Archive for the ‘International’ Category

Centro’s Deal Collapses

by David Bodamer September 15th, 2008

The asset sale Centro announced one month ago has seemingly collapsed. This pushes the firm even closer to the brink.

Centro’s chief executive, Glenn Rufrano, said yesterday that talks had been terminated with the private US pension fund that signed a contingent agreement on July 15 for the purchase of the Centro America Fund portfolio.

“The agreement was subject to certain closing conditions, including a due diligence period and lender consent,” Mr Rufrano said. “Centro now advises that the due diligence period has expired and the purchaser has elected to terminate the agreement.” He said that despite this, discussions were continuing, albeit that no assurance could be given that they would lead to an agreement.

Centro says it still has the support of its banker and financiers. A Goldman Sachs JBWere analyst, David Lloyd, said that while the termination of the agreement was an obvious setback for Centro in its attempts to recapitalise the business “asset sales alone will not be enough to keep Centro as a going concern”.

“Although asset sales will enable some debt to be paid, Centro’s future is dependent upon a significant equity injection, most likely through a hybrid instrument.

“With this unlikely to occur before calendar year-end, Centro will likely remain at the mercy of its lenders,” Mr Lloyd said.

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Centro Cancels Mall Sale

by David Bodamer September 10th, 2008

Centro Properties Group, the shopping mall owner seeking a debt extension to stay in business, canceled the sale of a Sydney shopping center after failing to find a buyer.

No “satisfactory offers” were received for Centro Bankstown before the August deadline, Centro said in a Sept. 4 letter, posted on its Web site, to members of its MCS 28 Syndicate, owner of 50 percent of the shopping mall.

Centro Chief Executive Officer Glenn Rufrano, 58, is trying to sell assets and raise cash to help repay as much as A$6.6 billion ($5.4 billion) of debt. The company said last month it may offer lenders securities convertible into shares in lieu of borrowings, affecting shareholders.

Link.

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H&M Continues to Shine

by David Bodamer September 4th, 2008

Business Week has a profile up on H&M, which is defying the retail sector’s gloom. It continues to post solid sales numbers and hasn’t slowed on expansion plans.

Indeed, as a purveyor of stylish clothing for reasonable prices, H&M sees the economic slowdown as an opportunity to expand. With its entry into Japan, the company will boast more than 1,600 stores in 30 countries, including China, where it launched in 2007. Over the next year, the company plans to increase the number of its stores by as much as 15%, focusing expansion on the U.S., Europe, and Japan.

As economic conditions worsen, H&M, which leases its store sites, is finding it easier to secure prime locations at better terms, especially in the U.S., where the company now has 153 stores, mainly on the East and West coasts. “We’re getting much better deals now that we are a known player in the U.S.” says H&M’s head of investor relations, Nils Vinge. “Landlords are approaching us.”

How is H&M managing to thrive in what many observers call the toughest trading conditions in decades? Credit a relentless focus on costs that extends from the company’s merchandise to its business model. For starters, H&M’s average sale prices are lower than those of its main rivals, Spain’s Zara, owned by parent company Inditex, and the Gap. This will enable the Swedish chain to gain “market share in the current downturn, as consumers trade down in search of better value,” says Kaupthing analyst Sandstedt.

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Simon Has Faith in Britain

by David Bodamer August 29th, 2008

While Simon Property Group struggles to fill vacancies in its malls in the U.S., it may be looking to Britain to boost its retail property portfolio.

On Tuesday, U.S. real estate investor Simon Property Group (nyse: SPG – news – people ) upped its stake in U.K. mall operator Liberty International to 4.22%, after raising its stake to 3.45% on Friday, a sign some think may mean it is preparing to bid for the entire firm.

But Simon may have some competition. Australia’s Westfield Group also announced on Tuesday that it increased its stake in Liberty to 2.96%. Westfield built up its stake, which now totals $41.9 million, between June and July.

Liberty shares jumped 5.3% to 995 pounds and 50 pence on Tuesday afternoon, after falling 13.1% in the last year as investors feared consumer spending in Britain would hurt business. Liberty owns retail assets throughout Britain including London’s Covent Garden.

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Centro Posts $299M Loss

by David Bodamer August 21st, 2008

Bleak news on the Centro front. The company has posted a huge quarterly loss. Centro says its U.S. properties have lost 8.8 percent of its value. It also said it may not be able to continue as a “going concern” given all the problems it is facing.

Centro Properties Group, the Australian owner of more than 650 U.S. malls, said the unit that manages U.S. assets acquired last year for $5.2 billion posted a second-quarter loss after writing down the value of the business.

Centro NP had a net loss of $299 million for the three months ended June 30, the Melbourne-based parent said today in a statement to the Australian stock exchange. The unit booked a $95 million charge for writing down properties and a $173.5 million impairment in the company’s goodwill and the value of its property management business.

“There is substantial doubt about the company’s ability to continue as a going concern given that the company’s liquidity is subject to, among other things, its ability to negotiate extensions of credit facilities,” Centro NP said in a statement filed yesterday with the U.S. Securities and Exchange Commission.

Link.

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Tesco, Vornado To Enter India in Separate Deals

by David Bodamer August 13th, 2008

There have been two big announcements in the past 24 hours regarding the entry of major players in retail and retail real estate entering India.

In one deal, Tesco has signed an agreement with Indian corporate giant Tata to form a joint venture that will bring the British retailer into the country. The deal gives Tesco a presence now in the world’s three biggest retail markets–the U.S., India and China.

“We have had India on watch for quite a while and in the last few years we have felt that the time is getting closer,” said Mr Clarke, Tesco’s international and IT chief. “That’s why it’s taken me so long and I’m very pleased to be here.”

Restrictive foreign direct investment rules in India allow overseas supermarket chains to operate as wholesalers but not as retailers. That means if Wal-Mart, Tesco or Carrefour wants to open a hypermarket, it has to find a franchise partner to own and operate that store.

Under the terms of yesterday’s Tesco-Tata tie-up, the British chain will spend £60m on three cash-and-carry outlets in Mumbai, Delhi and Bangalore over the next two years. Those Tesco-owned sites will supply goods to Tata’s retail stores and the British grocer will also offer up its retailing know-how in return for a fee.

Finding the right partner has proved a hurdle for Tesco, which suffered a big setback in 2006 when prospective partner Bharti Enterprises ditched it in favour of Wal-Mart.

Meanwhile, Read the rest of this entry »

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Mexican Shoppers Boost Texas Retail

by David Bodamer August 12th, 2008

Retail Traffic has written a couple of times about Canadians taking advantage of a favorable exchange rate and shopping in the U.S.

A similar dynamic is at play at the U.S./Mexico border. There, however, it’s not so much about the exchange rate as it is by the fact that the Mexican school year starts earlier. Therefore, Texas retailers are getting a bump from some added back-to-school sales.

Janie Ortiz, a clothing store manager at Cielo Vista Mall in El Paso, estimates that as many as 85 percent of shoppers in her store these days are from nearby Ciudad Juárez or the city of Chihuahua, a three-hour drive south from the Texas border.

“They’re very, very important because we’re so slow,” said Ms. Ortiz.

Sales started to pick up last weekend when Mexican students prepared to return to classes. As summer vacation ends in Mexico, families are busy shopping for last-minute items.

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Starbucks Closing Stores in Australia Too

by David Bodamer July 29th, 2008

Starbucks will close more than two-thirds of its 84 stores in Australia by the end of the week under a cost-cutting plan announced Tuesday that will put almost 700 people out of work.

The surprise announcement came a few weeks after the global coffee shop franchise that has become ubiquitous around the world announced it was closing 600 company-owned stores in the United States to try to bolster its business.

The closure of the 61 “underperforming” stores in Australia was the result of conditions specific to Australia that were not reflected elsewhere in the world, the chief executive Howard Schultz said in a statement

Link.

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NRDC/Hudson Bay Deal Goes Through

by David Bodamer July 17th, 2008

NRDC’s rumored acquisition of Canadian department store chain Hudson Bay I linked to Monday has been officially announced.

Terms were not disclosed. The sale comes about two and half years after the 338-year-old Hudson’s Bay was acquired for 860.4 million Canadian dollars and then taken private by Jerry Zucker, a technology and textiles investor from Charleston, S.C. Lord & Taylor was started a mere 182 years ago.

The sale on Wednesday to NRDC, which had a minority stake in Hudson’s Bay in addition to owning Lord & Taylor, appears related to Mr. Zucker’s death three months ago.

NRDC immediately announced that it would partly convert about 10 to 15 of Hudson’s Bay’s 94 full-line department stores, which are commonly known as The Bay, into Lord & Taylor outlets, a decision that surprised some analysts.

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Jones Lang Acquires Green Rating Group

by David Bodamer July 14th, 2008

Jones Lang LaSalle sure has been busy of late. The firm acquired Staubach Co. in June. It bought the Standard Group in December.

Now Jones Lang has purchased a Canadian group that developed its own green ratings system. Does this make it a competitor to the U.S. Green Building Council? Or does this complement that effort?

Also, Reuters analyzed the recent flurry of real estate service firm consolidation.

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