Retail Properties of America Hits Leverage Goals
12/23/2013 | by Sarah Borchersen-Keto

Retail Properties of America (NYSE: RPAI) president and CEO Steve Grimes recently joined REIT.com for a video interview at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT at the San Francisco Marriott Marquis.

RPAI recently announced its first on-balance sheet acquisitions since 2008. Grimes was asked about the timing of these deals, and whether any more can be expected.

Grimes explained that the company’s stock offerings last year, along with recent assets sales, enabled RPAI to reach its leverage goal of six to seven times net earnings before interest, taxes, amortization and depreciation (EBITDA) by the midpoint of this year.

“We are very excited about the acquisitions we have in the pipeline to date, but we remain very diligent in how we’re approaching those acquisitions, making sure that we’re looking to acquire in our select markets with the appropriate risk adjusted returns,” Grimes said.

Grimes was also asked whether he is satisfied with the current composition of RPAI’s portfolio.

“I would say very satisfied…we view our portfolio as institutional quality and I think we’re seeing that as we look to dispose of properties. These assets that we have slated for disposition are simply assets that are core for someone else. They’re well-performing assets, they’ve performed well for us in the past, they’re performing well for us currently, but we’re looking to narrow our focus.”

Turning to the dynamic between occupancy and rent levels, Grimes noted that RPAI has more than 10,000 square feet of its anchor space at 97 percent occupancy, which has “positioned us very well to drive rents in our smaller shop space.”

“In just one short quarter we moved our small shop occupancy to 84.6 percent, which is very strong for this portfolio. It’s about a 320 basis points improvement year-over-year. The dearth of supply has been helping in that regard, and the visibility of our anchor space,” Grimes said.