Archive for March, 2010

Vornado Chairman Commits a Potentially Costly Faux Pas

by Elaine Misonzhnik March 15th, 2010

We all have those moments when we accidentally say something we shouldn’t, so it’s easy to relate to how Vornado chairman Stephen Roth ended up in a bit of a mess with Boston Mayor Thomas M. Menino over some unguarded remarks Roth made at a Columbia University event earlier this month. Unfortunately, Roth’s slip of the tongue might end up costing him much more than general embarrassment.
Speaking about urban development in front of a Columbia University audience, Roth let it slip that he let the former Alexander’s site in Midtown sit vacant longer than necessary in a bid to get more concessions from New York City government for his eventual project, which became the Bloomberg Tower. In recounting the story, Roth implied waiting a bit too long to start construction might be a smart development tactic, which led some bloggers to speculate he was doing that very thing with the Downtown Crossing project in Boston.
While there’s been no response from New York City officials about their feelings on Roth’s purported tactics, the suggestion that Roth was holding up the Downtown Crossing development in a ploy to get more money infuriated Mayor Menino, who sent Roth an angry letter berating him for his callousness. Menino is now considering using the power of eminent domain to take the property away from Vornado, according to the New York Observer.
Meanwhile, a writer for The Boston Globe wonders how much of Roth’s purported tactic is due to revisionist history.

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2010 Store Closings Adding Up; Mall Owner Finds Use for Empty Spaces (Weekend Roundup)

by Elaine Misonzhnik March 15th, 2010

The season of annual earnings reports is upon us and as retailers take stock of their performance in 2009, we are starting to see announcements of store closings, especially in the apparel sector. This week alone, Abercrombie & Fitch, American Eagle Outfitters and the French Connection announced plans to either close hundreds of underperforming namesake stores or shut down underperforming concepts. But at least some of the mall owners impacted by store closings are finding innovative uses for their spaces. One Cleveland property, for instance, has been converting empty stores into greenhouses. For more on this and other news about retail and retail real estate, follow the links below:

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Ackman, Fairholme Offer to Inject Capital into GGP

by David Bodamer March 9th, 2010

The General Growth reorganization continues to be a moving target. The latest twist is that Fairholme Capital Management and Pershing Square Capital Management are offering to invest $3.93 billion in the firm in backing the plan conceived by General Growth and Brookfield Asset Management.

Here’s General Growth’s press release.

Todd Sullivan has posted the term sheet.

And here’s an Associated Press write-up of what’s on offer.

Two major investors in General Growth Properties Inc. are joining Brookfield Asset Management in offering to inject a combined $6.5 billion in fresh funds into the shopping mall operator to help it emerge from bankruptcy protection.

General Growth said in a statement late Monday that its board is weighing an offer from Fairholme Capital Management, one of its largest unsecured creditors, and Pershing Square Capital Management, one of its largest shareholders, to invest $3.93 billion. It said the new equity capital investment is valued at $15 a share.

The offer would be teamed up with one from Canada’s Brookfield Asset Management, which last month said it would invest $2.6 billion in cash in exchange for General Growth shares.

Chicago-based General Growth said the combined investments, along with it issuing $1.5 billion of debt, would give it the cash it needs to emerge from bankruptcy protection and pay unsecured creditors in full in cash.

General Growth also said William Ackman, who runs Pershing Square Capital Management, resigned from General Growth’s board of directors in conjunction with the hedge fund’s participation in the investment offer.

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Same-Store Sales Soar in February

by David Bodamer March 4th, 2010

After a home run in December and a strong January, retailers continued their hot streak with same-store numbers that soared in February. ICSC, Retail Forward, Retail Metrics and RetailSails have all crunched the numbers from the publicly-traded retailers that report same-stores sales and the figures show that the post-holiday shopping period went well for most firms. Retail Metrics said same-store sales rose 4.1 percent. Retail Forward and RetailSails recorded the gain as 3.9 percent. ICSC said sales rose 3.7 percent.
ICSC’s tally shows that same-store sales rose 3.7 percent in January, the fifth time in six months that ICSC’s index has risen. The result was up from the 3.0 percent rise in January and almost double the roughly 2 percent gain ICSC had been expecting. ICSC expects retailers to post about a 2.5 percent gain in March. Read the rest of this entry »

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GGP Lays Out Plan; David Simon Bemoans Lack of Data

by David Bodamer March 2nd, 2010

There are no letters this time. Instead, David Simon’s latest salvo against General Growth came at a panel at the at the Citi 2010 Global Property CEO Conference. Simon blasted General Growth for not sharing any data on the company since signing a non-disclosure agreement. At the same conference, Simon said he’s not worried about any antitrust concerns that a GGP/Simon tie-up might provoke.

“We’ve had this long dance on the NDA, nondisclosure agreement,” David Simon, chairman and chief executive of Simon Property Group, said at the Citi 2010 Global Property CEO Conference. “They wanted a lot of restrictions in that — you couldn’t talk to partners; you couldn’t talk to financial sources. We finally got one we can live with; we signed one (a week ago) Monday. We have yet to see any data.”

Separately, Simon filed amended objections to General Growth’s request to extend the period it has in bankruptcy court to exclusively file a reorganization plan.

For its part, General Growth outlined the plan it will present in bankruptcy court tomorrow that will enable it to emerge from Chapter 11 protection by October. Todd Sullivan’s Value Plays blog has the full document here.

Here’s the schedule General Growth has laid out, including how it will handle outside bids:
(Click for larger image)
ggp-plan.jpg

Meanwhile, throwing another wrench into the works is Bruce Berkowitz–one of General Growth’s largest creditors. He says he is unhappy with both Simon’s offer and General Growth’s Brookfield proposal.

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GGP Begins Flurry of Activity as Court Date Draws Near

by David Bodamer March 2nd, 2010

General Growth is getting all its ducks in a row in advance of tomorrow’s bankruptcy court hearing. There’s a lot to wade through. In the past 24 hours the company has released its fourth quarter results, announced that it will move its stock back to the New York Stock Exchange, filed its amended 10-K and filed a slew of court documents.

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Shopping Centers Test Social Media Waters

by David Bodamer March 2nd, 2010

We have a guest post today from Brian Quinton, executive editor of Chief Marketer, one of our sister publications. Quinton specializes in covering digital and mobile marketing for brands and attended the ICSC Fusion conference in Chicago and writes here about the steps shopping center marketers are taking in exploring social media.

Here’s are some excerpts of his observations. The full version can be found here:

I’d been skeptical that social marketing could work for the companies that own malls, as opposed to the brands that lease space in them. For one thing, research has shown that most people who engage with brands in social media do it in expectation of receiving some benefit—particularly in the form of a discount. Mall operators may control a lot of the offline shopping experience, but they don’t have any power to offer discounts.

More basically, I just wasn’t convinced that the relation between shopping centers and their consumers had enough stickiness to make friending or following a mall attractive to many people. And the undoubtedly soft metrics available for social marketing to date made it seem unlikely that operators, with the woes of the retail economy still upon them, would want to divert resources into campaigns that did not have provable ROI.

But the ICSC discussion, entitled “The Business Justification for Digital Media”, set me straight on a few of those points. Most basically, it seems, shopping centers are in fact interested in opening up social media conversations with their publics for a variety of reasons and on a number of fronts. Here’s my quick take on some of the most salient points of the discussion:

• It’s not all about discounts. The Washington DC-based Madison Marquette group has 6 to 8 properties that maintain ongoing campaigns in social media, and some of those take decidedly non-pocketbook approaches. For example, the marketing director at the company’s Glen Eagle Square in Chadds Ford PA runs a “Mommy and Me” Twitter page to more effectively engage the mommy shopper niche. A mother herself, she tweets not only about sales and events at the mall of interest to parents but about general parenting topics, and gets a viral boost when other parents retweet those posts for friends.

“One of the great things about social media is that it’s viral,” Madison marketing VP Angela Sweeney told the audience. “So if I notice my friend is following this page, I may go there and check it out. You may not have been able to speak to that second or third person directly, but your fans can tremendously expand the reach of your message.”

…

• Social media can also be useful to operators’ leasing efforts. Sweeney says a mall in Chapel Hill N.C. put a Web 3.0 spin on a traditional mall development tactic—a petition drive to convince a brand to move into a center—by mounting such a petition drive on its Facebook page to bring American Apparel to the property. More than 600 people signed the petitions in less than three weeks, and as a result Sweeney’s company is now in discussions with the retailer about that location.

…

• “Success” is still kind of a flexible concept in shopping-center social media. The Holly Green Facebook page, for example, has only 524 friends. And the Web site it points to, http://www.hollygreenguru.com, does not appear to be functioning at press time. Meanwhile Madison Marquette’s social efforts have fan/ follower counts that range from “25 to 12,000”, according to Sweeney. I hope to confirm this later, but i’m fairly certain she said twenty five. If that’s not understatement for effect, it hardly seems worth the effort.

Read the full version here.

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FTC Checks Out Simon’s Deal with Prime; Naming Rights at Malls (Weekend Roundup)

by David Bodamer March 1st, 2010

Things have died down a tad on the General Growth front. I suspect this is merely the calm before the storm as the parties wait to see what happens at the March 3 hearing. There we’ll find out if General Growth’s exclusivity period will be extended or not.

In the mean time, here are some other news and notes from around the retail real estate world.

  • The Federal Trade Commission is checking out Simon. But it’s not over the General Growth deal. Instead, there is an inquiry as to Simon’s strength in the outlet sector in light of its pending acquisition of Prime Outlets. Gap Inc. has been contacted by the Federal Trade Commission in regards to that deal. It’s an interesting development because if the FTC is interested in the Prime deal, then it seems likely it would want to review any deal with General Growth as well. One school of thought had been that the FTC would view retail real estate as one asset class. In that case, Simon’s concentration of malls would be viewed in the context of the entire shopping center universe rather than how much of the regional mall world it controlled. But this inquiry shows that the FTC may not look at things that way after all.
  • Crain’s New York reports that Coca-Cola is considering opening a retail location in New York on a site that formerly housed a World of Disney store.
  • There isn’t a long history of mall companies being able to sell naming rights of their properties. But that’s not stopping Ashkenazy Acquisitions Corp. from giving that strategy a whirl. The firm has hired Profit Increase Funding Inc. to help it secure naming rights deals for two properties outside Detroit.
  • Lastly, on the lighter side, in Charlottesville, Va., a mass of snow that accumulated in a series of snowstorms in the Mid-Atlantic in recent weeks was plowed into a massive pile at the parking lot of the Barracks Road Shopping Center. Local youth have taken to calling the mount “Mt. Barracks” and even erected a Facebook page in its honor.

No Comments Related Topics: Commentary, Development, Finance, Investment, Management & Leasing, News, Quirky, Retail, Retail Real Estate |

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