Archive for December 11th, 2008
by David Bodamer December 11th, 2008
This strikes me as smart given the circumstances, but also depressing considering it’s the latest sign of how bad things have gotten in the retail real estate sector. The right thing for public real estate companies to do is to get balance sheets in order and make sure the properties it is already operating are in prime shape. Redevelopment makes more sense than new development. But at the rate we’re going, how many new projects will we see at all in 2009?
Real-estate developer Forest City Enterprises Inc. said it will halt new projects and focus on reducing debt and managing its existing real-estate portfolio.
In a conference call Wednesday, Chief Executive Charles Ratner said Forest City will transition from a “development company with an operating portfolio to an operating company with a development capacity.”
Shares in Forest City fell 15%, or $1.23, to $7.02 at 4 p.m. in composite trading on the New York Stock Exchange.
“Forest City has heavy debt and heavy development, both of which are a problem these days,” says Rich Moore, analyst at RBC Capital Markets. The company has $2 billion of debt maturities over the next two years, according to company filings. Real-estate debt markets have seized during the past year, creating headaches for property owners needing to refinance mortgages and replace construction loans.
Forest City said it will continue some developments it has already started, including the $4 billion Atlantic Yards project in Brooklyn, N.Y. Plans for the 22-acre site include offices, apartments and a basketball arena.
Link.
Related Topics: Development, News, Retail Real Estate, Trends |
by David Bodamer December 11th, 2008
KB Toys Inc. has returned to Chapter 11 under Prentice Capital Management LP, the private-equity firm that bought the retailer out of bankruptcy in 2005. However, this time KB Toys is slated for liquidation.
The company plans to quickly start going-out-of-business sales at hundreds of its stores, “in order to take advantage of the last two weeks of the holiday selling season,” KB Toys said in a filing with the U.S. Bankruptcy Court in Wilmington, Del.
An “expedited and orderly” bankruptcy liquidation was the only option left for KB Toys, which was hit by the slump in consumer spending that has slammed the retail sector, court documents say.
KB Toys, which is based in Pittsfield, Mass., owes about $65 million on loans to first-lien lenders, and about $30 million on letters of credit to the first-lien group. It also owes about $95 million to second-lien lenders, court documents say.
The retail operation consists of 277 stores located primarily in shopping malls, along with 40 KB Toy Works stores, which are somewhat larger and located in strip malls. Additionally, KB Toys operates 114 outlet stores and 30 temporary “holiday stores,” court documents say.
Link.
Related Topics: News, Retail |
by David Bodamer December 11th, 2008
Retailers luring shoppers with deep discounts should have at least one security guard for every 200 shoppers, erect barricaded corrals 100 feet from entrances and consider other crowd control measures to prevent a repeat of this year’s “Black Friday” tragedy, a top police official said.
Inspector Thomas Krumpter offered the proposals Wednesday at a hearing of the Nassau County Legislature’s public safety committee — the first legislative review since the Nov. 28 trampling death of a Wal-Mart worker.
Jdimytai Damour, a temporary employee, had been on the job for about a week and had no training in security or crowd control, according to a lawyer for his relatives.
Link.
Past links.
Related Topics: Management & Leasing, News, Retail, Security |
by David Bodamer December 11th, 2008
Philly.com has an interesting breakdown of the financing involved in keeping regional department store chain Boscov’s afloat. A couple of weeks ago, a bankruptcy court approved a plan under which a family group led by Albert Boscov and Edwin Lakin purchased the chain in a deal worth about $300 million.
It turns out that a couple of big mall owners are involved in keeping the operator of 39 stores going. Anthony Cafaro Sr. and family put in $20 million in equity. And PREIT provided a $10 million unsecured loan. PREIT has at least 8 operating Boscov’s at its 56 properties, according to a Q3 08 supplemental filing dated Nov. 4. Cafaro, as a private company, does not provide a detailed breakout of its portfolio.
Related Topics: Finance, Management & Leasing, News, REITs, Retail, Retail Real Estate |
by David Bodamer December 11th, 2008
Fitch Ratings lowered its industrywide outlook for commercial real estate owners Wednesday, citing a worsening economic outlook and tight credit markets.
The rating agency downgraded its outlook for the real estate investment trust sector to negative from stable. The report applies to equity REITs, which invest in shopping malls, office buildings and other properties.
These companies “are situated at the nexus of a recessionary economy, weakening property fundamentals, near-frozen debt capital markets, and stock prices that are, on average, approximately 60 percent below their peak level,” wrote Fitch analyst Steven Marks.
The report came after Fitch on Tuesday downgraded General Growth Properties Inc.’s credit ratings, saying default may be imminent for the Chicago-based shopping mall owner.
Link.
Related Topics: Finance, News, REITs |
