Part 2 of 2
SAN DIEGO-In part one of this two-part series, we chatted with Stuart Tanz, CEO of Retail Opportunity Investments Corp. on why his firm is focused on the west coast, and what the specific draw was to shopping centers in particular. In part two of the exclusive Q&A, we chat about how tenant mix factors into the firm's acquisition strategy, what red flags to look out for, and the firm's strategy to maximize ROIC value and to grow market cap.
GlobeSt.com: How does tenant mix factor into your acquisition strategy? What do you consider an ideal tenant for your retail centers?
Stuart Tanz: In terms of acquisitions, we look for shopping centers that are generally situated with a 60/40 balance between anchor tenants and in-line shop tenants—or opportunities where we can quickly achieve that tenant mix through capitalizing on our re-merchandising expertise. We focus on acquisition opportunities where the primary anchor tenant is a strong national or regional supermarket operator that has a well-established customer base in the community and a strong sales track record - or opportunities where, during our underwriting process, we identify and line up a strong supermarket operator through capitalizing on our retailer relationships.
GlobeSt.com: You've grown your portfolio from approximately $400 million to more than $1 billion during the past several years. Are you still in an attractive acquisition environment?
Tanz: Our pipeline of acquisition opportunities continues to be very active today. Importantly, we do not focus on widely-marketed, fully-leased shopping centers that have many potential buyers aggressively chasing those deals, and consequently driving pricing to unreasonable levels. We instead focus on off-market, direct-to-owner opportunities, where we can acquire exceptional shopping centers on attractive terms and quickly add value.
GlobeSt.com: When do you foresee the market shifting, and what red flags are you watching for?
Tanz: Given that the acquisition market is constantly changing and evolving, it's hard to predict what may happen going forward. However, by focusing on sourcing off-market opportunities through our network of relationships with brokers, institutional investors and individual owners, we have been successful over the years at maintaining a consistent, active pipeline as the broader, more widely-marketed acquisition market has ebbed and flowed.
GlobeSt.com: REITs have been on a roller coaster this year, and many expect a rising interest rate environment to further erode investor interest in REITs. What's your strategy to maximize ROIC value and to grow your market cap?
Tanz: Having been part of the REIT public market since the 1990s, first with Pan Pacific and now with ROIC, we have successfully grown our business steadily in good times, when there's strong investor interest in REITs, as well as during more challenging times. The key to our success is staying focused on executing the same, prudent, risk-adverse strategy that we have pursued for over 25 years. Importantly, our business plan is straight-forward and is backed by a strong, transparent investment-grade balance sheet, with a minimal near-term debt maturities and a well-laddered debt maturity schedule. We intend to adhere to our long-standing strategy going forward and are confident in our ability to continue to grow our business and add value.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
