RPAI Tallies Impressive Totals for 2015

Retail Properties of America Inc. ended 2015 strong, with total investment activity of $979.5 million and and capital markets activity of more than $1 billion.

By Scott Baltic, Contributing Editor

Steve Grimes, RPAIRetail Properties of America Inc. logged some major numbers this past year, with total investment activity of about $979.5 million, consisting of $463.1 million in acquisitions and $516.4 million in dispositions, the REIT, based in Oak Brook, Ill., announced late last week. The company also had total 2015 capital markets activity of $1.45 billion, including an amended and restated credit facility of $1.2 billion and a first-quarter public offering of $250 million of 4.00 percent senior unsecured notes due 2025.

The credit facility, which closed on Jan. 6 of this year, increased total capacity by $200.0 million, extended the term by a weighted average of 2.2 years and lowered the interest rate by a weighted average of 13 basis points.

On the acquisition side, its $463.1 million bought RPAI eight high-quality, multi-tenant retail assets and three strategically adjacent retail assets (those three in parentheses):

  • Downtown Crown, metro Washington, D.C.
  • Merrifield Town Center, metro Washington, D.C.
  • Fort Evans Plaza II, metro Washington, D.C.
  • Cedar Park Town Center, Austin
  • (Lake Worth Towne Crossing parcel, metro Dallas)
  • Tysons Corner, metro Washington, D.C.
  • Woodinville Plaza, metro Seattle
  • Southlake Town Square, Trader Joe’s, metro Dallas)
  • Coal Creek Marketplace, Seattle MSA (Q3)
  • (Royal Oaks – Trader Joe’s, metro Houston)
  • Towson Square, metro Baltimore

Overall, these acquisitions reportedly have a weighted average annualized base rent-per-occupied-square-foot of $21.54, a weighted average household income of $128,000 and a weighted average population of 103,000 within a three-mile radius. Moreover, RPAI noted that from acquisition to year’s end, it managed to increase occupancy for the 2015 acquisitions from 87.8 percent to 93.7 percent.

“RPAI believes in a localized and decentralized leasing process with local teams in our target markets,” a spokesperson told CPE. “This allows us to have a better understanding of the market and to complete more meaningful transactions because we can better nurture relationships with local owners, brokers and developers.”

On the other side of the ledger, RPAI completed about $516.4 million of dispositions, including the sale of 16 non-strategic, multi-tenant retail assets, five of its six remaining office assets, three single-user retail assets and two non-strategic development assets. The REIT completed its exit from multi-tenant retail properties in four states (Kansas, Montana, Oklahoma and Nevada) and in 12 markets it considers non-strategic, that is, outside of the target markets it has pursued since 2013, including: Lawrence, Kansas; Oklahoma City; St. George, Utah; Canton-Massillon and Columbus, Ohio; McAllen, Texas; Denver; Knoxville, Tenn.; Las Vegas; Traverse City, Mich.; Greensburg, Ind.; and Kalispell, Mont.

Finally, besides its new credit facility and the public offering, RPAI repaid $425.4 million of mortgage and construction debt with a weighted average interest rate of 5.54 percent and, in connection with the dispositions, defeased $70.1 million of mortgage debt with an interest rate of 7.50 percent.

“In only two-and-a-half years and in a very competitive investment environment, we recycled over 20 percent of our portfolio into high-quality, strategically located retail assets, significantly improving our demographic, ABR and growth profile,” president & CEO Steve Grimes said in a prepared statement. “We also continue to strengthen our balance sheet through opportunistic transaction activity, increasing liquidity, providing greater flexibility and lowering costs.”