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Retail Properties of America Exceeds Own Expectations in First Year After IPO

06/07/2013 | By Mitch Irzinski

Steven Grimes, president and CEO of Retail Properties of America (NYSE: RPAI), joined REIT.com for a video interview in Chicago at REITWeek 2013: NAREIT's Investor Forum.

Retail Properties of America recently celebrated the one-year anniversary of its initial public offering. Grimes described the past year and the company’s accomplishments.

“We’re very excited about the progress we made, both from a stock performance perspective as well as from an operational perspective,” he said. “In fact, I would even argue that we exceeded our own expectations. We set out to achieve some simple goals, but very large goals, and with our IPO, our preferred issuance in the tail end of last year and the sale of $500 million of non-core assets, we were able to de-lever the balance sheet and meet our longer-term objective of six to seven times EBITDA in just one short year.”

Grimes talked about the status of the company’s portfolio repositioning plan, as well as his vision for the ideal portfolio composition.

"We have defined what our objectives are for the multi-tenant retail portfolio,” he said.  “We look to ultimately become very concentrated in 10 to 15 markets. Ten to 15 markets from all of the 35 states we’re currently in is going to take some time, so we’re going to look to be very disciplined and measured about how we go about doing that, hopefully having some meaningful progress over the medium to longer term.”

Grimes provided insight regarding changes in retailers’ space usage and needs.

“Space needs and usage is always a hot topic with retailers these days, but the lack of supply has really limited the concern in that regard,” he said. “What we are finding is that the retailers over the past several years have looked to manage their margins, and managing the margin is helping to pay the rent which is obviously a good thing. So, they’re looking at their footprint and their space usages and they’re trying to rationalize the size of the box that they may have. But, by and large, those retailers that had hard mandates to reduce their box size have really done so already.”