Stiff Competition for Shopping Center Acquisitions, CEO Says

Dennis Gershenson, president and CEO of Ramco- Gershenson Properties Trust (NYSE: RPT), joined REIT.com for a CEO Spotlight video interview at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT at the San Francisco Marriott Marquis.

Gershenson provided an overview of the acquisition market in the shopping center industry.

“It’s very interesting, because we were in a very frothy market in the first five months of 2013,” he said. “When Mr. Bernanke came out with his prognostication that things might change, the market just crushed.  It took most of the summer for both the buyers and sellers to feel that there was some normalcy coming back into the marketplace.  Now, here we are in the fall (Editor’s Note: video was recorded in November 2013), and we’re seeing the high quality shopping centers, as well as the B shopping centers, back on the market. What we find is, that as far as the highest quality assets are concerned, the institutional buyers are still paying approximately the same cap rates that they were paying before, and there is a tremendous amount of competition for those.”

Gershenson described his company’s involvement in in development and redevelopment activities.

“Development takes one of two forms,” he said.” Either it’s legacy property that we purchased in the go-go days of 2004 to 2007, and we’re now redeveloping those properties. We will not be greenfield developers going forward, but what we have been doing is acquiring land adjacent to our most recent acquisitions – that gives us the opportunity to expand on a very successful asset.”

Gershenson also talked about his anchor tenants, and what changes he is seeing in terms of occupancy.

“We’re very focused on improving the quality of our anchor tenants, as well as the whole spectrum of retailers in our shopping centers,” he said. “We have filed our shopping centers where we had vacancies, either that existed before the debacle of the recession, or as a result hereof, with high-quality, national retailers.  One of the exciting things about bricks and mortar retailing, is it’s always refreshing itself. So, with the problems that Circuit City and Linen’s had, along comes retailers like BuyBuy Baby.”