Stuart Tanz on inflation
From 2022 REIT Leadership Series–Stuart Tanz, ROIC · · NYU Schack
“Inflation is good for our business because a number of our leases are tied to CPI escalators, which typically increase rents annually. However, retailers are trying to capture longer lease terms to avoid paying higher rents due to inflationary pressures, and their margins are getting squeezed despite sales increases.”
On , Stuart Tanz, President, Chief Executive Officer & Director at RETAIL OPPORTUNITY INVTS CP, spoke about inflation during 2022 REIT Leadership Series–Stuart Tanz, ROIC on NYU Schack.
About Stuart Tanz
Stuart Tanz, president and CEO of Retail Opportunity Investments Corp. (ROIC), has stated that the company's grocery- and drug-anchored shopping centers have been insulated from the worst impacts of COVID-19, e-commerce, and inflation. In a 2022 interview, he described the first quarter of the year as "very strong" across the strip center sector, driven by tenant demand and a lack of new supply since the credit crisis. Tanz noted that inflation benefits the business because many leases are tied to CPI escalators, but added that retailers' margins are being squeezed despite sales increases. He also said that labor and supply chain issues continue to impact the industry, with labor shortages limiting store counts and supply chain delays requiring retailers to pre-order fixtures with lead times of up to 18 months. Tanz has emphasized the company's focus on acquiring older assets from private sellers, where the NOI profile offers good mark-to-market rents and growth potential over three to five years. He has stated that the company's deep relationships on the West Coast, where it has operated for close to three decades, give it a distinct advantage in sourcing off-market transactions. Tanz has also highlighted the company's unencumbered balance sheet as a key tool for building value, and noted that ROIC was one of the first public companies to tie ESG benchmarks to compensation. He has described the West Coast markets as varying in their cycle position, with Seattle and the Bay Area in "later innings" while Portland and Southern California remain in "earlier innings."