September 30, 2014
Interview conducted and condensed by Michael Lagazo
Stuart Tanz, President and CEO of San Diego-based Retail Opportunity Investments Corporation (NASDAQ: ROIC), an excellent dividend growth REIT, shares leadership insights to kick off the ICSC Western Division conference this week.
Q: Were you always interested in shopping centers?
A: Yes. I started my real estate career in the late 1980s, as a one-man operation, developing small shopping centers in Southern California. So I learned the business from the ground up and have been focused in shopping center sector on the West Coast for almost 30 years now.
Q: What are your expectations for the ICSC Western Division conference this year?
A: We expect that it will be a very busy and productive conference. At the national convention in May, there was a lot of interest from retailers wanting to expand on the West Coast. So we expect to see the same level of interest and enthusiasm at this conference.
Q: What is your assessment of the current market conditions?
A: In terms of property acquisitions — there continues to be a good amount of activity in our markets. Thus far we are on pace for another very strong, record-setting year. In terms of leasing — we continue to see strong demand for space across our markets.
Q: What changes can the retail market in Southern California and the Western Region anticipate in 2015?
A: We do not expect any dramatic shifts in the retailing industry looking towards 2015. We expect demand for space to remain strong. As it relates specifically to our sector, grocery-anchored shopping centers, there could be a small amount of fallout, or transition, as a result of the Albertson’s/Safeway merger, but nothing that the market can’t absorb.
Q: How has the landlord-tenant dynamic shifted in the past several quarters?
A: Given the strong demand for space, the dynamic is much more balanced today.
Q: What trends are you seeing in leasing?
A: An increasing number of large, national retailers are looking to expand on the West Coast. Additionally, we are seeing a lot more regional and local retailers seeking space as well. Overall, the trends are very promising.
Q: As of Q2 2014, your portfolio is reported to have occupancy rates of 96.8%. North Park Plaza in San Jose, CA is 100% leased. How does ROIC maintain consistent occupancy?
A: By being very proactive and hands-on with our properties and tenants. And by owning properties that well-situated, competitively located in the market that feature daily-necessity retailers that serve the surrounding community well.
Q: What yield enhancement and value add strategies have been most effective in ROIC’s portfolio?
A: Repositioning newly acquired properties where we aggressively improve the tenant mix, typically bringing in new, strong anchor retailers that are well-suited for the market.
Q: Which retailers would you identify as ‘best-in-class’ in the grocery-anchored or necessity-based space?
A: We don’t look at leasing that way. We instead take each property individually, look carefully at the demographic profile and competing properties and then work to identify what are the best retailers for that property.
Q: With $357.8 million of shopping center acquisitions year-to-date (July 30, 2014 earnings), how is ROIC different from other REITs in creating opportunities in the current market?
A: Having owned and operated shopping centers for nearly 30 years on the West Coast, we know the markets extremely well and as a result are able to access attractive acquisition opportunities through off-market sources.
Q: What can you share with emerging shopping center professionals?
A: Now is a great time to get into the shopping center industry, especially on the West Coast.
Q: What do you do in your free time?
A: Aside from enjoying time with my family, I’m involved in a variety philanthropic efforts – most notably the Tanz Neuroscience Center, which was started by my family 20 years ago and today is one of the leading research centers for Alzheimer’s and Parkinson’s diseases.
Stuart Tanz’s Bio: http://www.roireit.net/company-information/leadership-team/
ROIC Company Information: http://www.roireit.net/company-information/overview/