Southwest Florida REIT Holdings Expand

The Sarasota Herald-Tribune sheds new light on the state’s commercial real estate market with an article in today’s paper. Although the vast majority of Southwest Florida real estate continues to be owned by individuals and partnerships, growing numbers of properties are being bought by real estate investment trusts (REITs).

Publicly traded companies that buy commercial real estate on behalf of shareholders, REITs act like mutual funds for investors, allowing individuals or others to own real estate while providing the liquidit of stocks. Across the U.S., REITs control roughly $700 billion worth of property, or about 15 percent of all so-called “investment grade” properties, according to the National Association of Real Estate Investment Trusts.

In Southwest Florida, REITs aren’t nearly as sizeable, but trusts do own dozens of properties, including diverse holdings such as the Sarasota Pavilion shopping center at Gulf Gate, the Winds senior community on Tuttle Avenue, the Windmill Manor community in Bradenton, and the Port Charlotte Town Center.

“Florida, in general, is attractive to us because of its demographics and buying power, and because of its mix of population and median income,” said Darryl Cater, spokesman for Inland Real Estate Corp., an Illinois-based REIT ranking as one of the top five shopping center owners in the entire country. “We believe it always makes sense to buy near other properties in our portfolio, so that we can take advantage of economies of scale.”

In the area, no one has taken better advantage of economies of scale than Equity Lifestyle Properties Inc., a Chicago-based REIT specializing in age-restricted RV and retirement communities. The owner of 84 real estate investment properties in Florida, Equity Lifestyle’s largest concentration of its 28-state, 290-property portfolio lies here in the Florida. It generated $414 million in revenue last year.

As part of its Florida real estate holdings, Equity Lifestyle controls a dozen properties, such as Encore communities in Charlotte County, the Villa del Sol and Terra Ceia communities in Manatee County, and the Bay Indies in Venice and the Bay Lake Estate in Sarasota County. Inland and Equity Lifestyle aren’t the only REIT giants with a Southwest Florida real estate presence, either.

Real estate behemoths as Simon Property Group, an Indianapolis-based REIT that owns 200 million square feet of property in 39 states, Vornado Realty Trust, a New Jersey-based REIT that owns 56 million square feet, and the Colonial Properties Trust, a Birmingham, Ala.-based REIT that owns or manages 46,537 apartment units, 20.2 million square feet of office space and 11.5 million square feet of retail, are all expanding to Florida.

Like Inland and others, REITs have focused on Southwest Florida thanks to a steady influx of wealthy residents with discretionary income. Murial Lange, director of investor relations with American Financial Realty Trust, a Jenkintown, Pa.-based REIT, said Southwest Florida allows the company to diversify its portfolio. The company’s 1,100 properties generated $521 million in 2005, and it owns 182 parcels in Florida overall.

“Banks want to be there, for a variety of reasons, so we want to be there, because we have a relationship with financial institutions like Bank of America and Wachovia, both of which are there,” Lange said.