{"id":1004172076,"date":"2017-04-07T09:10:33","date_gmt":"2017-04-07T17:10:33","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004172076"},"modified":"2022-12-07T05:52:05","modified_gmt":"2022-12-07T13:52:05","slug":"nyu-schack-reit-symposium-finding-value-in-disruption","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/nyu-schack-reit-symposium-finding-value-in-disruption\/","title":{"rendered":"NYU REIT Symposium: Finding Value in Disruption"},"content":{"rendered":"

By Sanyu Kyeyune<\/p>\n

In its 22nd iteration, NYU School of Professional Studies Schack Institute of Real Estate’s REIT Symposium came at a heady\u00a0time for the U.S. business and economic environment, amid shocks to the retail sector (as evidenced by a slew of notable brands\u2013Payless ShoeSource, JCPenney, Macy’s\u2013shuttering stores nationwide) and sustained regulatory suspense.<\/p>\n

\"Sam

Sam Zell, Chairman, Equity Group Investments<\/p><\/div>\n

In a one-on-one conversation, Equity Group Investments Chairman Sam Zell called foul on the lack of urgency in raising interest rates, noting also that\u00a0Trump’s pro-growth stance\u00a0has\u00a0emboldened investors, but has yet to make progress in areas such as infrastructure and tax reform.<\/p>\n

Still, Zell waxed optimistic about growth in U.S. real estate investment, supported in part\u00a0by continued interest from China and the liquidity of domestic capital markets. “Corporate America has more cash…than at any time before<\/em>,” he commented. Following his company’s 2014 takeover of office REIT Equity Commonwealth, Zell sold off 124\u00a0properties<\/a> to rationalize the firm’s portfolio, resulting in a $2.1 billion cash windfall,\u00a0which\u2013in a characteristically opportunistic move\u2013he\u00a0plans to deploy outside of the office sector.<\/p>\n

According to Blackstone Group’s Global Head of Real Estate Jonathan Gray, industrial distribution centers are the beneficiaries of retail disruption. In the past two years, Blackstone has been bullish on industrial investment, having acquired Austria-based Immofinanz’s entire logistics portfolio<\/a> for more than $600 million after snatching up 16 U.K. warehouses<\/a> for around the same figure. Gray referred to the “last-mile” concept, which will lead disruption by locating\u00a0distribution centers in or around\u00a0urban centers in order to shrink\u00a0delivery timelines.<\/p>\n

\"Jonathan

Jonathan Gray, Global Head of Real Estate, Blackstone (left<\/i>), and moderator Barry Vinocur.<\/p><\/div>\n

 <\/p>\n

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 <\/p>\n

Unlocking Value<\/strong><\/p>\n

A group of executives shared tactics\u00a0for unlocking value for shareholders while executing growth strategies. Overall, they agreed that\u00a0that retail in the U.S. was not overbuilt, but under-demolished. To buck this trend,\u00a0Benjamin Schall, president & CEO of Seritage Growth Properties (which owns 266 properties totaling 40 million square feet),\u00a0has led the conversion of several single-tenant Sears locations to best-in-class shopping centers and mixed-use properties.<\/p>\n

“We have seen the most activity from three categories:\u00a0the discount retailers, everyday uses\u2013such as gyms and grocers\u2013and experiential retail, like entertainment and dining<\/em>,” Schall said. In the fourth\u00a0quarter of 2016, Seritage leased\u00a0900,000 square feet of retail space, with demand coming from\u00a0growing brands, including R.E.I., Planet Fitness, T.J. Maxx and Saks OFF 5TH.<\/p>\n

Referring to Orlando-based National Retail Properties, moderator and Schack Associate Dean Sam Chandan said, “(Craig Macnab’s)\u00a0strategy involves acquiring assets directly from retailers that are growing,<\/em>” adding “I think it’s important to remind our audience that retailers are growing,<\/em>” eliciting\u00a0chuckles.<\/p>\n

Macnab, chairman & CEO of the triple-net lease retail REIT, explained that his firm’s portfolio of\u00a02,500 properties is \u00a099% occupied because “small-box retailers\u2013restaurants and convenience stores\u2013are doing just fine.<\/em>”<\/p>\n

\"Conor

Conor Flynn (pictured at center<\/i>), President & CEO, Kimco Realty Corp.<\/p><\/div>\n

Reframing Retail<\/strong><\/p>\n

“The omnichannel wave is here to stay,<\/em>” claimed Conor Flynn, president & CEO of Kimco Realty Corp., naming Home Depot among the companies that have responded to the trend with parallel in-store and online offerings. Flynn also counted a proposed\u00a0border adjustment tax among the most damaging blows to retail employment.<\/p>\n

Increasingly, REITs will look to spinoffs to\u00a0create value for shareholders, shedding properties that no longer make sense for their portfolios. Creative strategies to reposition underperforming assets, such as revamping facades and altering the tenant mix, have proven successful for many of the REITs in attendance at the conference. In the current economic landscape, it will become more crucial for retail REITs to\u00a0deliver an experience\u00a0that cannot be replicated online. Meanwhile, organizations that are able to locate\u00a0industrial facilities close to cities stand to benefit as e-commerce eclipses brick-and-mortar retail.<\/p>\n

Images courtesy of\u00a0NYU Schack Institute of Real Estate and Commercial Property Executive<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Hosted by NYU Schack, the 22nd annual REIT symposium gathered preeminent decision-makers for a spirited dialogue about the forces impacting the sector. Among the event’s headliners were Equity Group Chairman Sam Zell and Blackstone Global Head of Real Estate Jonathan Gray.<\/p>\n","protected":false},"author":1245,"featured_media":1004172112,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21825,21748,21783,21752,23891,21742,21747,21749],"tags":[34874,34873,34114,34875,34872,34871,33129],"class_list":["post-1004172076","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","category-industrial","category-investment","category-mixed-use","category-national","category-latest","category-office","category-retail","tag-equity-group-investments","tag-jonathan-gray","tag-nyu-school-of-professional-studies","tag-sam-chandan","tag-sam-zell","tag-schack-institute","tag-the-blackstone-group"],"acf":[],"yoast_head":"\nNYU REIT Symposium: Finding Value in Disruption - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/nyu-schack-reit-symposium-finding-value-in-disruption\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"NYU REIT Symposium: Finding Value in Disruption\" \/>\n<meta property=\"og:description\" content=\"Hosted by NYU Schack, the 22nd annual REIT symposium gathered preeminent decision-makers for a spirited dialogue about the forces impacting the sector. 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