When Hurricane Charley slammed into Florida's Charlotte County Aug. 13, its 145-mph winds jackhammered everything in sight. By the time it moved north, at least 22 people were dead and countless others were seeking shelter.
Charley wreaked more than $7 billion in damage on the region's homes and businesses, but most of the area's malls and shopping centers suffered relatively minor damage — fortunate in light of the fact that the Gulf Coast area is a target-rich opportunity. Indeed, REITs own nearly 46 million square feet of retail space in the Florida counties that have since been declared disaster areas.
Still, Charley left its mark. In Port Charlotte, virtually the epicenter of the hurricane's landfall, Simon Property Group's Port Charlotte Town Center took a beating. Skylights were damaged, trees were uprooted, and the parking center was heaped with debris. Electricity and water were lost. But after eight days of repairs and cleanup, the enclosed mall was reopened.
Wachovia Securities analyst Jeffrey J. Donnelly identified the REITs with the largest exposures in the hard-hit area as Equity One, which has 21.1 percent of its portfolio there; Regency Centers, with 9 percent; New Plan Excel, with 5.1 percent; and Kimco Realty and Chelsea Property Group, each with 5 percent. None reported substantial damage, Donnelly says. But some stores that had to suspend operations during the storm have been impacted. Wal-Mart blamed weaker-than-expected August sales on the fact it had to temporarily close 75 stores in the affected region.
Equity One's experience was typical. The roof of its Charlotte Square center in Port Charlotte was damaged along with tenant air conditioning. The Summerlin Square center in nearby Fort Myers lost power, though its tenant, Winn-Dixie — like most supermarkets, equipped with a generator — stayed open. And Equity One properties in Orlando suffered various problems with landscaping, signage and roofs. In all, the damage will cost less than $250,000 after insurance payouts, the REIT says.
Although its eventual path and intensity were a surprise, Hurricane Charley's arrival had been expected for days, allowing property managers to prepare their defenses as best they could. At Glimcher Realty Trust's two properties in Tampa, University Mall and Westshore Plaza, preparations began days earlier as employees boarded up windows and tied down equipment. (Neither mall was damaged by the storm, which landed southeast of Tampa.)
At Winter Park, Fla.-based Inland Southeast Property Management Corp., part of Inland Real Estate, the scramble to deal with Charley began Wednesday, two days before the system made landfall. The storm “took a couple of turns that made us react pretty quickly,” says Dan Guinsler, an Inland vice president.
Properties were divided into three tiers, from most vulnerable to least. Everyone in the company was assigned a task and a “buddy” — “in case someone got three flat tires trying to get to a property. That worked well,” says Guinsler.
In all, 14 Inland properties were damaged, none seriously.