REAL ESTATE NEWS

Brixmor Property Group is seeing strong fundamentals in today's retail environment, as it's never been a better time to lease and make deals, according to the company's chief investment officer and EVP, Mark T. Horgan.

This was uttered during a fireside chat with moderator El Warner, vice chair, Colliers, at an ICSC New York 2024 panel, discussing the current retail investment landscape.

"We're seeing this is the best leasing environment we have ever seen, and that's really helping us drive this business forward," Horgan said. He also added that there has been strong tenant demand and rent growth.

Year-to-date, Brixmor has closed $300 million in transactions, which was around its initial target — given where interest rates have been.

STRATEGY TO BUY ASSETS

The REIT, which operates various properties in the Northeast, Florida, Texas, Southern California and Chicago, aims to "cluster investments" within its footprint.

"So we think we have in those kind of markets where we know where tenants want to be; we know the cost to build out," said Horgan.

"That's how we can find deals that work for our company to drive, [and] hopefully perform out before the market when we buy assets."

More specifically Brixmor looks for assets with "core plus value add returns," and where the price is below the replacement cost.

"Sometimes we like betting on retailers that we know are not under distress, or the rents are cheap," Horgan said.

Typically, the firm avoids buying smaller retail properties that cost between $15 and $20 million. Its ideal target ranges between $30 million to $100 million. "It's easier for us to put our redevelopment expertise on it," Horgan highlighted.

A CAPITAL ADVANTAGE

For many CRE operators — high interest rates have caused issues on the deal-making front. However, Brixmor has an advantage in being a public company — where it can issue shares for equity, or bonds for debt.

"Both our equity and bond prices have been attractive lately," Horgan said.

"We price bonds with a 10-year treasury, our credits have really compressed when we compare where we think we can issue public bonds relative to where a private buyer can issue CMBS or bank debt we think we have a real advantage there that helps us show up to a table and understand where we can make money day one when we own an asset, and then, more importantly, over time, as we grow it."

CONCERNS FOR 2025

While Horgan can't predict where interest rates will wind up in 2025, he expects them to be "stable" once the market does the same.

The biggest obstacle along with interest rates right now for Brixmor is adding the right talent to its team to drive short-term and long-term business growth.

But the fundamentals look solid for Brixmor heading into next year.

"We're pretty sure we'll find our place to put money to work in 2025," Horgan said.

Source: GlobeSt/ALM