The Miami Herald has an interesting Q&A with Equity One's Jeff Olson about the state of retail real estate.
Q: How do you see the struggling economy and the residential real-estate meltdown impacting your business?
A: It's clearly a more difficult market to lease these days than it was two or three years ago. We're seeing more tenant turnover. It's happening with the weaker tenants that may not have made it to begin with, even in a stronger economy.
We're more active today on a leasing front than we were a few years ago, in part because we have better vacancies to fill. But there is down time. The down time has an impact in the short-term on your numbers. Over the long-term, if you can release it to a better operator at a higher rent, it will increase the value of that property.
I feel pretty good about where we stand today. Our balance sheet is our strong suit. What got most people in trouble during past real-estate recessions was leverage. We're in a position where our leverage ratio is less than 40 percent, which is conservative by any standard.
When you couple that with the relationships that we've formed with two outside investors, we feel that we have a lot of capital to put to work as the market becomes more opportunistic. We strategically have placed ourselves in this position knowing that there would be a time when the balance sheet would really matter. Today is that day.