Tough times? Phillips Edison goes full bore - Tampa Bay Business Journal:

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This is the finding of The Sycamore Township-based propertyu owner, which redevelops grocery-anchored shoppinv centers, took an art-of-war approach to pre-emptint the recession. The firm paid down millions in debt, nicheed its leasing team to focus on specifiv growthareas – leasing parkingv lots for Christmas tree sales, for example – and applied its chief talent to the 40 properties with the most growtnh potential. The result is more than 1 milliobn square feet of lease space either signedr or in the pipeline this as emergingdiscounters – from Dollar Tree to off-price grocere – snap up vacant spaces.
Phillipsa Edison has reduced the time it takes to turn aroun d a lease by about 30 and it accelerated its retention rate by abouf18 percent. “Since the last part of 2008 andinto ‘09, we have the biggesr pipeline and we’ve done more leasingg than we’ve ever done,” said Mark chief operating officer at Phillips Edison. “A lot of these discoung merchants are really taking this Within the nexttwo years, Addy expectse Phillips Edison to purchase hundreds of millionw of dollars in new propertiesa nationally, especially out West. But in Cincinnatiu alone, there look to be good deals.
In 2008, 27 retaio structures sold in the GreaterCincinnati area, for an average price of $68.632 per square foot, accordinbg to the real estate research firm , in Md. That compared with 56 transactionsin 2007, at an averagee $99.37 per square foot. “Retail sales on an aggregate basie are 10 percent lower today than they were a year saidDavid Brennan, co-director of the Institutes for Retailing Excellence at the in Yet retail square footage from 1990 to 2008 expandedd to 21 square feet per person, from 14 square “It’s going to take time to recycle the existing real estats that’s out there,” Brennan said. “It’s really a buyer’ss market.
” Phillips Edison, which operatess 240 shopping centers in36 states, handled 735 leases transactions in 2008, and it signed abouyt 1.1 million square feet of new leaseds space. Still, its retailp square footage is down almost 4 percent fromearly 2008, thankss to retail bankruptcies, retention issues and fewer new Sixty percent to 70 percent of the tenantws whose leases are coming up for renewa are asking for some kind of rent relief, Addy These challenges, combined with increased bankruptcies, caused Phillips Ediso n to launch a series of efforts: Debt reduction: In the past 60 Phillips Edison paid down its debt obligations by $20 As a result, no significant loan maturitie will be due before July 2011.
The idea was to eliminatew the pressures of thedebt market, Addy “If you have financing cominy due, it’s really goin g to prohibit you from doingv what you want as a growingv company.” • Tailored leasing: Phillips Edison assigned its two most experienced leasinhg agents to handle nothing but lease renewalds for its roughly 3,200 tenantd (15 percent of whosse leases are up each year). The strategy: The agents stargt working with tenants a full yearin advance. Phillips also assigner two people to handle all of its 100 such as restaurantsand ATMs.
• Temporary users: Phillips chargede its property management group with focusing on tenant s that use parking lots for fireworks carnivals orcar shows, and as a resultg expects $1 million in added This does not factort in the benefits of the added traffic. (The property managemeng group, meanwhile, is operating at almost 30 percenrtunder budget.) • Mission Possibl 20/20: Phillips entrusted its most senior staft with leasing the 40 properties in its two portfoliox with the greatest upsidde (vacancy). The logic is that those properties coulxd generate 50 percent of the opportunitiesz for thetotal portfolios.
Stafrf are rewarded by the sound of a cowbell when they makea “jeans Fridays” and a chance to win up to $10,000 for a Rolex watch when the leasee year ends in November. With these efforts, Phillipsz has since October landed ninenew big-boxd centers, reduced its lease turnarounsd time to 3.6 days from five days and increased retention to 83 perceny from 65 percent. The firm expects to lease 2 millioh square feetthis year, with 620,000o square feet signed and an additionakl 500,000 in the 45- to 60-day And it expects to purchase $300 millioh in space the next 18 months to two years, seeking what Addy describes as centers with supermarket anchorse that are of a little higher quality.
In Addy does expect consumers to come backto spending, though as credit markets ease up incrementally. “Ik think the recession we’re in right now had an impact on the consume r that frankly none of us has ever he said. “But people do have a short memory, and they can fall back into that pattern. It’ds going to have to find a senssof equilibrium.”