CHICAGO—Eteri Zaslavsky of Next Realty LLC, an investment firm in suburban Chicago, has attended the International Council of Shopping Centers' annual RECon conference for the last eight years and tells GlobeSt.com from the conference in Las Vegas that she has never seen it so upbeat.
“We've come a long way from the trough of the market in 2009,” she says. This year the events are extremely well-attended and the environment fast-paced. “I've had twelve meetings today already. It looks like a lot of debt and equity are chasing deals. The industry right now is going through a good period.”
Still, the recent financial crisis has taught Zaslavsky to remain somewhat cautious even as the good times seem ready to begin again. “I don't see the end of the expansion in sight, but I don't see how we can possibly continue like this.” These days, every potential deal attracts a host of lenders, many of whom she has not heard of and seem new to the market. “I call them pop-up lenders. They try to beat each other out and they're pushing it to the limit.”
The intensity is certainly welcome in some ways, but in others is reminiscent of the go-go years before the collapse. “I've been through a couple of business cycles. And the underwriting today is a lot more aggressive that it was in 2006.”
Institutional investors and REITs have put a lot of product on the market, and Zaslavsky thinks buyers need to exercise caution. “If the bigs did not figure out how to make a center work you have to be careful about buying it yourself.” Buyers can find good deals, however, since these big players may not have given all the centers in their portfolios the attention that smaller, more local owners can provide.
But Next Realty, which typically looks for value-add properties, has also taken advantage of the present environment. “We've sold about 12 properties in the last 24 months because the prices are very healthy.” And all that competition among lenders allowed Next to secure a solid refinancing deal for Oak Lawn Promenade, a 30,000-square-foot retail center in suburban Oak Lawn, that, as reported in GlobeSt.com, it purchased late in 2012, and now plans to hold onto. “It's going to be a very nice yield for the investors.”
And today, Zaslavsky and the tens of thousands of attendees will keep hunting for even more deals. “That's what this is about right now.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
