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Commenting on the Credit Pullback


CoStar Group has a long article up surveying many retail real estate companies and how their execs say they are being impacted by the credit pullback.

Companies chiming in on the subject include Woolbright Development, Phillips Edison, Pine Tree Institutional Realty, SCI Real Estate Investments, Cole Companies, Dividend Capital Realty Trust, WBS Properties and Weingarten Realty Investors.

CoStar says that more companies will be added throughout the course of the day.

Here's one excerpt:

According to Michael Phillips, principal of Phillips Edison, the lack of credit in the residential market is having an effect on the cost of debt in the commercial market. "It's eliminating some of the higher leveraged buyers that have been in the market for the last few years," said Phillips, adding that this is a primary reason why he believes companies like his with strong balance sheets, good cash and strong history will excel in this real estate cycle.

"The rise in interest rates has made retail property margins very thin. Buyers have receded and are not as active in the market as they have been in the past." Further, he agreed that the average price-per-square-foot will probably show a decline over the next two quarters, but identified the Western states, due to their continued high growth, as more resilient than the rest of the country.

Phillips also talks about its recent transaction with Developers Diversified Realty, which Retail Traffic covered in this story.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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