The Big Get Bigger

Fourth-ranking acquirer Inland Real Estate Group of Cos. purchased Sherman Town Center in the heart of Chicago’s hottest Lake Shore suburb for development, Evanston, Ill.

Editor’s Note:Chain Store Age’s 18th annual survey of Fastest-Growing Acquirers measured retail square footage purchased during the preceding calendar year–2006.

With capitalization rates continuing at record lows, and record high prices for retail real estate, a casual observer really might not expect to see companies acquiring more than 30 million sq. ft. of retail space in a year.

Yet the top two acquirers for 2006 did exactly that, helping to consolidate a still-fragmented open-air business in the United States, and extending their reach outside the country.

And the consolidation shows no sign of slowing down, with a parent of top acquirer Centro Watt already agreeing to buy No. 5-ranked New Plan Excel Realty Trust.

No. 1: Centro Watt

2006 Fastest-Growing Acquirers Source: Chain Store Age research and company reports
Centro WattPlymouth Plaza, Pa.37,481,656 sq. ft.
Kimco Realty Corp.New Hyde Park, N.Y.36,387,778 sq. ft.
Developers Diversified RealtyBeachwood, Ohio9,888,836 sq. ft.
Inland Real Estate Group of Cos.Oak Brook, Ill.9,683,258 sq. ft.
New Plan Excel Realty TrustNew York, N.Y.4,358,147 sq. ft.
DLC ManagementTarrytown, N.Y.4,061,700 sq. ft.

Centro Watt placed first among acquiring companies in 2006, and now its co-parent, Melbourne, Australia-based Centro, has announced plans to acquire New Plan Excel Realty Trust.

The 2006 numbers were dominated by Centro Watt’s $3.3-billion purchase of Heritage Property Trust, a transaction that added 22 million sq. ft. of retail space at once.

“The market in the United States is very deep and broad,” said Tony Torney, COO of Philadelphia-based Centro Watt.

Centro Watt also is a joint venture of Santa Monica, Calif.-based Watt Commercial, giving the company fund-ing—and motivation.

“We have a lot of money coming out of the Australian capital markets,” Torney observed. In addition, most of the local institutional-grade assets already are held by owners not looking to sell in the near term. So Centro Watt has looked to the United States, and also is looking in the United Kingdom for quality retail assets.

Centro Watt
Property Acquisitions Completed in 2006
Total for 2006: 7 properties in 6 states, plus Heritage portfolio Source: Chain Store Age research and company reports Properties alphabetized by state.
Heritage REIT Portfolio157 properties in 27 states32,500,000 sq. ft.
Eagle Rock PlazaLos Angeles, Calif.459,717 sq. ft.
Westland Town CenterLakewood, Colo.533,342 sq. ft.
Enfield SquareEnfield, Conn.798,398 sq. ft.
West Park MallCape Girardeau, Mo.525,328 sq. ft.
Independence MallWilmington, N.C.1,021,423 sq. ft.
Midway MallElyria, Ohio1,110,420 sq. ft.
Richland MallRichland, Ohio533,028 sq. ft.
37,481,656 sq. ft.

The company entered the United States early in the decade, largely on the West Coast, then became a major player in the Northeast with its 2005 acquisition of Kramont Realty Trust. And future acquisitions certainly are possible.

“Who knows?” Torney said. “We try to look at every opportunity that makes sense to our investors.”

No. 2: Kimco Realty Trust

Adding 36 million sq. ft. to a portfolio involved more than just buying Pan Pacific Retail Properties. Though that single $4 billion transaction added 138 properties totaling 22.6 million sq. ft. to its list, New Hyde Park, N.Y.-based Kimco Realty Trust used various transaction types to build its portfolio.

“The company has done a good job over the years of buying multiple portfolios,” said David Henry, chief investment officer. “Pan Pacific was the fifth public company we’ve bought since 1998.”

Developers Diversified Realty
Property Acquisitions Completed in 2006
Subtotal (16 properties in 11 states)Subtotal from acquisition of 51 Service Merchandise locations in 24 statesSubtotal from acquisition of Brazil portfolio (9 properties)Total for 2006: 76 properties in 30 states and BrazilSource: Chain Store Age research and company reportsProperties alphabetized by state.
Riverchase PromenadeBirmingham, Ala.21,774 sq. ft.
Deer Valley Towne CenterPhoenix, Ariz.453,815 sq. ft.
Paseo ColoradoPasadena, Calif.556,961 sq. ft.
MervynsSan Diego, Calif.73,872 sq. ft.
MervynsValencia, Calif.77,776 sq. ft.
Flatacres MarketcenterParker, Colo.221,520 sq. ft.
Turner Hill MarketplaceLithonia, Ga.157,175 sq. ft.
McDonough MarketplaceMcDonough, Ga.22,658 sq. ft.
Overland Pointe MarketplaceOverland Park, Kan.83,047 sq. ft.
Fairplain PlazaBenton Harbor, Mich.222,739 sq. ft.
Riverdale VillageCoon Rapids, Minn.33,637 sq. ft.
Tri-County MallCincinnati, Ohio1,336,157 sq. ft.
Township MarketplaceMonaca Pa.46,470 sq. ft.
Frisco MarketplaceFrisco, Texas107,543 sq. ft.
McKinney MarketplaceMcKinney, Texas118,967 sq. ft.
The Marketplace at Town CentreMesquite, Texas178,925 sq. ft.
3,713,036 sq. ft.
2,748,625 sq. ft.
3,427,175 sq. ft.
9,888,836 sq. ft.

But over time, its acquisition strategy is changing, essentially turning the company into managers for pension funds, Henry said. Kimco’s purchases in the United States are largely for pension funds rather than for its own portfolio, he noted.

When investing its own capital, the company is pursuing more opportunistic deals, increasing its investments in Canada and Mexico, and acquiring property in Mexico for ground-up development.

No. 3: Developers Diversified Realty

Long one of the major consolidators of open-air centers, Developers Diversified Realty continued to be a major purchaser in 2006. Perhaps most interesting, the company took a 50% interest in Sonae Sierra Brazil, giving the company interests in nine malls. In addition, it plans to acquire and develop throughout Brazil, feeding both its development and acquisition pipelines. Many acquisitions this year will be part of its $3 billion joint venture with TIAA-CREF, giving the company a new role, that of a fund manager, as well as an owner.

“That’s how we’re able to do these deals,” said Scott Wolstein, CEO of Beachwood, Ohio-based Developers Diversified Realty.

Already this year, Developers Diversified has closed on a $6 billion, 43.6 million-sq.-ft. acquisition of Inland Retail Real Estate Trust, yet another joint venture with TIAACREF.

No. 4: Inland Real Estate Group of Cos.

Kimco Realty Corp.
Property Acquisitions Completed in 2006
Subtotal (43 properties in 19 states)Subtotal of various properties and portfolios in 10 statesSubtotal of Canada acquisitionsSubtotal of Puerto Rico acquisitionsSubtotal of Mexico acquisitionsSubtotal of Pan Pacific acquisition (140 properties in 7 states)Total for 2006:Source: Chain Store Age research and company reportsProperties alphabetized by state.
Diamond Shopping CenterAnchorage, Alaska85,163 sq. ft.
Foothills MallTucson, Ariz.503,084 sq. ft.
Cupertino VillageCupertino, Calif.115,000 sq. ft.
Poway CenterPoway, Calif.16,000 sq. ft.
Tyler Street PlazaRiverside, Calif.86,000 sq. ft.
Groves at LakelandLakeland, Fla.105,000 sq. ft.
Cypress Lakes Town CenterPalm Aire, Fla.250,000 sq. ft.
Riverwalk MarketplaceDuluth, Ga.78,000 sq. ft.
South Central Shopping CenterMoultrie, Ga.196,589 sq. ft.
Shops at KildeerKildeer, Ill.167,000 sq. ft.
Bridgewood PlazaWest Des Moines, Iowa63,423 sq. ft.
Overland ParkOverland Park, Kan.205,779 sq. ft.
Owensboro Town CenterOwensboro, Ky.156,672 sq. ft.
East Side PlazaShreveport, La.78,591 sq. ft.
Mallside PlazaPortland, Maine91,000 sq. ft.
Long Gate Shopping CenterEllicot City, Md.433,000 sq. ft.
180 Canal StreetBoston, Mass.30,859 sq. ft.
Boston MBC portfolioBoston, Mass.748,998 sq. ft.
Haverhill PlazaHaverhill, Mass.63,203 sq. ft.
The Center at Hobbs BrookSturbridge, Mass.231,000 sq. ft.
Fountains at Arbor LakesMaple Grove, Minn.407,000 sq. ft.
Windsor Corporate ParkEast Windsor, N.J.287,065 sq. ft.
Edgewater CommonsEdgewater, N.J.424,000 sq. ft.
Market at Bay ShoreBay Shore, N.Y.177,000 sq. ft.
Pathmark Shopping CenterCentereach, N.Y.102,000 sq. ft.
Airport PlazaFarmingdale, N.Y.448,000 sq. ft.
100 Van Dam StreetNew York, N.Y.40,600 sq. ft.
387 Bleeker StreetNew York, N.Y.1,349 sq. ft.
625 BroadwayNew York, N.Y.83,000 sq. ft.
Hylan PlazaStaten Island, N.Y.358,000 sq. ft.
Clakamas PromenadeClakamas, Ore.237,000 sq. ft.
Great Northeast PlazaPhiladelphia, Pa.290,000 sq. ft.
Arboretum and SouthbrookAustin, Texas, and Georgetown, Texas94,651 sq. ft.
Century SouthAustin, Texas341,559 sq. ft.
Homestead Shopping CenterAustin, Texas88,829 sq. ft.
Sunset Valley MarketfairAustin, Texas290,000 sq. ft.
Conroe MarketplaceConroe, Texas244,000 sq. ft.
Crème de la CrèmeCoppell, Texas20,000 sq. ft.
Trinity MillsDallas, Texas18,740 sq. ft.
Cottonwood VillageHouston,Texas350,000 sq. ft.
Lake Jackson MarketplaceLake Jackson, Texas58,106 sq. ft.
Round Rock WestRound Rock, Texas131,039 sq. ft.
Westbank MarketWest Lake Hills, Texas138,000sq. ft.
8,334,299 sq. ft.
2,694,631 sq. ft.
2,326,848 sq. ft.
2,150,000 sq. ft.
986,000 sq. ft.
19,896,000 sq. ft.
36,387,778 sq. ft.

Inland Real Estate Group of Cos. dropped from first place among acquirers in 2005 to fourth place a year later, but that does not mean its people weren’t working hard. In fact, they’ve been busier than ever.

“Last year was rather unusual in that we had a much higher percentage of acquisitions that came to us through sellers calling us cold,” said a laughing Joe Cosenza, vice chairman of The Inland Real Estate Group of Cos., Inc., and president of Inland Real Estate Acquisitions, Oak Brook, Ill. “And I’d like to thank each and every one.”

But such transactions are harder on Inland’s staff than buying entire portfolios.

“We might do 200 or 300 a year where others do 100 or even 50.” They’re also a testament to Inland’s success, he added.

“The world woke up to what we’re doing, which is good and bad,” Cosenza said. “It means we’re a step up in people’s eyes, and people want to invest with us.” As of Dec. 31, 2006, The Inland Real Estate Group of Cos., Inc. owned 116 million sq. ft. of retail, as well as industrial and office projects, and undeveloped land.

No. 5: New Plan Excel Realty Trust

In a buyers’ market, sometimes the buyer itself can get bought. A case in point is New Plan Excel Realty Trust. At presstime, New Plan was to be acquired by Melbourne, Australia-based Centro Properties Group, a parent of top-ranking Centro Watt, for $6.2 billion.

During 2006, New Plan added nearly 4.4 million sq. ft. in 15 states for an aggregate investment of $515 million, including $336 million of co-investments, despite low cap rates and competition for the best properties.

“Our access to multiple capital sources and capacity to efficiently source, underwrite and integrate assets on a national basis [given our state-of-the-art national infrastructure] has become increasingly important given the highly competitive market for our property type,” said Stacy Slater, senior VP of corporate communications.

Transactions included acquisitions of neighborhood and community centers in Tennessee, Illinois and Texas, among other states, both individually and in partnership.

At presstime, the acquisition by Centro was expected to be completed in the second quarter of 2007.

Inland Real Estate Group of Cos.
Property Acquisitions Completed in 2006
Total for 2006: 71 properties in 26 states Source: Chain Store Age research and company reports Properties alphabetized by state.
Northwood CrossingTuscaloosa, Ala.148,749 sq. ft.
Yuma Palms Regional CenterYuma, Ariz.496,224 sq. ft.
Pacheco Pass Phase IIGilroy, Calif.95,036 sq. ft.
Stop & ShopSouthington, Conn.64,948 sq. ft.
Lakewood Shopping Center Phase IMargate, Fla.149,077 sq. ft.
Walter’s Crossing Shopping CenterTampa, Fla.126,912 sq. ft.
Eastwynn Theatres, Inc.Athens, Ga.52,990 sq. ft.
Old Time PotteryDouglasville, Ga.110,174 sq. ft.
Battle Ridge PavilionPowder Springs, Ga.103,517 sq. ft.
The Plaza at Eagles LandingStockbridge, Ga.33,266 sq. ft.
Algonquin CommonsAlgonquin, Ill.565,000 sq. ft.
Fabyan Randall PlazaBatavia, Ill.91,395 sq. ft.
Lincoln VillageChicago, Ill.138,962 sq. ft.
Discovery Clothing Co.Glendale Heights, Ill.10,000 sq. ft.
TSA Stores, Inc.Glendale Heights, Ill.42,000 sq. ft.
Ulta Cosmetics & SalonGlendale Heights, Ill.8,820 sq. ft.
Shops of Sherman PlazaEvanston, Ill.152,264 sq. ft.
Ravinia PlazaOrland Park, Ill.101,384 sq. ft.
State Street MarketRockford, Ill.193,657 sq. ft.
Wauconda CrossingsWauconda, Ill.90,290 sq. ft.
East Lloyd CommonsEvansville, Ind.159,681 sq. ft.
Honey Creek CommonsTerre Haute, Ind.179,100 sq. ft.
Stop & ShopFramingham, Mass.64,917 sq. ft.
Stop & ShopMalden, Mass.79,229 sq. ft.
Stop & ShopSwampscott, Mass.65,268 sq. ft.
Bangor Parkade Shopping CenterBangor, Maine232,764 sq. ft.
The Centre at LaurelLaurel, Md.157,909 sq. ft.
Walgreens Drug StoreWestland, Mich.13,905 sq. ft.
Big Lake Town SquareBig Lake, Minn.67,835 sq. ft.
Apache ShoppesRochester, Minn.60,780 sq. ft.
Shakopee CenterShakopee, Minn.103,442 sq. ft.
The Shoppes at GrayhawkOmaha, Neb.226,720 sq. ft.
Monadnock MarketplaceKeene, N.H.200,775 sq. ft.
Greenwich CenterPhillipsburg, N.J.186,520 sq. ft.
Giant FoodsSicklerville, N.J.68,323 sq. ft.
Stop & ShopHyde Park, N.Y.52,500 sq. ft.
Pavilion at King’s Grant Phase IIConcord, N.C.142,471 sq. ft
Patterson Place Shopping CenterDurham, N.C.161,017 sq. ft.
Harper Hill CommonsWinston-Salem, N.C.96,914 sq. ft.
Canfield PlazaCanfield, Ohio100,949 sq. ft.
Stringtown CrossingGrove City, Ohio143,938 sq. ft.
Market at Hilliard Shopping CenterHilliard, Ohio107,544 sq. ft.
The Stack at the WaterfrontHomestead, Pa.29,825 sq. ft.
Stop & ShopBristol, R.I.63,128 sq. ft.
Stop & ShopCumberland, R.I.85,799 sq. ft.
Lincoln MallLincoln, R.I.439,132 sq. ft.
BI-LOGreenville, S.C.55,718 sq. ft.
The Shops at the PointGreenville, S.C.104,645 sq. ft.
Plaza at Carolina ForestMyrtle Beach, S.C.124,437 sq. ft.
East Stone Commons Shopping CenterKingsport, Tenn.272,145 sq. ft.
Crockett Square Shopping CenterMorristown, Tenn.107,122 sq. ft.
Crossroads SquareMorristown, Tenn.70,000 sq. ft.
Willowbrook CommonsNashville, Tenn.93,600 sq. ft.
South Towne CrossingBurleson, Texas59,986 sq. ft.
Rivery Town CrossingGeorgetown, Texas74,456 sq. ft.
Eldridge Lakes Town CenterHouston, Texas35,480 sq. ft.
CyFair Town CenterHouston, Texas47,520 sq. ft.
New Forest Crossing Shopping Center Phase IIHouston, Texas26,680 sq. ft.
Hunting Bayou Shopping CenterJacinto City, Texas133,165 sq. ft.
Lake Worth Towne CrossingLake Worth, Texas239,761 sq. ft.
Craig CrossingMcKinney, Texas123,216 sq. ft.
Brooks Corner Shopping CenterSan Antonio, Texas166,205 sq. ft.
Sherman Town CenterSherman, Texas353,621 sq. ft.
Southlake CornersSouthlake, Texas135,128 sq. ft.
Spring Town CenterSpring, Texas40,571sq. ft.
Colony SquareSugar Land, Texas435,268 sq. ft.
Riverpark Shopping CenterSugar Land, Texas308,405 sq. ft.
Central Texas MarketplaceWaco, Texas525,906 sq. ft.
Hollywood EntertainmentVirginia Beach, Va.7,488 sq. ft.
Walgreens Drug StoreOshkosh, Wis.13,905 sq. ft.
Pick’n Save Shopping CenterWaupaca, Wis.63,780 sq. ft.
9,683,258 sq. ft.

No. 6: DLC Management Corp.

Its niches may be narrow, but they are deep—deep enough for Tarrytown, N.Y.-based DLC Management Corp. to acquire 4 million sq. ft. of retail space last year (at a combined price tag of $355 million), enough for it to rank sixth on this year’s list.

Those niches are open-air centers in older markets with ethnic diversity that need just a bit of help, and centers in university towns.

“We don’t buy the Triple-A’s, and we don’t buy the C centers and down,” explained Adam Ifshin, president. “We’re operating in this space that a lot of people don’t understand, or have the ability to proceed operationally once they get a project.”

Among its transactions last year were a 10-center acquisition from Edens & Avant, and individual projects through the year.

“We look at every asset and ask, ‘Can we do a unique business plan that will get us the returns we want?’” Ifshin said. The company regularly assesses its capabilities, and literally has a playbook for each stage of future growth.

That’s particularly critical now that the company is adding a new focus—ground-up development. The company formed a development division in 2006, and plans more than $100 million in new projects this year.

New Plan Excel Realty Trust
Property Acquisitions Completed in 2006
Total for 2006: 24 properties in 11 states Source: Chain Store Age research and company reports Properties alphabetized by state.
SpringdaleMobile, Ala.612,616 sq. ft.
Fox Run MallGlastonbury, Conn.97,086 sq. ft.
Ventura DownsKissimmee, Fla.98,191 sq. ft.
Fashion SquareOrange Park, Fla.36,029 sq. ft.
Cobblestone VillageRoyal Palm Beach, Fla.33,207 sq. ft.
Tyrone GardensSt. Petersburg, Fla.209,337 sq. ft.
Building at Tarpon MallTarpon Springs, Fla.6,580 sq. ft.
Augusta West PlazaAugusta, Ga.187,823 sq. ft.
Conyers PlazaConyers, Ga.171,478 sq. ft.
Banks StationFayetteville, Ga.176,451 sq. ft.
The Quentin CollectionKildeer, Ill.171,179 sq. ft.
Marketplace at MattesonMatteson, Ill.309,864 sq. ft.
Chicopee MarketplaceChicopee, Mass.121,420 sq. ft.
Greatwoods MarketplaceNorton, Mass.117,827 sq. ft.
Wakefield CommonsRaleigh, N.C.160,949 sq. ft.
Wilkes-Barre Township MarketplaceWilkes-Barre, Pa.307,610 sq. ft.
Shoppes at Hickory HollowAntioch, Tenn.144,469 sq. ft.
Building at Hazel PathHendersonville, Tenn.94,977 sq. ft.
Memphis CommonsMemphis, Tenn.336,638 sq. ft.
Shelby SquareMemphis, Tenn.155,969 sq. ft.
Parmer CrossingAustin, Texas169,517 sq. ft.
Odessa-Winwood Town CenterOdessa, Texas343,603 sq. ft.
Baybrook GatewayWebster, Texas236,854 sq. ft.
Building at Westpark Shopping CenterGlen Allen, Va.58,473 sq. ft.
4,358,147 sq. ft.

DLC Management
Property Acquisitions Completed in 2006

Total for 2006: 20 properties in 11 states Source: Chain Store Age research and company reports Properties alphabetized by state.
Centre at RiverchaseBirmingham, Ala.132,734 sq. ft.
Florence SquareFlorence, Ala.239,516 sq. ft.
Tri-City PlazaVernon, Conn.300,038 sq. ft.
Amelia PlazaFernandina Beach, Fla.91,727 sq. ft.
Five Forks CornerLilburn, Ga.88,646 sq. ft.
Tree Trail VillageNorcross, Ga.99,236 sq. ft.
Riverdale CrossingRiverdale, Ga.92,786 sq. ft.
Indian Creek CrossingStone Mountain, Ga.63,650 sq. ft.
Rockbridge PlaceStone Mountain, Ga.71,268 sq. ft.
Northland PlazaDeKalb, Ill.297,438 sq. ft.
Highland PlazaHighland, Ill.107,021 sq. ft.
Eastover PlazaOxon Hill, Md.260,092 sq. ft.
Namco PlazaSeekonk, Mass.101,782 sq. ft.
East Park PlazaLincoln, Neb.212,655 sq. ft.
East Park Shopper’s FairLincoln, Neb.67,07 sq. ft.
Akers CenterGastonia, N.C.240,957 sq. ft.
Midtown PlazaParma, Ohio241,223 sq. ft.
Fort Steuben MallSteubenville, Ohio823,353 sq. ft.
Salem Consumer SquareTrotwood, Ohio274,652 sq. ft.
Winchester CourtMemphis, Tenn.255,853 sq. ft.
4,061,700 sq. ft.

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