Shopping Center REITs End Second Quarter in Growth Mode

Shopping center REITs sounded a distinctly optimistic note in reporting second quarter results, citing improved retailer health, increased occupancies and stronger terms on leasing deals.

Of the 13 shopping center REITs, seven beat consensus analyst estimates for the three months ended June 30, while two were in line with expectations and four missed.

Those that beat estimates, by a range of $0.01 per share to $0.02 per share, included Developers Diversified Realty (NYSE: DDR), Regency Centers Corp. (NYSE: REG), Federal Realty Investment Trust (NYSE: FRT), Ramco-Gershenson Properties Trust (NYSE: RPT), Inland Real Estate Corp. (NYSE: IRC), Acadia Realty (NYSE: AKR) and Weingarten Realty Investors (NYSE: WRI).

Equity One Inc. (NYSE: EQYNYSE: KRG) met consensus. Kimco Realty Corp. (NYSE: KIM), Cedar Shopping Centers (NYSE: CDR), Urstadt Biddle Properties (NYSE: UBA) and Saul Centers Inc. (NYSE: BFS) missed, by $0.01 to $0.22 per share.

Like their counterparts in the regional mall sector, shopping center REITs also experienced rising NOIs in the second quarter. Year-over-year, same-store NOI went up 2.9 percent for shopping center REITs, according to a report from Morningstar.

“While [it’s] still a tenant market, the position of retail landlords is improving, which should be reflected over time in our leasing spreads, same-store NOI, renewals and occupancy,” said David Henry, president and CEO of Kimco Realty Corp., during the company’s conference call with analysts on July 29.

Another REIT executive, Dan Hurwitz, president and CEO of Developers Diversified Realty, noted that the past quarter marked the first time since the beginning of the financial crisis in 2007 that shopping center REITs have collectively experienced positive leasing spreads and same-store NOIs.

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