Retail REIT Fundamentals Going in the Right Direction

On the heels of a rare asset-for-asset swap announcement in September, Michael Glimcher, chairman and CEO of Glimcher Realty Trust (NYSE: GRT), sat down for a video interview with at REITWorld 2011: NAREIT's Annual Convention for All Things REIT in Dallas at the Hilton Anatole hotel.

Glimcher Realty Trust and Developers Diversified Realty (NYSE: DDR) agreed to trade shopping mall properties that were better aligned with one another's portfolio.

"It's really exciting for us, DDR and REIT investors. This has allowed us to focus more on assets specific to our REIT - which is really malls, whether open air or enclosed - and for DDR to focus more on power centers," said Glimcher.

Glimcher noted that the swap gave the company the right type of asset and tenant. Additionally, he said it makes things more straightforward for the REIT investor who decides they want to invest in a certain asset type.

This is the first time that Glimcher has participated in this kind of asset swap, but since the announcement there have been discussions of other possibilities.

"There's been talk, even from peers outside of our sector, saying it's an interesting way to realign their portfolios and focus on the type of assets they want to be in, especially with not a lot of product coming to market," said Glimcher.

In terms of future projections, he said the retail sector is "cautiously optimistic." Glimcher noted that in the third quarter, his company was at 12 percent rental increases, 12 percent sales growth and had more than 94 percent occupancy in its portfolio.

"We are seeing fundamentals going in the right direction; the trends are all feeling good," he said, adding that the numbers for the fourth quarter also look good so far.

When it comes to any macro economic trends, Glimcher said the company is just looking for the world to settle down. He said the massive up and down swings in the REIT market are inconsistent with what's really going on.

"These are really safe, steady assets, and the fact that you are going to see five percent swings up and down everyday is really incongruent with what's happening as far as fundamentals," he said.