InvenTrust Focusing on Retail and Student Housing Real Estate

With a new name and a pared-down portfolio, InvenTrust Properties Corp. plans to continue to shed assets as it narrows its focus down to its two primary sectors of open air retail and student housing real estate.

InvenTrust announced in April that it was changing its name from Inland American Real Estate Trust, Inc., after becoming self-managed in 2014. The name change also followed the spin-off of its Xenia Hotels & Resorts, Inc. (NYSE: XHR) lodging platform in February.

In an interview with REIT.com, InvenTrust President and CEO Thomas McGuinness said the process of shedding the firm’s office and industrial assets will continue, as the company builds an independent brand presence for its two core platforms.

Pursuing Hub-and-Spoke Approach in Core Markets

About 60 percent of InvenTrust’s portfolio consists of shopping center properties. InvenTrust is looking to reduce the number of retail markets in order to develop a more concentrated hub-and-spoke system around its core markets of Atlanta, Houston, Dallas, Denver and Phoenix.

In April, InvenTrust paid $57 million to purchase The Shops at Walnut Creek, a 93 percent-leased shopping center located in Westminster, Colo. The property is just 15 miles from downtown Denver and boasts national tenants such as T.J. Maxx/HomeGoods, Petsmart, Inc., Dollar Tree, Inc. and Michaels Stores, Inc.

“We think it’s a phenomenal asset. If we could do a lot of Walnut Creeks, we would, but it’s very competitive,” McGuinness said.

InvenTrust’s portfolio includes a mix of grocery-anchored shopping centers with community and power centers. When considering tenants, McGuinness explained that InvenTrust “wants to match the retailer to the neighborhood, and all the demographics it has to bear.” Retailers also need to be aligned with other retailers to avoid situations where shoppers come to the center and only make a single purchase.

One of the biggest trends McGuinness said he is seeing in the open air retail sector is the multipurposing of vacant big box stores. He noted that due to the lack of new supply, existing vacant space is being cut up into smaller portions.

“In today’s world, it’s much more about creativity than I thought it would be even five years ago,” McGuinness said.

InvenTrust Actively Developing Student Housing Assets

Lack of new supply is not confined to shopping centers. McGuinness said InvenTrust is facing the same issue in its student housing operations.

InvenTrust’s student housing platform, University House Communities, concentrates on assets at major universities that are less than a mile from campus.

An influx of capital from pension funds, insurance companies and sovereign wealth funds has heated up competition for existing assets.

“The level of competition is one of the reasons why we have not been able to buy as much as we would have liked, and we’re at the point where we’re developing more than we’ve been purchasing,” McGuinness said.

University House Communities is currently finishing up a mixed-use student housing development set to open in August adjacent to the Georgia Institute of Technology. A new facility at the University of Texas at Austin is slated to open in August 2016.

As for the level of amenities University House Communities is offering, they include private bathrooms, entertainment venues and wireless networks.

“Students are willing to pay if you give them the product they are looking for,” McGuinness said.

Regarding the marketing of University House Communities properties, McGuinness emphasized the importance of social media in the student housing market.

“Word of mouth and social media is extremely important. Kids today are dialed in. If you do well and your reputation is positive, then you don’t have to do any advertising. They kind of rent themselves,” he said.