Arthur Coppola, chairman & CEO; Ed Coppola, president and Thomas E. O'Hern, senior executive vice president, CFO and treasurer are presenting for Macerich at NAREIT's REIT Week.
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Below are notes from the session:
2:18: Art Coppola: For our business, the consumer is OK. The consumer is not feeling tremendously healthy. They don't feel different from what they felt 10 days ago or three months ago. Those that are unemployed or underemployed are not feeling so robust. But at the high end, the consumer is active again. At the necessity level, they have remained active. … All of that tends to reflect itself in the sales at the shopping centers and the rents we can get. … Retailers are looking to expand and they are willing to pay higher rents. In the last 10 days, there have been stats about employment, foreclosures, housing, but that doesn't have that much impact on discretionary spending.
2:20: Art Coppola: Retailers almost across the board are looking to expand. It's hard to imagine a more universal situation of retailers being more in expansion mode. … One of the reasons they talk so much about expanding is that they have put a certain quality collar on where they will expand. … Two or three years ago retailers found that they opened locations in ill-conceived lifestyle centers and those are where they've had the most problems.
2:22: Art Coppola: On the ground-up side, we areand will open three years from now a new mall in Goodyear, Ariz., ... called Estrella Falls. … We are building a fashion outlet center in North Scottsdale and anticipate it will open two years from now. There will mostly likely another outlet center we are looking to build in the U.S. over the next two or three years. (Also work ongoing at Tyson's Corner.)
2:24: Art Coppola: Also some redevelopment opportunities. Looking at Walnut Creek. Have a great department store lineup, but really don't have enough small shop space. We only have about 120,000 square feet of shop space and the market could support a lot more than that. … It could be as dramatic as tearing down buildings and building new ones. … When you add it all up, it's all very healthy in markets of L.A., San Francisco, New York and D.C. area. … We're pretty bullish on the opportunities.
2:34: O'Hern: (Responding to question about re-leasing spreads) Looking over trailing 12-month period. In 12 months ending March 31, up 9.5 percent. That's consistent with the guidance we gave for 2011 where we projected a 10 percent increase in leasing for the year. … At ICSC, leasing team was very positive on the conversations they had the convention. All indications are that it will continue to be a strong year on the leasing front.
2:36: Art Coppola: (Responding to question about retailer trend of shrinking average store sizes.) We are talking to JC Penney about their urban initiative, which could include having stores as small as 30,000 to 70,000 square feet. We did awith Walmart for a 60,000 or 70,000-square-foot store. We are trying to help them serve markets they are not presently serving. … The good thing about retailers is that it generally means a new location, which creates a backfill opportunity on the old space.
2:41: Art Coppola: The goal is not so much to sell the bottom 20 percent of your portfolio. The goal is to have 95 percent of your income coming from high-barrier-to-entry or fortress real estate. … That's really the overriding goal. Dispositions are a tool to get us to that goal.
End of session.