COLUMBUS, OH-Between May and Oct. 1, Glimcher Realty Trust had disposed of four properties for an aggregate of $208.2 million, advancing the first stage of an ongoing strategy to upgrade the quality of its portfolio. The locally based retail REIT will use the proceeds to reinvest in its pipeline, which includes the redevelopment of existing centers, ground-up development and possible acquisitions, said Michael Glimcher, chairman and CEO, during a third-quarter conference call.
With sales accomplished and just two hold-for-sale properties remaining, Glimcher plans to pursue JV partnerships on its middle-tier properties, which Glimcher said, represent “the best place to find capital.” In developing the strategy, he said, the portfolio was segmented into “bottom, middle and top” properties.
Sales occurred at the bottom. They included Montgomery Mall in Montgomery, AL; University Mall in Tampa; Alameda Mall and Northwest Mall in Houston. Primarily as a result of dispositions, third-quarter net income was $46.4 million, compared with $1.7 million for the prior-year quarter.
Of the middle group, Glimcher said, “these are steady performers. We want to keep control of them and maintain an equity interest.” Regarding the timing of joint ventures, he said, “we'd love to be able to do it in 2008 and are working toward that. I don't have anything to announce today, and with the volatility of the financial markets, it's difficult to put a time on it.” The company will continue to reinvest in its top-tier assets.
Excluding mall properties held for sale, net operating income was up 4.4% for the quarter, primarily related to a $1-million increase in base rents for the portfolio. Excluding the held-for-sale assets, occupancy was 92.6%, compared with 90% for the quarter ended Sept. 30, 2006. By the end of this quarter tenants were averaging sales of $368 per sf.
Same mall store rents averaged $25.89 per sf at the end of September, up 2% from the same time a year ago. Re-leasing spreads for leases signed during the first nine months of this year were up 13% to average $34 per sf.
Glimcher is set to break ground for the opening phase of a $255-million center in North Scottsdale, AZ. Combining contracts and letters of intent, Glimcher said, “50% of the space is spoken for. The demand for retail is incredibly strong, and we're getting the tenants we desire at or above projected rent rates.”
Following the conference call, GRT common stock on the Nasdaq was trading at $22.03 a share, down about 2% for the day. This compares with a 52-week low of $19.39 a share on Aug. 6 and a 52-week high of $29.69 on Feb. 15 this year.
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