THOUGH many retailers are closing and cutting back, Teen Vogue is taking its franchise to the mall.

The magazine is opening a store, called the Teen Vogue Haute Spot, in the Mall at Short Hills in New Jersey. But the magazine does not intend to sell merchandise.

Instead, the store will be a place for girls to relax, try on clothes and drink smoothies — all while marketers woo them.

“We feel we’ve created a retail environment that doubled as a place where they could come together, be girls, and shop together,” said Laura McEwen, the publisher of Teen Vogue.

The Haute Spot is a so-called pop-up concept, meaning that the store is not permanent. The location will be open Nov. 28 through Dec. 26.

Link.

Turmoil in the credit markets and economic weakness has virtually frozen the commercial property markets, with buyers reluctant to commit as prices fall and sellers refusing to deal unless forced to by financing constraints, a panel of real estate financiers said Wednesday.

With vacancies predicted to rise for nearly all property types and rents expected to fall, office, retail, hotel and industrial holdings are likely to drop in value in the coming year, making it difficult to underwrite any transactions, the panel of experts said at a meeting of the Urban Land Institute here.

“It’s like a time out: Nobody wants to do anything until they can see with a little more clarity,” said Michael Fascitelli, president of Vornado Realty Trust. “It is very hard to operate in this environment of volatility we’re seeing. It’s like we’ve been hit with a 100-year flood 15 times in the last two months.”

Vornado, a publicly traded real estate investment trust that owns more than 100 million square feet of property, has lost about $10 billion in market capitalization in the last year as REIT shares have been battered by the spreading financial crisis.
“I don’t think this is a blip. We’ve gone far past a blip,” said Randy Reiff, senior managing director for J.P. Morgan in New York. “We’re in a protracted, massive restructuring of our capital markets. Even the lenders who are out lending are slowing down right now. And that is only the people who are accustomed to high-risk, opportunistic investing who don’t believe they have to buy at the bottom.”

Link.

During his two hour long presentation, Pershing Square Capital Management’s, William Ackman made a compelling argument for Target to unlock the equity of its real estate without losing control of its buildings by spinning off the land into a Target Inflation Protected REIT. Ackman’s business case revolved around a handful of key points:

1)Target would retain control of its buildings and brand
2)The deal would improve Target’s access to capital
3)And decrease its capital needs

The New York Times has more.

William Ackman, the activist investor and hedge-fund manager, proffered an idea on Wednesday that he claimed was worth billions. He wants Target Corporation, the large discount chain, to sell the land underneath its stores to a new unit set up for the purpose. Target, he proposes, would pay rent to the spinoff, with existing Target shareholders gaining stakes in the new real estate business.

The supposed benefit? Mr. Ackman foresees a big increase in the total value the stock market would attach to a sliced-up Target, as much as 74 percent by his reckoning. That would include a payday of several billion dollars for Mr. Ackman’s hedge fund, Pershing Square Capital Management, which owns nearly 10 percent of Target.

The potential cost? According to several analysts and Target itself, the complicated new setup would hurt Target’s credit rating and thereby raise its cost of borrowing, perhaps undermining the company’s ability to survive the economic downturn. And the company believes a sliced-and-diced Target would ultimately have less control over its stores, the lifeblood of the business.

The plan might lead to transitory gains in the short run, but in the long run, “the retailer would be on much shakier ground, so to speak,” wrote Carol Levenson, director of research for Gimme Credit, a bond research firm. In an e-mail message, she added that “with overleveraged retailers going under right and left, and inhospitable lending and commercial paper markets,” the timing of such a transaction could not be worse.

Link.

WHEN the first shoppers flock through the doors of Westfield’s new mega-mall in London tomorrow, the head of the company’s British arm will be thinking of sleep.

Michael Gutman admits he’s lost a fair bit of shuteye in the lead up to the opening of the company’s first London shopping centre.

For one thing, the timing isn’t perfect with Britain on the brink of recession and shoppers tightening their pursestrings.

The idea of opening what will be Europe’s biggest indoor mall in the middle of a city where shoppers are devoted to visiting stores on the high street has also come under fire from some traditionalists.

Against that background, along with the mammoth task of ensuring the £1.6 billion ($4.13 billion) centre in London’s White City opens on time, Mr Gutman has had his fair share of sleepless nights.

Link.

I have been at ULI’s fall meeting since Monday. It’s the first industry conference I’ve attended since August. Not surprisingly, the mood here is very dark compared with what people were saying just a couple months ago.

The consensus seems to be that 2009 is going to be a very hard here. Commercial real estate won’t bounce back quickly. The big trend to watch–a rise in distressed property and debt investment opportunities. For retail real estate specifically it’s difficult to put a positive spin on what the industry will be facing. From continued pressure on consumers to uncertainty in capital markets to a lack of retailers looking to expand, all signs point to real hardships for retail real estate. The pain will be most severely felt in secondary and tertiary markets. At the height of the boom, cap rates compressed regardless of market. That’s now unwinding. Top centers in top markets will weather the storm well. Everyone else will be in for some pain.

More thoughts later …

Wal-Mart has a new concept coming for Hispanic shoppers.

Wal-Mart Stores Inc’s Sam’s Club division is opening a new type of warehouse club aimed at attracting Hispanic shoppers with an expanded selection of products from Mexico.

The club, to be called Mas Club, will be opened in Houston the first half of 2009.

“Our objective is to create an additional shopping choice that provides currently unavailable value for families, restaurant owners, convenience stores and more,” said Doug McMillon, president and chief executive of Sam’s Club, in a statement.

At the same time, however, the company is once again slowing its growth plans.

Analysts are watching to see if Wal-Mart can keep its momentum going amid the threat of a global recession. While Castro-Wright provided an update on its U.S. business, Chief Financial Officer Tom Schoewe is expected to outline expansion and capital spending plans for the entire business on Tuesday.

…

Wal-Mart’s U.S. division plans to open 191 stores in the current fiscal year, which ends in early 2009, and 142 to 157 stores in the next fiscal year, Castro-Wright said. The company opened 218 U.S. stores in fiscal 2008.

Wal-Mart also plans $5.8 billion to $6.4 billion in capital spending this fiscal year for its U.S. division, down from $9.1 billion last year. In fiscal 2010, it plans to spend $6.3 billion to $6.8 billion, Castro-Wright said.

Discount retailer Value City Department Stores and its subsidiaries have filed for bankruptcy protection and plan to close their stores.

Bankruptcy papers filed in New York say the Columbus, Ohio-based company blames declining sales, tight credit and the sour economy for crippling its business.

The filings follow a series of restructuring efforts and layoffs aimed at keeping the business afloat. It has closed more than 75 stores since December 2007.

It has 66 open stores and more than 4,500 employees in 14 states.

Link.

Update 12:16 PM

Big news. John Bucksbaum is stepping down as CEO. He’s staying on as chairman. Long-time president Robert Michaels is also relinquishing that title, though he will remain as COO. This comes a couple weeks after another long-time executive, CFO Bernie Freibaum, was forced to step down.

General Growth Properties, Inc. today announced that two independent directors of the company will assume senior management positions effective immediately. Adam Metz will serve as interim Chief Executive Officer, and Thomas H. Nolan Jr. will serve as interim President, positions previously held by John Bucksbaum and Robert A. Michaels, respectively. Mr. Bucksbaum will continue to serve as Chairman and Mr. Michaels will continue to serve as Chief Operating Officer and a senior officer of the company. In order to maintain a majority of independent directors, Mr. Michaels has also given up his Board seat.

Update: Wow. This just gets worse. The firm has uncovered some loans to executives that breached company policy. Also, it looks like General Growth is selling some of its Las Vegas assets.

The company said it had discovered that an affiliate of a Bucksbaum family trust had extended loans to Michaels and to former Chief Financial Officer Bernard Freibaum.

The Michaels loan has been repaid, while $80 million remains outstanding on a loan to Freibaum, who was fired earlier this month.

Failure to disclose the loans violated internal company policy, but no company assets were involved and no regulatory rules were violated, General Growth said.

Freibaum could not immediately be reached for comment.

The Chicago-based company, which earlier this month suspended its dividend, also said that its board was evaluating all financial and strategic alternatives amid “unprecedented challenges in this economic environment.”

It plans to sell its portfolio of Las Vegas retail properties that include the Fashion Show Mall and The Palazzo, as is working with lenders to extend a Nov. 28 maturity date on debt tied to those properties. The company said it remained current on its debt obligations.

Macy’s Inc said on Friday that it will temporarily reinstate monthly reports of its sales to keep investors updated, as a global market meltdown raises new concerns for the retail business.

The parent of Macy’s and Bloomingdale’s said it will report October sales at stores open at least a year on Nov. 6, and will continue to report monthly sales until further notice.

“We want to provide investors as much information and transparency as possible,” Macy’s Chairman and Chief Executive Terry Lundgren said in a statement.

In February, Macy’s said it would stop reporting monthly same-store sales, an important measure of retail performance. At the time, the retailer said monthly sales cause undue confusion because of calendar and promotional shifts.

Link.

Update 1, 11:39 AM
Update 2, 11:55 AM
Update 3. 4:15 PM

Developers Diversified Realty Corp.

* FFO: $100 million, up $500,000
* FFO per diluted share: $0.83, up $0.03
* Net income: $27.9 million; down $4.8 million
* Net income per diluted share: $0.23; down $0.03
* Core NOI: Up 1.8%
* Operating base rent: $12.38 per square foot; Up $0.10 per square foot
* New store rents:16.4% above base rents
* Renewal rents:6.9% above base rents
* Occupancy: 94.5%; down 140 basis points

Here’s some information on its joint venture asset sale, worth $890 million. The net proceeds will be $260 million, which I imagine it will use to pay down debt.

Developers Diversified Realty has reached an agreement on terms to sell 13 properties to a new joint venture with an institutional investor. The properties, which comprise 5.9 million square feet, are expected to sell for $890 million.

The joint venture, announced this morning, could close in mid-December. Developers Diversified will hold a 20 percent stake, while the unidentified institutional investor will own 80 percent. Developers Diversified will get property management and development or redevelopment fees, plus leasing and ancillary income fees at closing.

Developers Diversified expects more than $260 million in total net proceeds from the sale, with more than $170 million of that available at closing. The remainder should be available during the first half of 2009. The planned sale is part of Developers Diversified’s effort to cut its debt and build relationships with large institutional investors.

Update 1: The company also announced that it is suspending its dividend during the fourth quarter.

Due to prior compliance with minimum REIT payout requirements, the Company will not pay a fourth quarter dividend for 2008. The 2009 dividends are estimated to be $1.50 per share annually, to be paid quarterly. These revisions are intended to enhance the Company’s current liquidity by generating more than $80 million of additional capital in 2008 and additional capital for 2009.

Update 2: Investors have responded well to all of this. Today, DDR’s stock is up $2.71 per share, or 31.8 percent, as I write this. Since bottoming at a new 52-week low yesterday of $4.01 per share, the price has nearly tripled to its current $11.19 per share. Anyone that got into the bottom yesterday has made a quick killing.

Update 3: It seems like there’s been a lot of “pumping and dumping” with this stock. I’m guessing there was also a lot of action with some of its big institutional investors. At the end of the day it ended up below where it started. It peaked at $11.42 per share then fell back to $8.08 by the market’s close. The volume today was 13.4 million shares–about four times the average for the stock.