Retail REITs have been nervously watching occupancy rates decline during the past year or so. Opinions diverge, though, about how to best handle the downward pressure on rental rates. In most cases, tough decisions with an eye toward the bigger picture are made. "We made the difficult, but practical, decision to sign [some] replacement leases at rates lower than pro forma rents," Inland Real Estate President and CEO Mark Zalatoris says. "However, those deals were executed with credit quality retailers that in an addition to paying rent, will also pay their share of shopping center operating expenses. In addition, the centers will benefit longer term from the improved tenant quality."
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