Morgan Stanley: REIT Earnings Preview - Shopping Centers

On April 20, Morgan Stanley released a report previewing what investors should expect from upcoming Q1 2015 earnings reports from the shopping center REIT sector, and including specifics on:  American Assets Trust AAT - $1.8 billion cap, 2.25 percent yield.  DDR Corp. DDR - $6.4 billion cap, 3.9 percent yield.  Regency Centers REG - $6.1 billion cap, 1.95 percent yield. Tale Of The Tape - Past Year MS - Shopping Centers: Big Picture  Fundamentals Solid: MS reports anecdotal evidence that tenant demand still remains strong despite a retail sales environment they described as still being "cautious."  Limited Supply: The lack of new shopping center development no doubt contributes to landlord pricing power, and low reported vacancy rates.  Northeast Weather: MS expects to hear that snow removal and other weather related factors may have negatively impacted some shopping center Q1 SSNOI performance.  Quality Matters: MS is looking for 3 to 4 percent SSNOI increases in higher quality centers vs. only 2 to 3 percent for "lower productivity" REITs. Related: http://www.benzinga.com/analyst-ratings/analyst-color/15/04/5412775/vaya-con-citi-a-puerto-rican-reit-tour MS - Shopping Center Growth Trends  Redevelopment: - MS expects investors will be focused on redevelopment growth trends for each REIT, since they have been accretive due to a wide spread due to (higher) attained yields vs. (lower) cap rates.  MS noted that although new development is still lagging, two large grocery anchored REITs Regency Centers and Kimco, both have new projects in the early stages of development.  M&A Activity: MS mentioned the recent acquisition of Excel Trust for a 15 percent premium by Blackstone as potentially being the beginning of a trend.  MS noted that six of the shopping centers in their coverage universe have market caps of $2 billion or less, as being potentially being fuel for future M&A activity. Related: http://www.benzinga.com/trading-ideas/long-ideas/15/04/5399195/blackstones-latest-acquisition-is-a-vote-of-confidence-for-gr American Asset Trust - MS Expects "$0.42 FFO, +8%Y/Y, vs. Consensus $0.42"  MS Call Questions: 1. How aggressive are new store opening plans? 2. Small shop leasing updates/progress? 3. Any new development updates? 4. Any color/guidance on 2015 SSNOI growth?  AAT is scheduled to report Q1 results AMC on April 28. DDR Corp. - MS Expects "$0.30 FFO, +7%Y/Y, vs. Consensus $0.30"  MS Call Questions: 1. Any additional color on power center cap rates vs. grocery anchored centers? 2. Any additional color on acquisitions and dispositions? 3. Any updates regarding "struggling retailers" Best Buy, Barnes & Noble, etc.? 4. What was the impact of lower gas prices on sales?  DDR is scheduled to report Q1 results AMC April 28. Regency Centers - "MS Expects $0.72 FFO, +4%Y/Y, vs. Consensus $0.73"  MS Call Questions: 1. How aggressive are new store opening plans? 2. Small shop leasing updates/progress? 3. What is the outlook for new developments and/or acquisitions? 4. Are grocers seeing any benefits from lower gas prices?  REG is scheduled to report Q1 results AMC on May 6.