REIT Rebound

REITs β€” especially retail REITs β€” posted an impressive rebound in August after six months of weak results. Shopping center and freestanding retail REITs had their best month in 2007. Regional mall REITs had their second best month of the year. Total returns for retail REITs were down 4.81 percent year-to-date as of the end of August. As of press time, September was looking to be another good month β€” pushing REITs back into positive territory for the year.

TOTAL RETURN BY MONTH

Jan. Feb. Mar. Apr. May June July Aug. YTD
All Retail 10.49 0.35 -0.97 1.05 -4.14 -11.79 -7.38 9.56 -4.81
Shopping Centers 8.22 0.25 -1.92 0.22 -2.75 -12.90 -6.40 11.36 -5.85
Regional Malls 13.44 0.81 -0.45 1.93 -5.79 -11.35 -8.39 7.83 -4.26
Free Standing 3.42 -3.01 1.46 -1.19 1.53 -8.09 -5.19 12.14 -0.23
All REITS 8.42 -2.24 -2.39 -0.02 0.05 -9.07 -7.80 6.57 -7.53
Source: NAREIT

A Look through stock prices

Most retail REITs are still down for the year, but after some companies hit 52-week lows, stock prices have begun to creep upwards.

RETAIL REIT SCORECARD

Symbol Price* 52-week High Chg 52-week Low Chg 31-Dec-06YTD Chg
PREIT PEI $43.97 $50.39 -12.74% $37.48 17.32% $39.38 11.66%
Acadia Realty Trust AKR $26.69 $28.75 -7.17% $21.92 21.76% $25.02 6.67%
Kite Realty Group KRG $19.10 $21.80 -12.39% $14.13 35.17% $18.62 2.58%
General Growth Properties GGP $52.75 $67.43 -21.77% $42.56 23.94% $52.23 1.00%
Equity One Inc. EQY $26.46 $29.51 -10.34% $20.25 30.67% $26.66 -0.75%
Taubman Centers TCO $50.15 $63.87 -21.48% $36.69 36.69% $50.86 -1.40%
Glimcher Realty Trust GRT $25.73 $29.69 -13.34% $23.08 11.48% $26.71 -3.67%
The Macerich Co. MAC $83.10 $103.59 -19.78% $67.90 22.39% $86.57 -4.01%
Capital Lease Funding LSE $11.13 $12.21 -8.85% $10.16 9.55% $11.60 -4.05%
Tanger Factory Outlet Centers SKT $37.42 $43.56 -14.10% $30.30 23.50% $39.08 -4.25%
Ramco-Gershenson Properties Trust RPT $35.83 $39.55 -9.41% $26.17 36.91% $38.14 -6.06%
Agree Realty Corp. ADC $32.23 $36.46 -11.60% $31.14 3.50% $34.37 -6.23%
Simon Property Group SPG $94.95 $123.96 -23.40% $79.07 20.08% $101.29 -6.26%
Realty Income Corp. O $25.33 $30.36 -16.57% $21.25 19.20% $27.70 -8.56%
Inland Real Estate Corp. IRC $17.01 $21.14 -19.54% $13.83 22.99% $18.72 -9.13%
Federal Realty Investment Trust FRT $76.84 $98.92 -22.32% $66.05 16.34% $85.00 -9.60%
Weingarten Realty Investors WRI $41.39 $52.30 -20.86% $37.06 11.68% $46.11 -10.24%
Urstadt Biddle Properties Inc. UBA $17.13 $19.73 -13.18% $14.62 17.17% $19.09 -10.27%
Regency Centers Corp. REG $70.10 $93.49 -25.02% $59.18 18.45% $78.17 -10.32%
Feldman Mall Properties FMP $11.14 $13.00 -14.31% $10.10 10.30% $12.45 -10.52%
Vornado Realty Trust VNO $109.23 $136.55 -20.01% $93.53 16.79% $122.35 -10.72%
Cedar Shopping Centers Inc. CDR $14.18 $18.42 -23.02% $13.84 2.46% $15.91 -10.87%
Kimco Realty Corp. KIM $39.17 $53.60 -26.92% $35.07 11.69% $44.95 -12.86%
CBL & Associates Properties CBL $36.80 $50.36 -26.93% $36.06 2.05% $43.35 -15.11%
Developers Diversified Realty Corp. DDR $52.11 $72.33 -27.96% $49.27 5.76% $62.95 -17.22%
Cousins Properties Inc. CUZ $29.16 $40.75 -28.44% $28.62 1.89% $35.27 -17.32%
Saul Centers BFS $45.12 $61.70 -26.87% $36.74 22.81% $55.19 -18.25%
Colonial Properties Trust CLP $36.05 $51.69 -30.26% $35.36 1.95% $46.88 -23.10%
* As of 9/25/2007
Source: Retail Traffic

Operating costs

The Institute of Real Estate Management published its 2006 Income/Expense Analysis of shopping centers. Here are some of its findings. The study breaks the U.S. into 10 regions. Regions 1, 2 and 3 include the Mid-Atlantic and Northeast. Region 4 is the Southeast. Region 5 includes northern Midwest states Ohio, Illinois, Indiana, Michigan, Wisconsin and Minnesota. Region 6 includes Texas, Louisiana, Arkansas, Oklahoma and New Mexico. Regions 7, 8 and 10 include the rest of the Midwest, the Pacific Northwest and Alaska. And Region 9 includes California, Arizona and Nevada.

MEDIAN INCOME 2006
Region Gross Leasable Area Average Actual Occupancy
1, 2, 3 $14.67 $15.25
4 12.08 12.9
5 11.69 13.14
6 12.62 14.58
7, 8, 10 11.37 11.9
9 17.73 18.99
TOTAL 12.62 13.96
MEDIAN EXPENSES 2006
Region Gross Leasable Area Average Actual Occupancy
1, 2, 3 $2.92 $2.92
4 2.56 2.83
5 3.73 4.86
6 4.35 5.08
7, 8, 10 3.38 3.49
9 4.85 4.96
TOTAL 3.73 4.27
MANAGEMENT FEES 2006
Region Gross Leasable Area Average Actual Occupancy
1, 2, 3 $0.50 $0.50
4 0.43 0.45
5 0.52 0.62
6 0.53 0.58
7, 8, 10 0.43 0.47
9 0.84 0.86
TOTAL 0.5 0.53
COMPARISON OF EXPENSE CATEGORIES
Maintenance & Repairs 9.60%
Services 11.7
Utilities 8.2
Insurance/Taxes 43.8

Source: IREM, in a survey of 288 centers averaging 85,028 square feet apiece.