The public may protest new Wal-Mart groundbreakings and gripe about suburban sprawl. But when it comes down to shopping time, folks love those suburban grocery stores and other shops convenient to their homes.
According to a recent survey by the Urban Land Institute (ULI), neighborhood shopping centers are the top performers among the four major shopping center types, scoring tenant sales of $260.49 per square foot.
What’s more, neighborhood shopping centers have increased in popularity, with the greatest increase in sales per square foot over the last three years. Sales in these centers were up 21 percent over that time period.
Meanwhile, super regional centers outperformed all other major shopping center types in terms of the bottom line, with a median net operating balance of $20.67 per square foot. Why the high level of profitability? Higher lease rates, lease structures that allow the recapture of a large range of expenses, and sophisticated approached to expense control all helped these tenants bring home the bacon.
In fact, according to ULI, super regional shopping centers saw their expenses decrease by 2 percent in the last year. Also, in the last 12 months, the bottom line of super regional centers increased by 14 percent. In contrast, regional shopping centers showed an 11 percent decline in the bottom line, reflecting a 14 percent decrease in operating receipts.
ULI says that these declines reflect the continuation of trends reported in the last several editions of its study, titled Dollars and Cents of Shopping Centers. Older, smaller, and often poorly located, many regional shopping malls have been out-flanked by the power centers offering lower prices and the super regionals offering greater choice of goods and services, so the poor performance is no surprise.
But the news isn’t all bad for regional shopping centers, which showed a sales increase of 16 percent in the last year. ULI suggests that this may reflect the beginning of a re-positioning of regional centers in terms of tenant mix, a weeding out of weaker centers and tenants, and aggressive efforts to attract new customers.
In other news, Washington Real Estate Trust (NYSE: WRE) announced its largest-ever dividend increase. This is the company’s 154th consecutive quarterly dividend at equal or increasing rates.
The increase was 2 cents per share in the quarterly dividend rate, bringing it to $1.25 per share per quarter. Amazingly, Washington Real Estate’s dividends have increased every year for 29 consecutive years, a record it says is unmatched by any other publicly traded real estate investment trust.
“This dividend increase is 60 percent greater than [our] 1999 dividend increase and the largest quarterly dividend increase in [our] 40-year history,” said Edmund Cronin, Jr., president and CEO. “This dividend reflects our strong performance in 2000 and our confidence in the future growth of the trust.”
WRIT is an equity real estate investment trust investing in income producing properties in the greater Washington- Baltimore region. The company’s stock has enjoyed a healthy bump in recent months. Near its 52-year low of just under $14 in early April, shares now have been nudging a year-high of $18. And with a price-to-earnings ratio of only 15 and ever-increasing dividends, this market-proof issue looks like a great buy for long-term investors.
Published: May 25, 2000
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