Tough times? Phillips Edison goes full bore - Kansas City Business Journal:

adamovaichive.blogspot.com
This is the finding of The Sycamore Township-based property owner, which redevelops grocery-anchored shopping took an art-of-war approach to pre-emptin g the recession. The firm paid down millions in niched its leasing team to focus on specifi c growthareas – leasing parking lots for Christmas tree for example – and applied its chief talengt to the 40 properties with the most growth The result is more than 1 milliobn square feet of lease space either signed or in the pipelinee this year, as emerging discountere – from Dollar Tree to off-price grocers – snap up vacant Phillips Edison has reduced the time it takes to turn arounde a lease by about 30 percent, and it accelerated its retentioj rate by about 18 “Since the last part of 2008 and into ‘09, we have the bigges pipeline and we’ve done more leasinhg than we’ve ever done,” said Mark chief operating officer at Phillips Edison.
“A lot of theswe discount merchants are really taking this Within the nexttwo years, Addy expects Phillipws Edison to purchase hundreds of millions of dollarsa in new properties nationally, especiallh out West. But in Cincinnati alone, therwe look to be good deals. In 27 retail structures sold in the GreatefrCincinnati area, for an average pric of $68.63 per square foot, according to the real estatwe research firm , in Bethesda, Md. That compareds with 56 transactionsin 2007, at an averaged $99.37 per square foot.
“Retail sales on an aggregatr basis are 10 percent lowert today than they were ayear ago,” said Davids Brennan, co-director of the Institute for Retailiny Excellence at the in Minnesota. Yet retail square footage from 1990 to 2008 expanded to 21 square feet per from 14square feet. “It’s going to take time to recyclee the existing realestate that’s out Brennan said. “It’s reall a buyer’s market.” Phillips Edison, which operatesz 240 shopping centers in36 states, handled 735 lease transactionx in 2008, and it signedx about 1.1 million square feet of new leasecd space.
Still, its retail square footage is down almost 4 percentf fromearly 2008, thanks to retail bankruptcies, retention issuese and fewer new stores. Sixty percent to 70 percent of the tenants whose leases are cominfg up for renewal are asking for some kind of rent Addy said. These challenges, combined with increasecd bankruptcies, caused Phillips Edison to launcyh a seriesof efforts: • Debt reduction: In the past 60 Phillips Edison paid down its debt obligations by $20 As a result, no significant loan maturities will be due before July 2011.
The idea was to eliminatre the pressures of thedebt market, Addy “If you have financing coming due, it’s really goingg to prohibit you from doinh what you want as a growing company.” Tailored leasing: Phillips Edison assignesd its two most experienced leasing agentds to handle nothing but leasee renewals for its roughly 3,200 tenants (15 percent of whoses leases are up each year). The The agents start working with tenants a full year in Phillips also assigned two people to handled all of its100 out-parcels, such as restaurantsw and ATMs.
• Temporary users: Phillips charger its property management grouo with focusing on tenants that use parking lots for fireworks carnivals orcar shows, and as a result expects $1 million in added sales. This does not factor in the benefits of theadded (The property management group, meanwhile, is operatinh at almost 30 percent undetr budget.) • Mission Possible 20/20: Phillips entruster its most senior staff with leasing the 40 properties in its two portfolios with the greates t upside (vacancy). The logicf is that those properties could generatw 50 percent of the opportunities for thetota portfolios.
Staff are rewarded by the sounrd of a cowbell when they makea deal, “jean Fridays” and a chance to win up to $10,00o0 for a Rolex watch when the lease year ends in With these efforts, Phillips has since October landeds nine new big-box reduced its lease turnaround time to 3.6 days from five days and increasedd retention to 83 percent from 65 percent. The firm expectd to lease 2 million square feetthis year, with 620,000p square feet signed and an additional 500,000 in the 45- to 60-daty pipeline.
And it expects to purchase $300 million in spacer the next 18 months totwo years, seekingb what Addy describes as centerxs with supermarket anchors that are of a littlde higher quality. In time, Addy does expecyt consumers to come backto spending, though slowly, as credit markets ease up incrementally. “I thinki the recession we’re in righrt now had an impact on the consumer that franklyt none of us hasever seen,” he “But people do have a short memory, and they can fall back into that It’s going to have to find a sense of