CAPITAL MARKETS DISCUSSION MATERIALS. November 2014

Transcription

1 CAPITAL MARKETS DISCUSSION MATERIALS November 2014

2 U.S. RETAIL MARKET OVERVIEW Supply & Demand Observations Select Market Trends & Forecasts Demand recovery is muted, but set to accelerate Completions Net Absorption Vacancy High-quality strip centers recovered well from the recession due to a tenant flight to quality Actual Projected 20% Anchor boxes attract strong demand, but small shop demand is in the slow lane Tenants in service-oriented, ecommerce-defensive industries have increased Rents continue to rise, but at a lower rate, and vacancy is expected to fall this year 2014 will be the first full year of rent growth since the recession started Square Feet (mms) Rent per SF Index Rent Growth 15% 10% 5% 0% Vacancy Growth will be at a modest rate of 2%, but will accelerate in subsequent years $30 Actual Projected 10% 8% Supply growth not a concern yet Development remains at historic lows across all major retail center types Rent per Square Foot $25 $20 $15 6% 4% 2% 0% -2% Rent Growth -4% Source: CBRE Econometrics Advisors and Real Capital Analytics as of second quarter 2014 $ % 2 CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

3 U.S. RETAIL MARKET OVERVIEW (CONT D) Market Observations Sales of retail properties totaled $18.3 billion in Q3 2014, down 8% from third quarter last year Individual property sales remained strong, up 34% YOY Although Portfolio deals declined 55% YOY, closed transactions in October rival total portfolio sales in all of Q Strip centers saw an increase in sales activity in Q3 2014, while regional malls and single tenant activity fell Sales of strip centers totaled $10.2 billion, up 17% YOY Only one significant regional mall traded in the third quarter and single tenant sales dropped 43%, largely due to portfolio sales declines Cap rates were down slightly across the retail sector Strip centers cap rates increased slightly as more activity has shifted to higher yielding markets For the top quarter of assets, the average cap rate is now 20 bps below levels of the peak in 2007 Source: CBRE Econometrics Advisors and Real Capital Analytics as of third quarter 2014 $30 $25 $20 $15 $10 $5 $0 10.0% 9.5% 9.0% 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% Select Market Trends & Forecasts Transaction Volume ($ in billions) Transaction Cap Rates Strip Cap Rate Mall Cap Rate CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

4 U.S. RETAIL MARKET OVERVIEW (CONT D) The RMS and retail REITs have outperformed the broader markets Shopping center and regional mall REITs are trading in line with net asset value 130% 120% 110% S&P 500 U.S. REIT Index (RMS) Retail REIT Index RMS +25.4% Retail REITs +22.4% S&P +11.0% Company Sho pping C enters Share Price Equity M arket Cap. Capitalization Enterprise Value Net Debt / EV 2015 EBITD A 2015 FFO Valuation Div. Yield Prem./ Disc. to NAV Implied Cap Rate Kimco Realty $24.95 $10,303 $17,744 36% 19.0x 17.3x 3.8% 1.8% 6.1% Brixmor Property $24.36 $6,189 $12,762 47% 15.0x 12.3x 3.7% 0.5% 6.3% DDR Corp. $18.14 $6,559 $12,516 44% 17.7x 14.2x 3.4% 3.7% 6.3% Federal Realty $ $9,101 $11,573 20% 24.0x 24.8x 2.6% 13.6% 4.5% Regency Centers $60.70 $5,616 $8,481 30% 22.5x 20.6x 3.1% 3.8% 5.4% Weingarten Realty $36.25 $4,486 $6,943 32% 20.3x 17.4x 3.6% 13.3% 5.8% Retail Properties $15.69 $3,712 $6,187 40% 16.3x 14.7x 4.2% -9.0% 6.8% Equity One $24.00 $2,987 $4,569 34% 18.9x 18.1x 3.7% -5.9% 5.6% Acadia Realty $31.20 $2,097 $3,525 30% 30.0x 20.5x 2.9% 17.7% 4.6% Kite Realty Group $25.89 $2,204 $3,158 27% 12.8x 12.4x 4.0% -6.1% - Saul Centers $54.95 $1,541 $2,550 31% 18.3x 18.4x 2.9% -4.0% - Ramco-Gershenson $17.48 $1,395 $2,452 31% 16.1x 13.4x 4.6% -1.8% - Retail Opportunity $16.34 $1,570 $2,236 30% 18.2x 17.9x 3.9% 12.7% 5.1% Inland Real Estate $10.61 $1,061 $2,197 47% 17.1x 10.6x 5.4% -4.3% - Cedar Realty $6.88 $525 $1,400 50% 15.5x 12.2x 2.9% -3.4% - Excel Trust $13.00 $808 $1,331 29% 14.1x 14.1x 5.4% -8.9% - 100% 90% Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 R egio nal M alls Wtd-A verage 35% 19.0x 17.0x 3.6% 3.0% 4.9% M edian 31% 17.7x 17.1x 3.7% -1.8% 5.7% Simon Property $ $65,167 $91,758 29% 22.0x 18.3x 2.9% 4.3% 4.9% General Growth ,031 43,017 46% 20.5x 18.2x 2.5% -4.0% 5.3% M acerich Co ,633 17,556 36% 27.3x 18.5x 3.7% -0.4% 5.2% Taubman Centers ,727 10,636 33% 28.7x 20.9x 2.8% -21.6% 5.2% CBL & Associates ,817 10,057 55% 14.0x 8.5x 5.1% -26.4% 8.0% Tanger Factory ,613 5,173 29% 18.7x 16.5x 2.7% -5.2% 6.1% Glimcher Realty ,034 4,222 44% 20.5x 17.3x 2.9% -8.5% 6.0% Pennsylvania REIT ,520 3,403 53% 13.9x 10.4x 3.7% -22.8% 7.7% Rouse Properties ,051 2,512 58% 15.0x 10.9x 3.7% 19.4% 8.1% Source: SNL Financial and Green Street Advisors as of November 01, 2014 Wtd-A verage 36% 21.7x 17.6x 3.0% -2.0% 5.4% M edian 44% 20.5x 17.3x 2.9% -5.2% 6.0% 4 CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

5 RETAIL CAPITAL MARKETS Demand Cap Rates Transaction Volume Supply 5 CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

6 DEMAND DRIVERS Lack of Alternative Investments Bonds risky if rates rise Stock market volatility Hard to find yield Soft Office Investment Demand Drives capital to Multihousing and Retail Some now over allocated in Multihousing Flight to quality Major metro Supply constrained, infill Credit & term Strong rental growth 6 CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

7 TOP RETAIL BUYERS IN D.C. Acquisitions Between $5M - $25M Top Retail Buyers in D.C. Over the Past Three Years # Buyer Acq. ($M) # Props. Avg.Price ($M) 1 Douglas Development $ $ Acadia Realty $ $ EDENS $ $ Michael R Kain Co $ $ Ellisdale Construction $ $ Altus Realty Partners $ $ Chesapeake Realty Part. $ $ Harbor Group Int'l $ $ Beztak Properties $ $ Skanska AB $ $12.00 Overall Acquisitions Top Retail Buyers in D.C. Over the Past Three Years # Buyer Acq. ($M) # Props. Avg.Price ($M) 1 Douglas Development $ $ Acadia Realty $ $ Jamestow n, L.P $ $ th Street Revisited LLC $ $ AFL-CIO $ $ OMERS $ $ EDENS $ $ Michael R Kain Co $ $ SPMC Urban Properties $ $ Katz Properties $ $ CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

8 TOP RETAIL BUYERS IN MARYLAND Acquisitions Between $5M - $25M Top Retail Buyers in MD Over the Past Three Years # Buyer Acq. ($M) # Props. Avg.Price ($M) 1 Kimco $ $ Blackstone $ $ Broad Street Ventures $ $ Inland Real Estate Group $ $ Spirit Realty Capital $ $ Acadia Realty $ $ Cole RE Investments $ $ ECHO $ $ Saul Centers $ $ Katz Properties $ $15.70 Overall Acquisitions Top Retail Buyers in MD Over the Past Three Years # Buyer Acq. ($M) # Props. Avg.Price ($M) 1 Kimco $ $ Blackstone $ $ Inland Real Estate Group $ $ Saul Centers $ $ American Realty Capital $ $ Realty Income Corp $ $ MCB Real Estate $ $ Azure Partners $ $ Nightingale Partners $ $ Acadia Realty $ $ CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

9 TOP RETAIL BUYERS IN VIRGINIA Acquisitions Between $5M - $25M Top Retail Buyers in VA Over the Past Three Years # Buyer Acq. ($M) # Props. Avg.Price ($M) 1 DDR $ $ Spirit Realty Capital $ $ Blackstone $ $ NV Commercial $ $ PE ARC Shop. Cen. REIT $ $ Cole RE Investments $ $ First Washington Realty $ $ Rappaport Co $ $ Sterling Organization $ $ Realty Income Corp $ $19.30 Overall Acquisitions Top Retail Buyers in VA Over the Past Three Years # Buyer Acq. ($M) # Props. Avg.Price ($M) 1 National Retail Properties $ $ Cole RE Investments $ $ Realty Income Corp $ $ ARCP $ $ DDR $ $ Blackstone $ $ American Realty Capital $ $ Principal Financial Group $ $ Kimco $ $ Spirit Realty Capital $ $ CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

10 COMPARABLE SALES 10 CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

11 COMPARABLE SALES 11 CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

12 COMPARABLE SALES 12 CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

13 COMPARABLE SALES 13 CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

14 COMPARABLE SALES 14 CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

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19 COMPARABLE SALES 19 CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

20 COMPARABLE SALES 20 CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

21 WASHINGTON-BALTIMORE HISTORICAL CAP RATES Grocery-Anchored Shopping Centers & 10-Yr Treasury Yield 21 CAPITAL MARKETS DISCUSSION MATERIALS NOVEMBER 2014

22 For more information regarding this presentation please contact: R. William Kent Executive Vice President