STIFEL - Retail REIT Comp Sheets 8/29/16

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FULL REPORT

 

REITs were down 0.44% last week, but are up 12.9% YTD. Retail REITs are slightly outperforming the REIT index YTD, up 13.1%, as regional malls are up 11.6% and shopping centers are up 15.5%.


The REIT sector is trading at a 1.8% premium to NAV. Regional malls are attractively priced to the REIT sector, in our view, trading at an 10.5% discount to NAV, while shopping centers are trading at a 5% premium to NAV.

 
  • Forest City Realty (FCEA, $23.41, Not Covered) announced the Board of Directors has authorized a process to review strategic alternatives for its retail portfolio, which consists of ownership interests in 14 regional malls throughout the country and 19 specialty retail centers located primarily in New York City. FCEA expects to conclude the review process by 1Q17. If FCEA does a retail portfolio transaction, it would redeploy the proceeds into their apartment and office assets that better align with their focus on urban, mixed-use assets. A few of the mall and shopping center REITs could be interested in some of the assets, but FCEA owns less than 100% in many of their retail centers and doesn’t manage some of the centers, which could make them less appealing to the public REITs.
 
  • Long-time Equity One (EQY, $30.88, Hold) President, Thomas Caputo, is departing the company on December 31, 2016 when his employment agreement expires. Mr. Caputo has entered into a consulting agreement with EQY for January 1, 2017 through December 31, 2017 to provide consulting services on acquisitions and other strategic opportunities. Members of EQY’s management team will assume Mr. Caputo’s responsibilities upon his departure.
 
  • Taubman Centers (TCO, $77.28, Not Covered) reopened International Market Place in Waikiki on August 25. The 345k sf open-air center is anchored by Hawaii’s first Saks Fifth Avenue. Nearly 50% of the retailers and restaurants at the center are unique to O’ahu. International Market Place was redeveloped through a partnership between TCO and CoastWood Capital Group in conjunction with the Queen Emma Land Company.
 
  • WP Glimcher (WPG, $13.55, Not Covered) completed the sale of Knoxville Center for $10.12 million. Knoxville Center was identified as a non-core asset and anchored by Belk, Dillard’s, JC Penney, Regal Cinema, Rush Fitness Center, and Sears. WPG received $3.85 million at closing and financed the remainder of the sale price with a $6.2 million loan secured by the property. The term of the loan is for one-year loan with one six-month extension option at an interest rate of 5.5%. WPG used the sale proceeds to reduce borrowings on its credit facility.
 

Performance is as of 8/26/16. Equity pricing is intraday, 8/30/16.