“The momentum we built in 2018 has continued into the current year as shown by our strong first quarter results. Thanks to the timely start of rents and healthy expense control delivered by our team, first quarter same-store outpaced our internal expectations.” Those thoughts are according to Steve Grimes, CEO of Retail Properties of America Inc., on the firm’s Q1 earnings call.
“The merits of our transform asset footprint shines through in our 2.7% same-store NOI growth and ongoing expansion and rent per square foot to $19.17. These attractive assets continue to help us find high quality tenants, which include a growing group of digitally native tenants,” he explained. “Our strong portfolio demographics and healthy property types including our significant and growing concentration in lifestyle and mixed use should enable us to increase store count with these and other high growth retailers.”
According to Grimes, the company continues to systematically reduce its exposure to watch list tenants and diversify our rent roll. “Our top 20 tenant concentration again declined in the first quarter and now measures only 27% of our ABR down 180 basis points from a year ago.”
He added that “We also hold just two tenants that account for 2% or more of our ABR down from 4% at this time last year. The increasing balance in our tenant line up helps drive diversification in our merchandising mix. We view this retailer and product diversification as key to managing risk amid ongoing disruption in the consumer market and while we benefit from the lack of outsized exposure to any one or more product or service categories, we also gain from the everyday relevance stemming from 64% of our portfolio ABR being derived from assets with a grocer component, either anchored or shadow anchored.”
Consumer confidence, he added, “has stabilized during the last few months after retrenchment in December and January amended Federal government shutdown and the job-to-market remain solid with unemployment below 4%. Though the Easter calendar shift to April has added incremental headwinds to early 2019 retailer result, gains in the stock market year-to-date should further add a wealth impacted benefits are super zip heavy portfolio.”