Stuart Tanz with his daughter Sarah and son Zach

Stuart Tanz, president and CEO of Pan Pacific Retail Properties, Inc., is quick to point out that a diverse tenant base and the tireless efforts of his employees are the keys to the company's success. With its recent acquisition of Western Properties Trust, Pan Pacific's tenant base increased by 50 percent to over 2,100, making it the largest neighborhood shopping center real estate investment trust on the West Coast.

Portfolio: How do you think your company's recent acquisition of Western Properties Trust will affect Pan Pacific's liquidity, visibility and shareholder value?
Tanz: We are very excited about the transaction. It truly transforms Pan Pacific and takes the company to a whole new level. In terms of liquidity, the transaction increased our share base by nearly 50 percent from 21 million shares outstanding before to over 32 million shares today. As a result, Pan Pacific's total market capitalization is now approximately $1.3 billion. Additionally, Western's shareholder base was predominately individual retail investors, while Pan Pacific's was mostly institutional. By combining the two, we now have a much greater balance.

In terms of visibility, given that we are now over the one billion-dollar mark and are the largest shopping center REIT on the West Coast, we should attract a greater level of investor interest.

With respect to enhancing shareholder value, the transaction accomplishes several key objectives. First, it is accretive to our earnings and it is balance sheet neutral; in fact, our financial ratios and flexibility improve. Second, by combining the two portfolios, Pan Pacific now has a significant market presence in the best growth markets on the West Coast, which should enhance our ability to drive rental rates and increase cash flow over time. Third, being the largest and most active acquirer in our markets should enhance our ability to access additional investment opportunities.

Portfolio: You own and operate shopping centers in a diversity of markets. What is the advantage of maintaining such a diversified mix of tenants?
Tanz: Maintaining a strong and diverse tenant base is the cornerstone of our philosophy. It provides a very stable and predictable cash flow stream, which translates into a very secure dividend for our shareholders. With the Western acquisition, our tenant base increased by 50 percent from 1,400 retailers to over 2,100. Importantly, 80 percent of our centers are leased to national and regional retailers and 60 percent are leased to long-term anchor tenants. We believe it is critical to maintain a broad geographic representation on the West Coast. We are careful to only own shopping centers that are located in demographically strong, in-fill markets with retailers that cater to the daily needs of the community, like grocery stores and drug stores, which will always be in demand. We believe this strategy provides shareholders with sustainable, long-term growth and value, with limited downside risk, through all real estate cycles.

Portfolio: How much of an impact do you see the Internet having on shopping centers and the retail industry?
Tanz: As the Internet exploded a couple of years ago, we all thought that it would have dramatic impact on traditional brick-and-mortar retailing. That being said, we were confident that our focus, neighborhood shopping centers, would be affected the least. As the Internet and e-retailing continues to evolve, we are finding that the impact is far less severe and, in fact, we are finding it to be positive, not negative. Many retailers are utilizing the Internet in ways that actually enhance their brick-and-mortar business. As a landlord, we are constantly exploring different Internet concepts, such as Eversave.com, that will improve our tenants' sales and build upon the convenience of neighborhood shopping and the local retailer/ customer relationship, which, in turn, will enhance the underlying value of our properties.

Portfolio: How would you describe your management style?
Tanz: Our management philosophy has always been a hands-on, fully integrated team approach. Applying this team approach has proven to be very successful in the day-to-day aspects of operating the company. Also, having incentive programs to reward people for working hard and delivering strong results is a very important aspect of running a successful company. We strive to create a positive and enjoyable work environment. As a result, we have a team of dedicated professionals whose talent and tireless efforts have been instrumental in our success and ability to increase shareholder value.

Portfolio: What is your prediction for the retail REIT sector the next few years?
Tanz: I can only speak to what we know and experience on the West Coast. We are continuing to see retailers seeking to establish and/or expand their operations in our core markets, all being driven by the ongoing economic and demographic growth. The fundamentals in our core markets continue to be very strong which should enable us to continue to achieve solid cash flow growth going forward. We are also continuing to see consolidation among the leading supermarket chains, which is our primary tenant type. The benefit of this consolidation is that it is creating larger, stronger companies, which, as a result, enhances the underlying strength and stability of our tenant base.

Portfolio: How do you like to unwind when you are not working?
Tanz: With the demands of a public company, it seems I have such little time to relax and unwind. I try to spend as much time as I can unwinding with my family. We all enjoy a variety of activities from skiing, to tennis, to going to the movies.

Portfolio: You're originally from Toronto. Are you a big hockey fan?
Tanz: I'm a huge hockey fan! However, I have lived in Southern California for the past 25 years, so I'm also a big football and baseball fan as well.

Portfolio: Do you ever find yourself running into one of your own stores to do some shopping?
Tanz: Absolutely! Our office is located in one of our shopping centers, so every day I shop at our center. Also, we recently acquired a shopping center just down the street from my home. Now, on my way to the office in the morning, I stop by the center and pick up a cup of coffee. And on the way home, I'll often make a quick stop at the center's grocery store to pick up a few things. Owning a center close to home has also been great fun with the neighbors. When we acquired the property we immediately upgraded the look of the center, and brought in some new tenants. We have also held a number of community related events at the center. The positive response by my neighbors has been very rewarding.