Canopy is the new lifestyle hotel brand from Hilton (HLT -4.5%), and Federal Realty Investment's (FRT +0.4%) urban mixed-use development, Pike & Rose in Rockville, MD, will be one of 11 locations chosen for the launch.
Set to open in 2016, the 177-room hotel will be built by a partnership of Federal Realty and The Buccini/Pollin Group.
Jefferies makes a couple of changes in its REIT coverage cashing in its chips on its Buy call for Federal Realty (NYSE:FRT) after a nice run for the stock this year, and throwing in the towel on its Sell rating for Equity Residential (NYSE:EQR) after that stock's big advance.
Federal Realty Investment Trust (FRT -0.1%) CEO Don Wood (webcast): One thing I hear a lot is we like the company, but it's too expensive. That may well be, he says, but we're a balanced company, not just strip centers or malls - the product we offer is a growing stream of cash flow in good times and bad; the best combination out there of high growth and low risk. "We would expect to double FFO in the next ten years."
AvalonBay (AVB +0.3%) CEO Timothy Naughton (webcast): He expects apartment supply growth of about 5% over the next three years, but that demand growth will be there to meet it. Giving a mid-quarter update for AVB, everything so far is inline with management's expectations. Effective rents in AVB's markets are growing 3-4% and trending positively through the year - May was much stronger than April which was better than March. Leading the way is Northern CA, and Seattle with rent growth of 6-7%. Mid-Atlantic trails the pack with flat growth.
Notably lower today with the major averages in the green are retail REITs Realty Income (O -1.5%) and National Retail Properties (NNN -1.7%), and shopping-center REITs like Kimco (KIM -1.1%), Inland Real Estate (IRC -0.6%), Federal Realty (FRT -1%), and Brixmor (BRX -1.2%).
Investors may be mulling over a continuing string of disappointing retail earnings reports and plans for mass store closings from the likes of RadioShack and Staples.
Tuesday's news of Sears closing its flagship downtown Chicago store comes on the heels of closings announced by Macy's and J.C. Penney, and is followed by today's word of job cuts at Target HQ.
These are just the beginning (continuation really) of a wave of similar actions likely to cause an average shrinkage in overall retail square footage of between one-third and one-half over the next 5-10 years, says Excess Space Retail Services' Michael Burden.
"Stores are making a long-term bet on technology," says Belus Capital Advisors analyst Brian Sozzi. "It simply doesn't make strategic sense to enter a new 15-year lease as consumers are likely to continue curtailing physical visits to the mall."
Keep an aye on the shopping center vacancy rate. It rose 550 basis points to 11% in the Great Recession, but has since recovered to just 8.9%. Will it make a higher high in the next downturn?
Within the closings is another trend - indoor malls are faring worse than outlet centers, outdoor malls, or stand-alone stores. Without a major reinvention, says Rick Caruso of Caruso Affiliated, traditional malls will go extinct. He's unaware of an indoor mall being build since 2006. "Any time you stop building a product, that's usually the best indication that the customer doesn't want it anymore."