REIT Executives Upbeat
On Property Values

DALLAS -- Some of the largest U.S. shopping center owners and operators remain largely unconcerned that the ongoing credit crisis and consumer-spending slowdown will lead to plummeting occupancy rates and slumping values for their properties.

Rather, several top executives participating in a panel discussion on Wednesday at a Wachovia Corp. investor conference in New York said their real estate investment trusts have portfolios large and diverse enough to withstand the market turbulence. Some noted that U.S. retailers, while nervous about this holiday season's results, still haven't signaled a major pullback in their expansion plans.

"It's a little hard for me to get too nervous when we talk about a maybe ever-so-slight downturn in the economy that could be a mild recession, might be a soft landing, but we don't know," said Andrew Alexander, chief executive officer of Weingarten Realty Investors, a shopping-center REIT based in Houston. "Our business is extremely recession-resistant. When you look at what's happened to all of our stock prices, it's a heck of an opportunity (considering) the stability of all of our platforms."

The panel discussion was webcast for investors and media by Wall Street Webcasting.

Several factors have combined to batter the stocks of REITs this year. Turmoil in the housing market, stoked by the credit crisis born of aggressive subprime lending in recent years, has sapped consumer confidence. Homeowners facing rising payments as their adjustable-rate mortgages reset to higher rates are less eager to spend freely at retail stores. In turn, retailers -- particularly those selling home-improvement and home-décor goods -- have seen their sales momentum slow.

Despite the upheaval, REIT executives on the panel said they have seen no significant falloff in leasing activity, perhaps because no one retail chain occupies a substantial portion of their properties. Some mentioned that the weakening U.S. dollar has drawn foreign investors looking to buy U.S. properties. Others mentioned that 8,000 people have attended a retail-leasing conference in New York this week hosted by the International Council of Shopping Centers.

"From the real-estate side, there are still absolutely deals happening," said Don Wood, president and CEO of Federal Realty Investment Trust, based in Rockville, Md. "Having said that, there will be a lot of private developers who can't get projects done who thought they could."

David Henry, vice chairman of Kimco Realty Corp., a shopping-center REIT based in New Hyde Park, N.Y., said Kimco minimized its risk with a diverse array of businesses including development, lending and money management, as well as properties in Mexico, Chile and Canada. He added that Kimco has $1.6 billion in cash and other liquidity sources to support it. "It is true that some of the retailers are pulling back," Mr. Henry said. "A lot of them are anxious about the holiday season and what's going to happen. It's a good time to have a strong balance sheet. I think most of us REITs are pretty well positioned."

Another REIT executive took comfort in the stability of her company's tenant base. "From an operating perspective, it's a good time for any of us who are in the grocery-anchored business, because it is clearly the most recession-resistant of any of the many types of retailers," said Mary Lou Fiala, president and chief operating officer of Regency Centers Corp., based in Jacksonville, Fla.

The stocks of the REITs represented on the Wachovia panel thrived in the rising market on Wednesday. Kimco closed at $39.23, up $1.49. Federal closed at $84.40, up $3.03. Weingarten closed at $34.48, up 73 cents. And Regency closed at $67.64 up $2.12. All are traded on the New York Stock Exchange.

Email your comments to rjeditor@dowjones.com.