Kyle Stonis
Senior Vice President
678.420.1392
Pierce Mayson
Senior Associate
404.231.4696
Monthly Insight into the Capital Markets
SRS Real Estate Partners is pleased to distribute our monthly investment sales newsletter presented by the Southeast Investment Sales Team, composed of Kyle Stonis and Pierce Mayson.
Pension Funds’ Penchant for Retail
Pension funds, both domestic and international, are making moves on the U.S. retail sector. Several high profile transactions involving pension fund buyers have transpired in recent months. Australia’s largest institutional investment manager, QIC, is making its first direct investment in North America through the acquisition of a 49% stake in eight regional malls owned by Forest City Enterprises – a $424.8 million investment. Further expansion into the U.S. by QIC has been a logical progression after in-depth research into the retail market. With a global portfolio comprised of $10 billion in assets throughout Australia, the U.K., and the U.S., QIC continues to chase trophy properties where it sees an opportunity for its investors.Meanwhile, TIAA-CREF has gambled on the Grand Canal Shoppes in Las Vegas, buying a 50% stake in GGP’s high profile retail asset located on the Vegas strip; and Dutch pension fund manager, PPGM, has partnered up with Inland American Real Estate Trust to chase $600 million worth of U.S. grocery-anchored assets.
ON THE MARKET
Pell City Marketplace
Pell City, AL
Winn Dixie Center with
10-year Lease Term
JUST CLOSED
Colonial Promenade
Tannehill
Bessemer, AL
Target & Publix
UNDER CONTRACT
Colonial Townpark Smyrna
Smyrna, TN
Super Target
Kohl’s & Ross
Top 10 Most Rapidly Expanding Retailers
- Dollar General
- Family Dollar
- 7-Eleven
- CVS
- Dollar Tree
- T-Mobile
- The Cash Store
- GameStop
- Great Clips
- Mail Box Stores
Source: National Real Estate Investor
Atlanta Retail Transaction Metrics
Source:Real Capital Analytics
Some Investors Putting a Long-Term Hold On IRR-Related Investment Strategies
Real estate funds attempting to market themselves to high net worth individuals are finding that not all investors are alike. Even as pension funds and other institutional buyers continue to preach about IRR goals and short-term hold periods, more and more private investors are becoming concerned with managing risk and the preservation of their assets; looking to pass these investments down through multiple generations of children and grandchildren. This has created an opportunity for the return of money managers who act as owner/operators, taking the reins from hands-off investors who are no longer interested in falling cap rates and “flipping properties” to recognize a quick return on their investments. This strategy has put more of a spotlight on opportunities involving taking underperforming assets in the right locations and improving their operating metrics, which may take years as opposed to a quick ‘property flip’. Many of these investors have therefore turned their attention to secondary markets where value-add opportunities lie in waiting for the right management team to turn a mismanaged shopping center around through a multi-year re-positioning or re-development strategy. These investors want to see that the IRR potential is there, but the true driving force behind their decision-making is less about IRR and more about creative real estate strategies and how an asset fits into their current portfolio long term. Furthermore, foreign buyers seeking asylum for their money in the more stable U.S. market are not looking at investments as IRR numbers; rather, they are viewing these investments as a way to protect their capital through asset preservation. Essentially, from their point of view, they are not just buying a well-located shopping center with solid fundamentals; they are also buying a veritable safety deposit box for their money in the U.S. commercial real estate market. Source: National Real Estate Investor