RISKS RELATED TO INVESTMENTS IN RETAIL SHOPPING CENTRES
- Performance risk: risk that the retail sector does not outperform the office, residential, industrial and/or other sectors. Corio has chosen retail because we believe that this is the sector in which we can add most value through our active local+ management approach. The advantage is that we can specialise and develop expertise in shopping centres, without having to allocate resources to other areas of expertise. Another advantage is the multitenant character of the retail sector, which reduces vacancy risk as compared to other sectors, like offices and industrials.
- Competitive risk: there is risk that consumers will increasingly use other shopping channels, like e- & m-commerce. We have in-house research teams to monitor and predict developments and assess their impact on our business. In addition we actively manage our centres to attract consumers. We also engage other parties (from production companies, wholesale retailers, consumers, tenants to investors) in discussions about developments in the retail sector, innovative products or retail concepts, consumer behaviour, etc.
- Economic risks; the risk that consumer confidence will decline, leading to reduced consumer spending that in a turn leads to a fall out of tenants. Our in-house decentralised leasing management strives to optimise the tenant mix. While we can respond in a flexible manner to market trends and catchment area needs, the timing of any changes in the tenant mix might be influenced by local leasing regulations and the availability of quality tenants.
- Valuation risks; An important part of Corio’s valuation proces are external valuations that are performed twice a year by external international appraisers on a rotational bases. Nonetheless we are dependent on the market’s view on valuation models used and the risk profile associated by the market with retail real estate centres in the different territories we are present.
- Tenant mix/leasing risk: Our in-house decentralised leasing management optimises the mix of tenants and picks those tenants with the most appealing product range. While we can respond flexibly to market trends and catchment area needs, the timing of any changes in the tenant mix might be influenced by local leasing regulations.
- Refurbishment risk: Our active in-house centre & technical managers keep our shopping centres up to date, taking our stakeholders, like tenants, co-owners and municipalities into account.