Shopping center REITs see strong 1Q leasing

DDR Corp., for one, reported 8.6 percent rental rate growth and 2.6 percent same-store NOI growth for the quarter. “This positive momentum was driven by rent commencements on a range of previously vacant anchor spaces and continued small-shop leasing progress,” said CEO David Lukes on an earnings call. The bankruptcy of tenant Toys ‘R’ Us will enable DDR to recapture control of retail space and parking at some of its best assets, facilitating redevelopment, Lukes said. DDR has already acquired one of the 21 Toys ‘R’ Us stores in its portfolio and has its eye on others.

The REIT is spinning off a portfolio of some 50 assets, consisting of 38 U.S. retail centers and the entirety of its Puerto Rico portfolio, into a separate publicly traded REIT called RVI. The firm expects to complete the spinoff by July. 

San Diego-based Retail Opportunity Investments Corp., which owns 91 West Coast shopping centers, reported a 2.4 percent increase in same-center NOI, thanks in part to rental rate growth of 21.6 percent on new leases and of 8.3 percent on renewals. “Demand continues to be driven by a broad base of retailers, most notably in the services, fitness and restaurant sectors, where there continues to be an abundance of new concepts being introduced, particularly unique boutique-like concepts that are tailored for a specific targeted consumer,” said COO Richard Shoebel. “By and large, these focused new concepts are proving to be very successful across our markets. We're also seeing a growing influx of retailers from other parts of the U.S., as well as some from Canada.”

At Weingarten Realty, same-property NOI was up by 2 percent, while rental rates grew by 5.8 percent. The Houston-based REIT’s portfolio includes four Toys 'R' Us stores marked for closure.

“We feel very good about the prospects of re-leasing all the spaces, and I think [we] will profit long-term from the closings,” said COO Johnny Hendrix. “The leasing team is preparing for ICSC RECon meetings in May, and we are excited about the demand for meetings and the interest in our centers from retailers.” The firm is talking to a variety of expanding retailers: discount clothing stores, banks, quick-service restaurants, full-service restaurants, shoe stores, supermarkets, pet stores, home furnishings stores, linen stores and fitness facilities.