that will bring it to “the next level,” the CEO says. Among
these additions is Michael Pralle, formerly president and CEO
of GE Real Estate. Pralle, who is JER’s president and COO, is
charged with overseeing the company’s strategic growth and
managing its daily operations.
“America’s economy is growing at 1%, maybe negative 1%,
while emerging markets are growing at 4% to 10%,” Robert says.
“So we’ll pursue the same mission as in 1981: to leverage our
skill sets and position ourselves to capitalize on crises.”
The newly elected chairman of the National Association of
Real Estate Investment Trusts, Martin “Hap” Stein also heads
one of the nation’s leading retail REITs. Jacksonville, FL-based Regency Centers is known for its innovative business
strategies, its commitment to confronting environmental
issues as it expands into new markets and its ability to adapt
its developments to local conditions. Now in his 20th year as
CEO of Regency, Stein says he and his team are uniquely
positioned to flourish at a time when many owners of retail
properties fear the consequences of an economic downturn.
“We’ve built our strategy around owning and operating high-quality grocery- and community-anchored shopping centers and
creating value for our shareholders by recycling capital and utilizing co-investment partnerships that let us grow our portfolio
and strengthen our balance sheet,” Stein explains. “Today’s environment is challenging, but we’re positioned to perform well.”
How so? The executive says the company is well capitalized;
its centers focus mainly on convenience- and necessity-driven
retail, “which is always cycle-resistant;” its projects are significantly leased before breaking ground; and “if you have strong
anchor tenants and are located in top metropolitan areas with
attractive demographics, you’re going to outperform the field.”
One of the secrets to successful retail development, says
Stein, is to strike the right balance of small and large spaces.
“A common mistake is to create too many spaces for small
shops,” he says. “But at the same time, you want to create a
property that’s welcoming to the Starbucks, the Subways and
the UPS Stores, as well as to Kroger and Target.”
At present, Regency has approximately $1.1 billion in the
development pipeline—55% funded, 80% preleased.
According to its year-end 2007 earnings results, those projects are expected to generate an approximately 9% return on
net costs after partnership participation.
Regency’s showcase project is a 67,226-sf Whole Foods-anchored center in Santa Barbara, CA that will
serve as a pilot project for the US Green Building
Council, in which each participant in the development will earn LEED points for the green elements
under its control. The total number of points will
determine whether the project achieves LEED certification. “It’s a mixed-use, infill project,” Stein
explains, “and it will feature environmentally sensitive materials throughout. It should be finished
in a couple of years. Right now, we’re still working
on the entitlement process.”
Last fall, Regency announced that it would seek
LEED certification on 20% of its 2008 development
starts, with that number increasing to 40% next year
and 60% in 2010. It will also work toward achieving
certification for its existing properties.
As chairman of NAREIT, Stein says he hopes to
help promote legislation that would help modernize
the REIT industry and to let the general public know
about the soundness of REITs as investments. “We
have a compelling story to tell investors here and
abroad,” he says. “The REIT industry has a 15- to 20-
year track record of outperforming other investment vehicles,
and the transparency of REITs is another point we want to
“We may be going into a slowdown, but REITs in general
have strong balance sheets, strong management teams and
well-leased portfolios,” he adds.
Generally, when credit gets tight,
regional banks and insurance companies gain power as sources of commercial real estate debt. As one of the
largest life insurance lenders in the
business, Prudential Mortgage Capital
is widely expected to be a major force
in the market this year. The company’s president, David Twardock,
explains that it’s not just as a straight
portfolio lender that Prudential will
show strength. Rather, he says, it’s the company’s versatility that
will bring success.
“We are one of the largest Fannie Mae DUS lenders,” he says.
“We do a lot of FHA multifamily lending and loans for securitization. We have a multi-pronged program. People tend to think of