Objectives and strategy of the REIT
Through the execution of our Investment Strategy, we have a differentiated position within the retail REIT universe.
Focusing on retail community and neighbourhood centres:
Although there are several REITs focused on shopping centres in Canada, Partners REIT enjoys a rather unique position within the retail REIT universe. The triangle to the right, shows the different shopping centre types. There are a number of high profile players that focus on the higher tiers of the triangle (Super Regional Malls, Regional Malls, and Power Centres). The entities that focus on these types of centres play in rather limited market segments. The top three markets on the triangle account for only approximately 165 centres in Canada combined and represent only approximately 130 million square feet1. Due to the large demand and low supply for these centres, there is significant competition when these centres come to market. Within the community and neighbourhood centre sectors, there are a smaller number of key public players, including Partners REIT. Partners REIT is one of the only public entities entirely focused on the neighbourhood and community centre portions of the hierarchy and experiences very little competition from other groups in secondary markets. Partners REIT’s opportunity is even more pronounced when taking into account the size of it’s market compared to the top three sections of the hierarchy. There are approximately 2,180 community and neighbourhood shopping centres throughout Canada representing approximately 300 million square feet1.
“A” assets in “B” markets, “B” assets in “A” markets:
We apply an acquisition strategy of “A” assets in “B” markets and “B” assets in “A” markets. We believe that secondary real estate markets offer us the opportunity to acquire well-tenanted retail properties at attractive capitalization rates. By combining assets in the secondary market with high yielding primary real estate market assets, we believe that we will generate higher returns with less risk than if we were to focus exclusively on primary real estate markets.
Mid-market deal size between $10 and $40 million:
We focus on owning properties valued between $10 million and $40 million, allowing us to differentiate ourselves from small public and private real estate investors, who we believe generally look for smaller investments, while also acquiring properties that are small enough to minimize competition from large real estate investment trusts and institutions. We also look at larger acquisitions that do not fall into the investment parameters of larger real estate investment trusts or institutions that still provide good investment opportunities.
Stable rents via national and regional tenants:
We focus on owning retail properties and maintaining our retail properties with strong national and regional retail tenants, increasing the likelihood of those tenants fulfilling the lease terms to which they have committed and thereby providing Partners with stable cash flows.
Institutional grade properties:
We focus on owning properties that are of institutional grade or have the potential to become institutional grade through active management. This strategy presents two main benefits. First, focusing on institutional grade properties tends to generate more interest from national/regional retailers, resulting in more stable cash flows for Partners. Second, institutional grade properties tend to be more highly sought after and valued by others in the event of a disposition of a particular asset by Partners.
1 Source: Monday Report on Retailers, Ivanhoe Cambridge, and ICSC Research. Based on 2006 Data.