This post is sponsored by Pennsylvania Real Estate Investment Trust (PREIT).
As shopper demands change, retailers and developers are working to create locations that offer unique experiences that appeal to consumers. To position itself for the future, PREIT has been evolving its portfolio of properties under the leadership of CEO Joe Coradino.
Here we talk to him about his recent changes to the company and where and how he plans to position it for growth.
Question: Since becoming CEO, you’ve done a lot to reposition the company’s portfolio. Can you tell us how that is helping in the current market?
Joe Coradino: Our portfolio transformation is the result of our focus on several key initiatives that we announced when I became CEO in 2012. The disposition program was particularly noteworthy. We have sold 13 lower-performing malls and other noncore properties. With the sale proceeds, we’ve been able to reinvest capital in stronger assets and have paid down debt, which has ultimately strengthened our position in the market and made our portfolio more compelling to retailers and investors. PREIT has carved out a new niche with a portfolio composed largely of major market assets with superior demographics that will allow us to deliver net operating income (NOI) growth reflective of our uniquely positioned portfolio.
Q: How are you competing with other property owners in terms of attracting new retailers and customers?
JC: It really comes down to providing a differentiated experience for our shoppers. For example, we recently began the build-out for the new Legoland Discovery Center at Plymouth Meeting Mall, just outside of Philadelphia, which will open in 2017. This drastically expands the mall’s trade area and will transform the center into a true regional tourism destination. Combine that with an amazing collection of restaurants and complementary retail offerings and we are giving guests a compelling reason to stay on property all day long. It’s a win-win scenario for shoppers and our retailers.
Q: Are retailers seeing results from the strategic shift?
JC: Retailers benefit from our strategy in a major way. With a stronger portfolio, we can take a more focused approach on creating compelling retail environments, driving traffic and stimulating sales. Comp sales were up nearly 10% in 2015 and we are on the path to being a $500 per square foot REIT in the near future.
Q: How are these moves attracting new investors?
JC: We’ve demonstrated sustained success for the past several years. Goals outlined in 2012 have been achieved. And we are well on the way to making the objectives we established during January’s investor event a reality. As we sit here today, we have created a stable platform with a flexible balance sheet and realizable redevelopment and organic NOI growth opportunities. The composition of our investor base has evolved with significantly higher institutional ownership than ever before. The analyst community has taken note, and its sentiment is markedly optimistic, which echoes our outlook for the future.
Q: Can you tell us how you will continue to innovate as market conditions change?
JC: As shopper behavior is changing, so is the way we speak to customers. We’re beginning to use technology to our advantage and engaging with shoppers on a whole new level via beacons, rewards programs, exciting on-mall activations and unique amenities at our centers — ones we hope will keep shoppers in the mall longer so they stay engaged with our retailers. Successful mall developers won’t look at technology as a threat to sales, but will embrace the new omnichannel retail paradigm.