Both tenant interest and acquisition opportunities are looking favorable going into the second half of the year, according to Dennis Gershenson, president and CEO of retail REIT Ramco-Gershenson Properties Trust (NYSE: RPT).
“We are very pleased with the acceleration and interest of the tenants,” Gershenson said during a REIT.com video interview filmed in New York during REITWeek 2012: NAREIT’s Investor Forum. “We saw an acceleration of tenant interest at the beginning of the year, especially with the national retailers. Not just anchors but smaller tenants were open to buy.”
Gershenson added that the company is also making multiple deals with retailers that are expanding their footprints to larger spaces. He used stores such as Ulta, The Shoe Carnival and Five Below as examples of smaller stores upgrading to larger spaces.
However, he said it would be a mistake to make the assumption that the retail sector has fully recovered. He referred to the industry as being “cautiously optimistic.”
In keeping with that theme, Gershenson suggested some basic rules that should apply now, in case the market takes a turn for the worst.
“Stick to your basic blocking and tackling. Make sure you put something away for a rainy day and don’t be overly optimistic as far as financing is concerned,” he said. “Be conservative in your financing decisions.”
When it comes to acquiring properties, Gershenson said the market is ultimately efficient, and he added that there has been an acceleration of acquisition opportunities.
“That means that I don’t care how much you want for your asset–the marketplace and the number of bidders are going to be the ones that come in and help determine that,” he said. “On the coasts, you’re seeing some very aggressive pricing. We’ll have to wait and see if that justifies itself.”
Gershenson said the company prefers to invest in the middle of the country, where he said cap rates are more favorable. In the month of May, the company purchased close to $108 million in shopping center assets, including two in Colorado and one each in Wisconsin and Missouri.