Leasing agents for open-air REITs were busy signing up new small-shop tenants in the third quarter. Malls had a tougher time processing a series of bankruptcies from the likes of Destination Maternity and Forever 21.
• Brixmor same-center NOI climbed by 4.4 percent in the third quarter. Average rental rates jumped by 13 percent, and small-shop occupancy increased by 20 basis points. The landlord, which owns roughly 400 retail centers, for an aggregate 72 million square feet, is seeing healthy demand for its shuttered DressBarn stores, executives said. About 60 percent of the REIT’s vacant DressBarn stores have already been refilled by such tenants as Five Below and Pet Supplies Plus.
• CBL Properties reported a third-quarter same-center NOI decline of 5.9 percent across its 108-property portfolio. Sales portfoliowide increased by 3.2 percent, which brought rolling twelve-month sales to $383 per square foot, the firm says. “This trend should provide a positive backdrop for us during the holiday season as well as on future lease negotiations,” CEO Stephen D. Lebovitz said in a press release.
• Kimco Realty posted same-center NOI growth of 2.2 percent for the third quarter across its 420-property, 74 million-square-foot portfolio of shopping centers. “The demand for space is being led by off-price, exemplified by Old Navy,” said CEO Conor C. Flynn on an earnings call. “Beyond the off-price category, increasing demand from health, wellness, and medical products and services continues to be a growing category, both in our sector and our portfolio.” Small-shop occupancy stands at 89.9 percent, on the back of the bankruptcy-based store closings of Avenues, Charming Charlie and Payless, which combined for a reduction of 55 basis points in small-shop occupancy. Average rental rates were up by 8.1 percent.
• Macerich same-center NOI grew by 0.2 percent in the third quarter, while average rental rates rose by 8.3 percent. Tenant sales across the company’s nearly 50 regional shopping centers ended the quarter at $800 per square foot. This represents a 13.2 percent increase on a year-over-year basis.
• RPT reported third-quarter same-center NOI growth of 4.7 percent and average rental-rate growth of 3.5 percent across its roughly 50 retail properties.
• RPAI said average rental growth of 10.8 percent helped drive same-center NOI growth of 2.3 percent in the third quarter. The Oak Brook, Ill.–based REIT made progress filling vacant storefronts with more-profitable tenants across its roughly 100 properties, according to President and COO Shane Garrison. “We opened our sixth Trader Joe's, at The Shoppes of Union Hill, in Denville, New Jersey, last week — backfilling a Pier 1 location at a very compelling spread,” he told analysts. “We also recently signed our fourth Lululemon location, at Main Street Promenade, in downtown Naperville, Illinois, replacing a J.Crew there at a positive double-digit spread.”
• Regency Centers made strong progress leasing small-shop space at its open-air centers in the third quarter, but the bankruptcy filing of upscale department-store chain Barneys New York caused income growth to slow for the Jacksonville, Fla.–based REIT. Same-center NOI was up by 2.1 percent, thanks in part to strong small-shop leasing across the 422-property, 57 million-square-foot portfolio. Average rental rates on leases signed during the quarter were up by an average 14 percent. The REIT’s quarterly income took a 50-basis-point hit from the bankruptcy filing of Barneys, executives said. Regency owns the retailer’s five-level, 55,000-square-foot store in New York City's Chelsea neighborhood, the only one of the stores to remain open after the retailer's filing in August. The firm acquired the property when it bought REIT Equity One in 2016. Authentic Brands, which won Barneys at auction with a bid of $271 million, said it plans to license the Barneys brand to Hudson’s Bay–owned Saks Fifth Avenue and to open Barneys-branded shops in Saks locations across the U.S. and Canada.
“We are evaluating and pursuing alternative redevelopment plans, and we feel good about the prospects for replacing the rent at this high-quality location, although this would certainly come with downtime and capital requirement,” President Lisa Palmer told analysts.
• Simon same-center NOI grew by 1.6 percent in the third quarter, and average rental rates grew by 22.2 percent. Retailer sales per square foot came to $680, up by 4.5 percent from the previous quarter.
• Site Centers same-center NOI grew by 1.6 percent in the third quarter, while average rental rates rose by 13.9 percent for new tenants and by 4.6 percent for lease renewals.
• Tanger Outlets same-center NOI declined by 80 basis points across its nearly 40 properties in the third quarter, thanks in part to a glut of tenant bankruptcies. Through the end of the quarter, the landlord recaptured approximately 195,000 square feet related to bankruptcies and brandwide restructuring by retailers, including 6,000 square feet in the third quarter itself. Destination Maternity, DressBarn, Forever 21 and Kitchen Collection made up the bulk of the closures. The firm's average rental rates increased by 2.5 percent. The leasing team will get creative to fill space, CEO Steven Tanger told investors. “Our leasing strategy targets a mix of new and existing permanent tenants, as well as new tenants that are testing the outlet strategy with pop-up and temporary stores and [which] may become long-term tenants,” he said. “This means we are being more creative by allowing tenants to test a multichannel approach that works for them, while also maintaining a desirable presentation to our customers.”
By Brannon Boswell