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Prices Remain Rich for Retail Assets

OAK BROOK, IL-Capitalization rates have averaged 6.8% on 1.1 million sf of acquisitions totaling $227 million so far this year for Inland Real Estate Corp.

By Mark Ruda | Updated on May 07, 2006

(To read more on the debt and equity markets, click here.)

OAK BROOK, IL-Maintaining an “opportunistic and disciplined” posture when pursuing retail centers to add to its portfolio is a challenge even with rising interest rates, laments one major Midwest buyer. Not only have capitalization rates for stabilized retail centers remained low, Inland Real Estate Corp. chief operating officer Mark Zalatoris said they have drifted lower in some cases.

“The acquisition environment for stabilized assets is extremely competitive,” Zalatoris said during his company’s earnings conference call Friday. As a result, Inland is working on small-scale shopping center redevelopment and outlot development projects that could generate returns of 12% or more. And as it ventures out of its Midwest comfort zone to Texas to buy properties with New York State Teachers Retirement System, the REIT is taking a smaller stake that it has in other acquisitions with the pension fund partner.

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