Brixmor rents space in shopping centers built around supermarkets, and those rents are rising. A pending purchase of more centers, paid with cash, new debt, new shares and asset sales, will help decide whether that growth reaches each share.
A weekly supermarket run probably ends in a parking lot shared with a pharmacy and a few smaller shops. Brixmor owns centers like that across the United States: open-air centers built around a supermarket or a big discount store. Its customers are the retailers that rent the space, from national chains to local operators. It buys centers, re-leases their space, redevelops tired buildings and sells those it no longer wants.
Tenants pay base rent and cover their share of the center's running costs and property taxes. Some also pay a slice of their sales. The draw for them is the traffic the supermarket or discount store brings to the whole center. What Brixmor keeps depends on how full its centers are, how much rent rises when leases renew, what it spends to fill and refresh space, and the interest on its debt. Profit also carries depreciation, a large charge for buildings ageing on paper that moves no cash. So we think funds from operations (FFO) is the better gauge of earnings: profit with depreciation added back and with sale gains and property write-downs removed.
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