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PHILADELPHIA-PREIT (RECon booth S500W) is one of GlobeSt.com's Thought Leadership partners around the ICSC convention next week in Las Vegas. We recently spoke with Joseph Coradino, the mall REIT's chief executive officer, who we will interview on camera at the conference. Coradino was upbeat about retail real estate in the current evironment and expects his firm to have a strong showing this year at RECon.

GlobeSt.com: How do you feel about the consumer and economy right now?

Joseph Coradino: The wind is at our back. We're seeing occupancy moving in the right direction. Sales, while they have begun to moderate, continue to be generally healthy. The consumer has continued to shop in spite of the setbacks such as the new tax code. Unemployment seems to be moving in the right direction. Housing, which is a big barometer for us, is regaining steam and is healthier than it has been in a number of years.

GlobeSt.com: What types of tenants are you seeing expand right now?

Coradino: Clearly, restaurants are a big focus in our industry as a whole. They change the nature of the shopping trip. People tend to be more relaxed and at ease when they go out to dinner and then go shopping. There is great synergy between restaurants and retail. There is also a trend of international retailers that we are seeing that are helping to reshape our industry and fill in for the tenants that we lost or that downsized during the recession. H&M from Sweden, Uniqlo from Japan, Cotton On from Australia and Garage from Canada. We're drawing from all parts of the globe. That's a good thing because businesses and retailers in particular have recognized that in spite of the cyclical economics that the US is still the strongest economy in the world.

GlobeSt.com: Does this also allow for more diversification in your portfolio?

Coradino: Diversification and differentiation. It allows us to bring some new tenants into our properties. That's a good thing.

GlobeSt.com: How are B malls doing right now?

Coradino: You're seeing a movement of tenants into that sector. In some cases they were formerly open-air-center tenants like Ross Dress For Less, T.J. Maxx, Dress Barn, Charlotte Ruse, and Rue 21. We're seeing a regained tenant demand in mall types, both A and B.

GlobeSt.com: So those tenants are finding spaces they weren't able to get into before?

Coradino: Part of it is driven by a slowdown of supply in open-air centers. There hasn't been a lot of development, as these tenants look to grow, it's kismet, if you will. We're looking to incorporate new tenants into the B-mall space, and they're supply is constrained. Both things result in it being good for the mall sector.

GlobeSt.com: Do you have any new goals this year at the convention?

Coradino: We're real focused on identifying new first-to-portfolio retailers. We're looking at ICSC as an opportunity to introduce some retailers that we haven't done business with before. We are going to be selling the fact that we control eight of the 20 malls in the Philadelphia market, which is the six-largest in the country, and we're going to be really driving that point home. We've got quality assets in a strong and growing market. We'll also be highlighting the Gallery in downtown Philadelphia and have a whole room dedicated to it.

GlobeSt.com: What do you think the mood will be like? Will attendance be up?

Coradino: Attendance will be up. I get excited every year when I go to Vegas, and it's not because I'm a gambler because I'm not. I figure I gamble every day at the office. I'm really looking forward to it. It's going to be an upbeat conference and a place where we made more deals than in 2007. We will see continued growth across mall segments, A and B.

GlobeSt.com: Any theme people will be discussing this year?

Coradino: Our theme this year will be quite simple: Make It Happen. We've really transformed ourselves in the past year. We sold off assets at the bottom of our portfolio and lowered our leverage. We had the highest leverage in our sector, and we're now kind of in the middle of the pack. We found ourselves with assets that tenants wanted to leave and have sold off a number of those. We'll go to Vegas feeling pretty good in terms of our capital structure and the quality of our portfolio. For us, it's really about making it happen.

GlobeSt.com: Are there any headwinds you see on the horizon that concern you?

Coradino: We learned one thing, that nothing is forever. What might derail us is an economic slowdown. But we will be OK for the next couple of years. It's been quite a slow recovery, not meteoric like the ones in the past. As a result we are handling it the right way this time. We have a couple of years to talk about solving what the problems are. Also, the department-store sector is one we remain cautious about. Given those two things as a caveat, we will be OK over the next couple of years.

Instant Insights /

PREIT's Coradino: 'The Wind Is at Our Back'

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