As of September 30, 2007, FRT's average contractual, cash basis minimum rent for retail and commercial space in its portfolio is $19.73 per square foot. IRC reported Q3-07 FFO of $22.8 million [$0.35/share] compared to $23.2 million [$0.34/share] in Q3-06. There was a decrease in the number of shares outstanding in 2007, a result of the repurchase of approximately 2.8 million shares in Q4-06. Average base rents for new and renewal leases up 25.8% and 24.8%, respectively, over expiring rates. SSNOI (excluding the impact of straight-line and intangible lease rent) was $29.6 million for Q3-07 and $88.0 million year to date, essentially level with the same periods prior year. KIM reported Q3-07 FFO of $146.6 million [$0.57/share] compared to $138.6 million [$0.56/share] in Q3-06. SSNOI growth was 4.2%. On new leases signed for the same space in U.S., the average increase in contractual base rent was approximately 17.1% on a cash basis for the quarter. KIM has more than 55 active development and redevelopment projects for its own portfolio as well as approximately 30 merchant development projects. Total net cost for these projects is estimated at more than $2.0 billion at completion. KRG reported Q3-07 FFO of $12.0 million [$0.32/share] compared to $11.4 million [$0.30/share] in Q3-06. On a cash basis, base rental rates increased 23% on new leases and 7% on renewals. KRG owned interests in nine retail properties in the current development pipeline that are expected to total approximately 1.3 million square feet. Approximately 580,000 square feet are anticipated to be owned directly KRG or JVs. The total estimated cost (KRG and JV) of these projects is $167.2 million, of which approximately $133 million had been incurred as of September 30, 2007. O reported Q3-07 FFO of $46.6 million [$0.47/share] as compared to $38.0 million [$0.43/share] for Q3-06. FFO per share before Crest’s contribution was $0.45/share as compared to $0.42/share for Q3-06. Same store rents increased 1.4% to $52.28 million. During Q3-07 O invested $314.6 million in 218 new properties with an initial average lease rate of 8.6%. REG reported Q3-07 FFO of $67.8 million [$0.97/share] compared to $69.5 million [$1.00/share] in Q3-06. SSNOI growth was 2.3% for the quarter and 2.9% year to date. Rental rate growth on a cash basis was 13.7% for the quarter and 13.8% year to date. During the quarter, REG started three new development projects representing $22.2 million of estimated costs. These starts have an expected NOI yield of 11.0% on net development costs after partner participation. RPT reported Q3-07 FFO of $14.1 million [$0.66/share] compared with $13.5 million [$0.63/share] for Q3-06. During the quarter, for both core and JV properties, 20 new non-anchor stores opened in 63,134 square feet, at an average base rent of $18.77/square foot, an increase of 19.5% over portfolio average rents. In addition, 21 non-anchor leases were renewed impacting 83,947 square feet, at an average base rent of $14.95/square foot, an increase of 11.6% over prior rental rates. SSNOI increased 2.3%. WRI reported Q3-07 FFO of $68.627 million [$0.79/share] compared to $64.997 million [$0.72/share] in Q3-06. During Q3-07 WRI completed 329 new leases and renewals, totaling 1.9 million square feet with an average rental rate increase of 14.1% on a same space GAAP basis and 9.2% on a cash basis. SSNOI grew 2.4%. The retail properties grew 2.0% while the industrial properties were up 7.3%. WRI currently has 37 properties in various stages of development in which they have invested $386 million to date. At completion total investment is estimated to be $820 million. WRI also reported that it has 18 development sites under contract that have a projected final investment of $370 million. Acquisitions totaled $379 million. CBL reported Q3-07 FFO of $49.696 million [$0.76/share] compared with $50.914 million [$0.78/share] in Q3-06. The decrease was due to the non-cash income tax provision and adjustments to the depreciation. SSNOI increased 3.9% excluding lease termination fees. GGP reported Q3-07 'core' [for the mall properties] FFO of $237.8 million [$0.80/share] as compared to $186.8 million [$0.63/share] in Q3-06. Total FFO was $245.6 million [$0.83/share] compared to $191.8 million [$0.65/share] in Q3-06. SSNOI from consolidated properties increased by 4.9%. SSNOI from unconsolidated properties increased by 10.1%. [GGP restated FFO after a sizeable legal jugdement went against it.] MAC reported Q3-07 FFO of $110.985 million [$1.15/share] compared to $86.595 million [$.98/share] in Q3-06. SSNOI $178.235 million compared to $174.036 million in Q3-06 - up 2.41%. During the quarter, MAC signed 356,000 square feet of specialty store leases at average initial rents of $43.77 per square foot. Starting base rent on new lease signings was 27.1% higher than the expiring base rent. PEI reported Q3-07 FFO of $47.7 million [$1.16/share] compared to $32.5 million [$0.80/share] in Q3-06. Q3-07's FFO included a $13.3 million [$0.32/share] benefit from the redemption of its Preferred Shares. SSNOI increased $0.4 million to $72.3 million, an increase of 0.5% from Q3-06. SPG reported Q3-07 FFO of $418.7 million [$1.46/share] compared to $369.5 million [$1.30/share] in Q3-06. Average Rent per Sq. Ft. at Regional Malls was $36.92 vs. $35.23 in Q3-06 - a 4.8% increase; Premium Outlet Centers $25.45 vs. $24.05 in Q3-06 - a 5.8% increase' and at Community/Lifestyle Centers $12.15 vs. $11.69 in Q3-06 - a 3.9% increase. Comparable regional mall NOI growth was 5.6% while the premium outlet portfolio NOI grew at 9.4%. SPG reproted that releasing spreads remained very strong. The mall portfolio is $8.85 per square foot, representing a 23% increase. Releasing spreads for the premium outlet portfolio was $7.53, representing a 31.8% increase. SPG opened three new international centers during Q3-07 in Japan, Rome and Milan Italy. Construction continues on six new U.S. projects, two community lifestyle centers, three premium outlet centers, and a 950,000 square foot open air regional center, as well as two shopping centers in Italy and five in China. TCO reported Q3-07 FFO of $36.205 million [$0.68/share] compared to $31.445 million [$0.57/share] in Q3-06. TCO had 9.8% 'core' NOI growth. Year-to-date core NOI growth was 6.2% including lease cancellation fees and 6.9% excluding them. TCO is forecasting for the full year a core NOI growth of 5.5%, excluding lease cancellation fees. average rents for the portfolio continued to climb steadily and were up 2.6% for Q3-07 Year-to-date, rents are up 1.9%, and TCO forecasts that for the year rents will be up at least 2%. Rating Changes & Dividend Increases On 12-06 AKR declared a dividend of $0.21/share payable on January 15, 2008 to the holders of record as of December 31, 2007. On 12-04 BFS declared a dividend of $0.47/share to be paid January 31, 2008 to holders of record on January 17, 2008. On 11-19 DDR declared a dividend of $0.66/share payable 1-08-08 to shareholders of record at the close of business on 12-21-07. On 12-07 GRT declared a dividend of $0.4808/share payable on January 15, 2008 to shareholders of record on December 31, 2007. On 12-11 TCO declared an increased dividend of $0.415/share payable January 22, 2008 to shareholders of record on December 31, 2007. On 12-12 O declared a dividend of $$0.13675/share from $0.136125/share pauable monthly on the 15th to shareholders of record on 2nd. On 12-13 RPT declared a dividend of $0.4625/share payable on January 2, 2008, to shareholders of record on December 20, 2007. On 12-14 EPR declared a dividend of $0.76/share payable January 15, 2008 to shareholders of record as of December 31, 2007. On 12-17 KIM declared a dividend of $0.40/share payable on January 15, 2008 to shareholders of record on January 2, 2008 representing an ex-dividend date of December 28, 2007. On 12-21 AKR declared a special dividend [in connection with its disposition initiatives] of $0.2225/share, payable on January 15, 2008 to the holders of record as of December 31, 2007. On 10-08 Deutsche Securities Downgraded KIM from Buy to Hold. On 10-11 Ferris Baker Watts Downgraded BFS from Buy to Neutral. On 10-29 Deutsche Securities Downgraded DDR from Buy to Hold. On 10-04 GGP declared a dividend of $0.50 per share, payable October 31, 2007, to common stockholders of record as of October 17, 2007. On 10-26 MAC declared a dividend of $0.80 per share to stockholders of record on November 15, 2007 - payable on December 7, 2007. On 11-06 CBL declared a dividend of $0.545 payable on Jan. 15 to shareholders of record on Dec. 28. On 10-09 EPR priced a public offering of 1,400,000 newly issued common shares of beneficial interest. The offering is expected to close on October 15, 2007. On 11-30 EQY declared a dividend of $0.30/share payable on December 31, 2007 to stockholders of record on December 14, 2007. On 12-04 BFS declared a dividend of $0.47/share to be paid January 31, 2008 to holders of record on January 17, 2008. On 12-06 AKR declared a dividend of $0.21/share payable on January 15, 2008 to the holders of record as of December 31, 2007. NOTE #1: This page is ment to be a supplement for those already getting monthly sector updates from another source. Data entry errors sporadically happen here. There are metrics like SSNOI growth, debt/market cap, agency ratings on debt, organic growth in process to total market cap, and other ratios that should not be ignored but are not covered here. NOTE #2: This site's operator owns shares in DDR, GGP, KIM, and O - and this could distort the coverage of those REITs. Home Page Previous REIT Update Top Sites |