PREIT signed some nontraditional tenants into its malls during the second quarter. Construction is underway for Aldi to open at Massachusetts’ Dartmouth Mall in the third quarter. A self-storage facility will open during the first quarter in previously unused, below-grade space at the Mall at Prince George’s in Hyattsville, Maryland. Family-focused entertainment destination Tilt Studios will replace the JCPenney at Magnolia Mall in Florence, South Carolina, in the third quarter. Cooper University Health Care will open an outpatient location in the former Sears in New Jersey’s Moorestown Mall, and Turn 7, which sells overstocked merchandise from online channels at a discount, will open a store in the former Lord & Taylor there. PREIT also executed a rezoning agreement to allow 1,065 multifamily units and a hotel at the mall, which is pictured at top.

Regency Centers is on the hunt for existing properties and new sites

Regency Centers is going on the offense when it comes to capital strategy, president and CEO Lisa Palmer said on the REIT’s second-quarter earnings call. During the quarter, the firm bought joint-venture partner USAA’s 80% interest in their seven-property, supermarket-anchored portfolio for $178 million, including the assumption of $84 million in outstanding mortgage debt.

The firm has a strong balance sheet, Palmer said, including a $1.2 billion revolving credit facility and access to low-cost capital that can support further deals. The company was able to reduce the interest rate on its revolving credit facility by 1 basis point because it met certain sustainability targets, Palmer added.

During the second quarter, Regency entered into forward sale agreements in connection with its ATM, or at-the-market, program to sell an aggregate of 2.3 million shares of common stock at an average gross price of $64.59 per share. That raised $148 million the REIT will use in the third quarter to help pay for the USAA deal, Palmer said.

Regency also will move some planned developments forward, said executive vice president and COO Jim Thompson. Regency’s in-process development and redevelopment projects have an estimated net project cost of $346 million and an estimated remaining cost to complete of $173 million. “As the world recovers, there is an appetite from the grocery sector for growth,” he said. “We’re in tune with that and working hard to locate sites. Our shadow pipeline is building nicely.”

Urban Edge says demand from investors and tenants is surging

Urban Edge Properties’ leasing pipeline is the largest it’s ever been, with more than 1 million square feet of space under negotiation. The most active categories include grocers, discounters, off-price retailers, home furnishings, health and beauty, quick-service restaurants and medical users, according to chairman and CEO Jeff Olson. He said the company now hopes its net operating income will reach a pre-COVID-19 level in late 2022.

The company also sees strong demand for retail properties as it markets some centers for sale, he added. “It’s easy to see why investors are attracted to the sector, where one can generate over an 8% cash-on-cash return buying an asset at a 5% to 5.5% cap rate and obtaining a 3% to 3.5%, 10-year mortgage leveraged at 65%,” he said on the company’s second-quarter earnings call. “This is especially attractive for yield-starved investors, considering the sub-4% cap rates we are seeing in the industrial and multifamily sectors.” Urban Edge has sold about $40 million worth of assets year to date at a cap rate of approximately 6%.

It plans to convert a retail center in Lodi, New Jersey, to industrial in 2022, the first time the company has converted a retail property to industrial, Olson said. “Throughout many submarkets in the New York metro area, industrial rents have increased to levels that equal or even exceed big-box retail rents, creating an opportunity for us to leverage our existing assets, infrastructure and retailer relationships.”

Foot traffic is on the upswing at Phillips Edison & Co. properties

Phillips Edison & Co. sees signs of a full recovery, according to chairman and CEO Jeff Edison. “Foot traffic at our centers during June 2021 totaled 102% of average monthly levels during 2019, and our second-quarter, same-center NOI increased 4.5% when compared to the second quarter of 2019. During the quarter, collections were 98%, combined new and renewal leasing spreads were 10.4% and leasing demand continues to be favorable.” The REIT’s July 15 IPO raised $547 million. It used a portion of the proceeds to repay its $375 million term loan that was set to mature in 2022.

Seritage adds office and residential

Seritage Growth Properties is beefing up its nonretail business. It’s negotiating over 300,000 square feet of new leases, over one-third of which are for uses other than retail, such as office, said president and CEO Andrea Olshan. “During the second quarter, we were keenly focused on activating our office/life sciences and residential portfolios by advancing entitlements and joint-venture partnership discussions for these sites.” Seritage is a REIT formed to own and redevelop former Sears Holdings properties in July 2015.