Archive for June, 2008
by David Bodamer June 6th, 2008
Same-store sales came in surprisingly strong in May, jumping 3.0 percent. That was less than April’s gain of 3.6 percent, but most observers had attributed April’s strong numbers to the Easter shift and so it was viewed with caution. So May’s surge is being seen as a more legitimate sign of strength.
Margaret Brennan has a good rundown of the results, including video, over at Retail Detail. However, one of the factors that’s really helping retailers is the inflation in food and fuel costs. So, in some instances, consumers are spending more because they have to, not because they feel more confident or are increasing discretionary spending.
Overall, 37 chain stores are in the index this month. According to ICSC, “strength in
wholesale clubs (4.6 percent ex fuel), drug stores (3.2 percent) and discounts (3.0 percent)” was at the heart of the gain. Apparel (-6.5 percent) and furniture (-2.7 percent) stores were the weakest sectors. Luxury department stores (4.1 percent) also posted strong results.
This all meshes with what retailers and owners have been saying recently. Grocers, discounters and wholesale clubs are weathering the economic headwinds and benefiting from food and fuel inflation. Meanwhile, sections of the luxury market are hanging in. Other sectors are having a rougher go.
ICSC’s report can be downloaded here (m’shp rqd.)
In less encouraging news, unemployment jumped by the largest amount in one month in 22 years and now sits a 5.5 percent. Further, a new report says that Americans’ net worth dropped by $1.7 trillion during the first quarter.
Related Topics: News, Retail |
by David Bodamer June 4th, 2008
Shopping mall owner RioCan Real Estate Investment Trust says it has agreed to acquire a 10-property portfolio located in central and eastern Canada in a joint venture deal valued at $156 million.
The portfolio will be acquired on a 50-50 basis with U.S.-based Kimco Realty Corp. through the creation of a second joint venture partnership, RioKim II.
RioCan said Wednesday that under the non-exclusive partnership, the Canadian REIT will find, lease and manage properties in the joint venture and will be paid market fees for the services.
The portfolio includes retail centres in primary markets, including Montreal and Ottawa, and neighbourhood strip malls in Halifax, Gatineau, Que. and the Ontario communities of Hawkesbury, Belleville, Fergus, London and Chatham.
Link.
Related Topics: International, Investment, News, REITs, Retail Real Estate |
by David Bodamer June 4th, 2008
Alongside carts with candles and cell phones, mall kiosks are offering everything from teeth whitening to hair removal – all performed in the middle of the shopping center for all to see.
“People are happy to spend more money on personal care in order to feel good,” said Laurel Sibert, portfolio vice president of marketing for Simon New England, which owns 18 malls in New England. “The neat thing is that kiosk carts in the mall allow the vendor to demonstrate their services to people walking by while promoting their product.”
Teeth whitening, eyebrow threading, mineral makeup applications, skin exfoliation, hair extension, henna tattoos, massage tables – if it’s in the realm of “personal care,” it’s ripe for a public mall procedure.
Link.
Related Topics: Management & Leasing, News, Quirky, Retail Real Estate, Trends |
by David Bodamer June 4th, 2008
David Simon, CEO of Simon Property Group, doesn’t talk to the media much. So this makes for an interesting read. He did an in-depth interview with SmartMoney magazine that you can see here.
How else does the economy affect you?
If the consumer slows down, will we have some potential cash-flow impact? The answer is yes. I think it will be de minimis. Remember, we’re in the real estate business. We are somewhat — I know it’s hard to believe — but we are somewhat insulated. These times are also when we can do some of our best transactions. When the economy was slipping into recession in 2001, we did one of the best deals that we’ve done in terms of buying a high-quality portfolio [of malls] at a very attractive price [from] Rodamco. So we’re gearing up.
Are you looking at specific properties or whole companies?
We’ll do both because we’ve always done both. There are some companies that have a little more pressure on them financially than we do, because of the way we have financed our growth. So we look at it as an opportunity.
You say you also can expand your business by actually demolishing department stores in your existing malls?
What you’re seeing is, you probably don’t need four or five anchor department stores; you may need two or three. That enables us to capture one of the stores, chop it up and bring in other smaller retailers, bookstores, restaurants, theaters, to broaden the appeal to the consumer.
Related Topics: Development, Management & Leasing, News, REITs, Retail Real Estate |
by David Bodamer June 2nd, 2008
Shopping centres equivalent to eight Bluewaters are due to open over the course of 2008 and 2009, just as the economy heads into its worst period for more than a decade.
A total of 1.25 million sq m will be opened in the next 18 months, the first of which was the Liverpool ONE city centre development, which centres on a new John Lewis and the largest Debenhams in Britain.
According to Mark Hudson, retail and consumer leader at PricewaterhouseCoopers: “The amount of space coming on is potentially massive and, with the trading conditions we have and the ongoing shift towards online, it’s going to mean more empty shops in market towns. More marginal sites will become unprofitable and more companies will go bust.”
Link.
Related Topics: Development, International, News |
by David Bodamer June 2nd, 2008
Gadget retailer The Sharper Image plans to close all of its remaining stores, its new owners announced Sunday.
The company expects to sell $50 million in inventory as it shutters 86 stores across the United States, joint owners The Hilco Organization and Gordon Brothers Group said in a statement.
The group, which purchased the gadget retailer’s assets in a bankruptcy auction Thursday for $49 million, said it has developed a licensing strategy for wholesale, retail, direct-to-retail, e-commerce, and catalog businesses.
The Sharper Image filed for Chapter 11 bankruptcy protection in February, with plans to shut about half of its 184 stores and reorganize. The San Francisco-based company said it had lost more than $135 million since early 2005. The company put itself up for sale in April.
Link.
Previous posts:
Related Topics: News, Retail, Trends |
by David Bodamer June 2nd, 2008
Jacksonville, FL-based Regency Centers (NYSE:REG), together with co-investment partner Macquarie CountryWide of Australia, sold seven “non-core” properties, totaling 804,457 square feet, to a joint venture between New York-based Angelo Gordon & Co and Maryland-based Spectrum Partners. The portfolio of centers sold for $108.1 million, or approximately $134.38 per square foot, with a cap rate of 7.75 percent; this sale price is $10.5 million less than the agreed-upon price Macquarie announced in Nov. 2007.
Bill Kent and Gary Lawrence of CB Richard Ellis’ Washington D.C. office represented the seller in the transaction. A buyer representative was not disclosed.
Barry Argalas, Regency Centers senior vice president of National Acquisitions and Dispositions said, “The disruption in the capital markets has not only impacted new debt, it has also lengthened the loan assumption process. This was a great example of buyer and seller working together to get through the extended loan assumption process and achieve a successful result.”
Link.
Related Topics: Investment, News, REITs, Retail Real Estate |
by David Bodamer June 2nd, 2008
The market for commercial mortgage-backed securities (CMBS) will begin to recover when issuers and bond buyers agree on pricing, probably late this year or early in 2009, observers say. Once that begins to happen, however, a potential flood of pent-up trading could plunge the market back into price volatility and value losses.
The worry that CMBS investors will unload large volumes of bonds and affect pricing is one of the forces stalling the CMBS market today, according to real estate attorney Doug Buck, a partner at Foley & Lardner LLP in Madison, Wis. “A lot of people are holding these CMBS issues in their portfolios right now and the fear is that these would be dumped onto the market and the pricing would come way down,” Buck explains. “There’s a huge quantity of these things that are on people’s books, and they’re not really trading at the moment.”
Investors are certainly shying away from CMBS so far this year. Through the first week of May, United States’ CMBS volume in 2008 amounted to a mere $10.8 billion compared with the $78.5 billion in bonds that sold during the first four months of 2007, according to industry newsletter Commercial Mortgage Alert.
Link.
Meanwhile, Financial Week reports on construction financing drying up.
Related Topics: Finance, News, Retail Real Estate, Trends |
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