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LAS VEGAS-Edens & Avant was one of the many developers that attended last month’s International Council of Shopping Centers’ RECon show not knowing exactly what to expect. Executives at the Columbia, SC-based firm that owns about 130 centers on the East Coast, knew their appointments were booked solid but weren’t sure what kinds of moods their retailers would express given the economic downturn. Terry Brown, Edens’ chief executive officer, took some time to speak with GlobeSt.com near the end of the convention to reflect on the show and give an update on his firm’s strategy since he last spoke with us in 2005. Though Brown still has concerns about the consumer, he said he was “pleasantly surprised” by the convention’s turnout.

GlobeSt.com: Has the downturn slowed down your business?

Brown: The economic headwinds are clearly an issue. We’ve had good levels of activity. We’ve had levels that three to five years ago you would have dreamed about having. But I think clearly we’re off from some of the froth around the activity from the last year or two, which is not really bad. The retailers here seem to be about doing deals. People have been very productive. Clearly, some of the retailers have slowed deals. The leverage has definitely shifted as it relates to the strength of the quality of the site. But it’s been a productive show.

We had guarded ourselves for a more guarded environment, so we have been pleasantly surprised with the levels of activity. People are making deals and thinking beyond 2009. Some retailers are even concerned about getting the stores that they need going out because they’re concerned that the developer won’t be able to deliver and the financing will be tight, and it will impact their growth plans. So that’s a positive. But I think we’re still cautious. This country is still under a lot of stress, and I think it will continue to impact our business and our retailers.

GlobeSt.com: So the show’s been busier than you had thought?

Brown: We knew what meetings were set before the show. Every single leasing person that we brought had a full slate of meetings. The message coming from the retailers was a bit better than expected. There was not an issue with the level of activity at the show by any means. There was plenty of activity, but the decision making was just a bit slower. We’re a bit more cautious; the retailers are a bit more cautious. That makes deal making a bit more tentative.

GlobeSt.com: Are you noticing any sectors in retailers that are having less extensive growth?

Brown: Clearly anything that’s home related. Hardware is a bit slower, video is a significant problem. And clearly apparel and upscale apparel. Women’s fashion is under some level of stress. Casual dining also has some stress as consumers have tended to eat down, whether its going to fast food, carryout or prepare-at-home foods.

GlobeSt.com: How is that impacting your portfolio. Are you targeting more fast-food tenants?

Brown: We look at each shopping center differently. We look at each space differently. A lot of the decision making that we do is based on that particular shopping center and the merchandising of that center. Is that the right retailer for that space in the long run? We’re not going to make any drastic decision making just for short-term economics. We’re a private company and we view our real estate, people and relationships over a long period of time. But if it’s a restaurant we don’t like for the long run, we will move to something different. Our occupancy has trended down for the last quarter and some of our areas, especially in Florida and the Southeast, are not immune to the problems that others in our space are having.

GlobeSt.com: How has it impacted development? Have your plans slowed?

Brown: The development business has changed a lot. Ten years ago, you were talking about a 24-month to 36-month timetable. Over the last 10 years developers are taking all of the risk on the zoning, entitlement and permitting. Real estate development in a strong demographic area takes 48 to 72 months. You tend to view those developments over a long period of time and not make drastic decisions. On the other hand, every single developer is looking at their pipeline. Clearly, retail leasing decisions are being slowed. We’re looking at every single development project. You look at your pro forma rents, absorption timetable to lease up space in a center, construction and land-carry costs and your market rents. Then you look at your cost of capital and make a decision as to whether to continue to work on a project or not. In some situations, we’ve had projects delayed, and in places like Atlanta and Richmond made a decision to sell some land that we acquired for development because the deals don’t make sense or are just too far out. But with most of our stuff, it’s too early to know how the market is going to be.

GlobeSt.com: Do you still look at non-infill projects?

Brown: We’ll still do suburban shopping centers if they’re in the sweet spot for one of our regional operating groups, but clearly, over the last four or five years we’ve sold 98 shopping centers, mostly in suburban locations, and reinvested almost all of that into strong demographic areas. We’re moving into Washington DC, Boston and in South Florida we’re concentrating on really strong demographic areas in Miami. So we are focused on demographic areas driven by household income and population density.

GlobeSt.com: Have you considered buying and building further west?

Brown: That’s not something we’ve looked at. Our strategic plan for the next five years revolves around being a market-dominant East Coast shopping-center owner. We’re not dominant in Metro New York, so we’re trying to get in there in a meaningful way. We’ll probably be exiting Cleveland, Tennessee and Pennsylvania this year, so we’ll be tightening down on that map. We think we drive great value out of our regional operating structures and leverage our platform much more easily in those markets.

GlobeSt.com: Do you look at this an opportune time to buy, or has pricing not really changed?

Brown: We haven’t seen any good buying opportunities. There are not enough sellers of high-quality portfolios who have to sell, so pricing hasn’t settled down. We’re out there aggressively looking, but we haven’t seen any great buying opportunities at this point.

GlobeSt.com: When do you see the environment turning around?

Brown: I’m a little concerned about a double-dip recession. I think the show has been positive and the level of productivity is very good, but I worry about the consumer. If you think about food prices and oil and health care and relatively flat to declining employment and lay on top of that tightening home equity situations, I worry. I don’t think there’s a real quick out of this. I don’t think there’s a quick fix for the consumer. And if you’re in the shopping-center business, all you’re really doing is extracting your fair share of commerce at your shopping centers. If the commerce is down, that’s going to squeeze us.

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