by David Bodamer April 1st, 2009
Buffalo Wild Wings Inc., a sports-themed bar chain based in Minneapolis, is one of the companies emphasizing conversions as it expands. Over the past two years, it has acquired eight Don Pablo’s restaurants and turned them into new versions of its sports-themed bar chain. As of the end of the year, Buffalo Wild Wings had 560 sites.
It has also put in place a rebranding “SWAT Team” of construction, operations and other professionals who can take a vacated site and convert it in just a little more than five months.
Giving Buffalo Wild Wings a boost in pursuing the locations is the chain’s balance sheet. “We don’t have any debt and we have cash on the book so these are the kinds of opportunities that we can take advantage of” and the competition often can’t, says Matt Brokl, a vice president and associate general counsel.
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by David Bodamer April 1st, 2009
New research from UBS Securities LLC predicts a 10 percent contraction in space devoted to specialty stores over the next several years, just as weaker malls face either extinction or an accelerated evolution.
“While some specialty retailers could pick up market share as others shutter stores, we expect the majority of the sales to never resurface given the poor quality of those lost sales and given a smaller consumer appetite,” wrote UBS equity analysts Roxanne Meyer, Brian Nagel and Neil Currie in a research report.
The UBS team predicted the reduction in specialty store square footage would be driven by the elimination of newer concepts, such as Abercrombie & Fitch Co.’s Ruehl and American Eagle Outfitters Inc.’s Martin + Osa; the shuttering of underperforming doors; cutbacks in average store size, and the closure of shopping centers. Executives at Abercrombie & Fitch and American Eagle continue to stand behind their respective Ruehl and Martin + Osa nameplates.
UBS worked up a list of the “bottom 300” shopping centers with more than 500,000 square feet and found the companies with the greatest exposure to those centers were Christopher & Banks Corp., 24 percent of its store base; Aéropostale Inc, 16 percent; Pacific Sunwear of California Inc., 15 percent, and American Eagle Outfitters, 15 percent.
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REIT Wrecks on the Geithner Plan
by David Bodamer April 1st, 2009
REIT Wrecks has put up a highly intriguing commentary on the possible effectiveness of the Geithner plan in the face of a building volume of commercial real estate defaults and delinquencies.
Overall, there seems to be a lot of debate about Geithner’s plan. The consensus I’ve seen so far is that the Geitner plan is an improvement on all its predecessors. However, many wonder if it’s still not ambitious enough. Does it go far enough to shore up the financial system or is some sort of nationalization inevitable?
REIT Wrecks’ piece brings the story home–focusing particularly on the possible effect of the plan on commercial real estate. Most pertinently, the piece points to the fact that the volume of maturities will only get larger in 2010 and 2011. With values down from when those loans were originated, owners will be hard pressed to refinance or to sell properties and get enough cash to pay down debt.
I think the hope is that shoring up the financial system–and restoring the availability of credit–will help stabilize asset values or even let them start rising again. But property values are dropping for two reasons. The first reason is the lack of debt has reduced the number of buyers and cooled what had been a frenzied investment sales climate. But values are also falling because fundamentals are deteriorating very quickly. So even if the flow of credit is restored, lenders are likely to not be so generous in terms and in assessments of property values.
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