Friday, October 31, 2008

Street not sold on proposed REIT spinoff at Target

Wall Street not swayed by shareholder activist's proposed REIT spinoff for Target

NEW YORK (Associated Press) - Investor William Ackman's proposal to unlock Target Corp.'s real estate value by spinning off the land the discounter owns into a publicly traded REIT isn't just raising concerns among the merchant's management. It also appears to be getting a cool reception from Wall Street.

The proposal from Ackman, who heads Pershing Square Capital Management, which owns just under 10 percent of Target's common stock, involves creating a real estate investment trust that would take ownership of the land Target owns under its stores and distribution centers and spin it off tax free to existing shareholders.

The retailer would retain ownership of the buildings and would rent the land back under a 75-year lease on attractive terms. Ackman, who pushed Target to sell off part of its credit card portfolio earlier this year, believes the transaction would create more value for the company, sending shares higher.

Ackman presented the proposal to several hundred people _ including hedge fund managers and investment analysts _ at a meeting in Manhattan on Wednesday. Target issued a statement in response saying it has been evaluating similar proposals by Pershing, but has "serious concerns" about the potential transaction, including that it could hurt its credit rating..
. . more

Updating the upscale - Kenilworth mall seeks reinvigoration through renovation

The floors at the Shops at Kenilworth are stripped, the ceilings ripped out, and the fountain is drained. Scaffolding stands throughout the mall.

It's not a pretty sight now, but the Towson mall's owners promise major upgrades by next month as the 30-year-old center undergoes a $3 million makeover - its largest in nearly 20 years.

The owners, Kenilworth Limited Partners of Cincinnati, want to modernize the mall, which the owners acknowledge has a dated, 1970s look. The changes come as Towson is undergoing a billion-dollar renaissance with new condominiums, apartments and shopping. Business leaders hope to further develop the area as a regional hub for entertainment, dining and night life.

Nearby Towson Town Center mall is going through its own makeover, expanding by more than 100,000 square feet - its biggest renovation since Nordstrom opened in 1992. The mall will be 1.1 million square feet when renovations are completed. . . . more

Baltimore: Klein's Family Markets is joining ShopRite group

The Harford company, founded as a small general store in 1925, is becoming part of the Wakefern Food Corp. cooperative

Long a familiar sight in Harford County, the logo of Klein's Family Markets will get a new look in coming months.

The company, founded in 1925 as a small general store on Fallston's Main Street, announced yesterday that it is joining the Wakefern Food Corp.'s retail cooperative, which owns the ShopRite banner. Klein's membership in the co-op means that its seven stores will be known as Klein's ShopRite.

Michael J. Klein, vice president and purchasing director for Klein's Family Markets, said in a statement that, like his own family, "many of the Wake- fern members are third- and fourth-generation grocers," and that joining forces with other independent retailers "will allow us to remain competitive with larger chains.". . . more

CVS slashes generic drug costs, escalates price war

One of the nation's largest drugstore chains ratcheted up a price war Thursday, offering deep discounts on generic prescriptions amid national concern about the spiraling cost of healthcare.

Drugstore giant CVS Caremark Corp. announced it would sell 90-day supplies of more than 400 medications for $9.99 and offer discounts for cash-paying patients at its in-store medical clinics.

The price war was unleashed by Wal-Mart Stores Inc., the country's largest retailer, a few years ago. Since then, many grocery stores have followed suit.


The price competition makes generic drugs just about the only healthcare bill that isn't escalating. The lower prices provide a measure of relief to consumers who are struggling with rising health insurance premiums and other out-of-pocket expenses or have lost coverage altogether. . . . more

Williams-Sonoma opens teen-oriented concept

These are tough times for furniture retailers, but Williams-Sonoma is bullish enough on its emerging Pottery Barn Teen brand to take it bricks-and-mortar.

Next month, the San Francisco retailer will open its first PBteen store at Lenox Square Mall in Atlanta, already home to the company’s largest Pottery Barn and Pottery Barn Kids. The store will occupy 1,800 square feet of the mall’s 11,700-square-foot Pottery Barn Kids.

PBteen began as a catalog and web site in 2003, and this is the first indication that it could one day be a proper chain.

Williams-Sonoma does not have plans for additional PBteen stores. It said in its most recent earnings call that it would reduce its new square footage for 2009 to between 4 percent and 5 percent from 7 percent, and that most of that growth will come from West Elm.. . . more

Walgreens: $4 generics have hurt our sales

Walgreen executives conceded Thursday that the Deerfield-based drugstore chain has been hurt by rivals' discount drug plans, and said it plans to change its store layouts, tout its own drug-savings card and enhance its online shopping.

Walgreen President and Chief Operating Officer Greg Wasson said the drugstore chain lost up to four to five prescriptions a day per store after Wal-Mart, grocery stores and discount chains started offering $4 generics and free antibiotics plans. Walgreens stores fill an average of 275 prescriptions a day.

While the impact has been small, "we're not pleased," Wasson said. Walgreen has started an ad campaign for its own prescription savings club.

Walgreens marketing executives said they've realized their cluttered stores need to be reorganized, with more readable signs, lower shelves and merchandise displayed in a more attractive, rational way. . . . more

NYSE warns Circuit City; investor cuts stake


Richmond, Va. (AP) -- Circuit City Stores Inc. said Thursday the New York Stock Exchange has warned it that its stock price is not high enough for continued listing.

The NYSE said shares in the nation's No. 2 consumer electronics retailer had an average closing price of less than $1 over 30 consecutive trading days as of Oct. 22, falling short of the exchange's requirement.

Circuit City shares have fallen as its results have weakened amid a deteriorating retail environment and heightened competition from rival Best Buy Co. and others. Since the beginning of the year, shares have lost most of their value, down 93 percent.

Its shares have closed under a dollar in trading since Sept. 30, when the stock closed at 76 cents. Shares rose a penny to close at 30 cents in trading Thursday but fell a penny in aftermarket electronic trading to 29 cents.

In order to regain compliance with the NYSE, Circuit City's common stock share price and the average share price over a consecutive 30-trading-day period must both exceed $1 within six months following receipt of the notice. . . . more

Office Depot, hit by liquidity crisis, to close stores

The global liquidity crisis is taking away business at Office Depot, the Delray Beach-based office supply retailer said Wednesday. On a conference call, the company said it expects to close more North American stores in the coming months.

Small and medium-sized businesses, Office Depot's primary customers, cut back on office supply purchases in the quarter while consumers limited discretionary spending, said Steve Odland, Office Depot chief executive.

Office Depot reported a net loss of $6.7 million or 2 cents a share for its third quarter ended Sept. 29 compared with a profit of $117 million or 43 cents a share in its third quarter 2007.

The company took a $21 million charge for North American store impairment and closures. . . . more

NYC: Burberry Takes 68,000 SF at 444 Madison

NEW YORK CITY-Drawn in part by an opportunity to put its name up in lights, Burberry will move its US headquarters to 68,348 sf at 444 Madison Ave. by Q2 2009. The 42-story Art Deco tower, located between 49th and 50th streets, will sport illuminated Burberry signage in three directions, similar to the building-top logos that have adorned 444 Madison in the past.

“We pretty much zeroed in on this opportunity” rather than consider other sites, Jeffrey Peck, corporate managing director of Studley, which represented the London-based fashion house, tells GlobeSt.com. “There are other buildings that will give you naming rights, but that’s generally just a plaque over the entrance or some kind of lettering in the lobby. There’s only a handful of buildings in the city that actually have lit signage atop the building.” They include the MetLife tower at 200 Park Ave., the UBS building at 1285 Ave. of the Americas and 666 Fifth Ave. . . . more

Thursday, October 30, 2008

Walgreen plans overhaul, CVS makes generic push


CHICAGO (Reuters) - Walgreen Co. is redesigning stores and adding more groceries to appeal to busy shoppers, while CVS Caremark Corp is going after cash- strapped consumers looking for cheap drugs, the companies said on Thursday.

Both U.S. drugstore chains know consumers need bargains on household goods and medication, so they are shaking up their strategies to prevent shoppers from defecting to a discounter such as Wal-Mart Stores Inc.

The two unveiled new strategies after a battle for Longs Drug Stores Corp ended this month. Walgreen's had sought to usurp CVS's acquisition of the company and expand in markets such as California and Hawaii. But Longs rebuffed the offer and its deal with CVS is set to close on Thursday.

Walgreen, which held its first-ever analyst meeting on Thursday, says consumers are shopping closer to when they get their paychecks and using credit cards less.

CVS, which reported higher third-quarter profit, said some customers are choosing to self-medicate when they are sick rather than spend money on doctor visits..
. . more

Construction Market Will Continue to Slide in 2009, According to McGraw-Hill Construction Outlook

WASHINGTON -- McGraw-Hill Construction, part of The McGraw-Hill Companies (NYSE: MHP), released its 2009 Construction Outlook, which forecasts a drop in overall U.S. construction starts for next year, as the tough funding environment continues, construction projects are deferred, and financial stress gradually eases. Against this backdrop, the level of construction starts in 2009 is expected to decline 7%, to $515 billion, following a 12% decline predicted for 2008.

"The speed and scope of the events in September and October were startling," said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction, addressing 400 construction executives and professionals at the Outlook 2009 Executive Conference in Washington. "Tighter lending standards are a major constraint for the construction industry. For single family housing, declines are continuing and showing no sign of an upturn. Home prices are continuing to drop, a 20% drop so far this year, and we expect another 10% decline through the first half of 2009. Then, things should level off. Store construction has taken the biggest hit; we're looking at a 30% decline in retail square footage starts this year.". . . more

U.S. Economy: GDP Shrinks at Fastest Pace Since 2001 Recession

Latest GDP report shows that economic activity fell in the third quarter - another warning sign of a recession.

NEW YORK (CNNMoney.com) -- The nation's economy slammed into reverse in the third quarter and suffered its biggest decline in seven years, according to a government report Thursday.

The gross domestic product, the broadest measure of economic activity, fell at an annual rate of 0.3%. That compared with a 2.8% growth rate in the second quarter, when growth was boosted by economic stimulus checks and strong exports.

The third quarter decline wasn't quite as bad as experts had forecast. Economists surveyed by Briefing.com had estimated GDP would plunge 0.5%.

Still, the latest report is yet another warning sign of recession and marked only the fifth quarter in more than 17 years in which GDP fell below zero. The report, which covers the three months that ended Sept. 30, did not reflect the full impact of the recent crisis in financial and credit markets.. . . more

New Wal-Mart style unifies stores

ROGERS, Ark. (AP) -- Style at a Wal-Mart used to mean a clean cut on the side of a box so customers could get their products right from the case.

But the world's largest retailer has been working for years to improve its stores' appearance and, on Wednesday, unveiled its new design for remodeled stores -- a look that ties each section of the store together with a fresh use of light and color.

Gone are the high shelves stuffed with so much it was hard for shoppers to find what they sought. Now, Wal-Mart Stores Inc. is showing softer colors, understated shelving and employing a design intended to keep customers from having to dart all over a tremendous store to gather their purchases.

"We're trying to make it more experiential, rather than just stuff we're selling," said Joe Tapper, the company's vice president for store presentation. "We've placed emphasis on making it more enjoyable.". . . more

Linear Retail Buys Former McDonald's for $2.4M

Summer Street Bldg. Trades for $342 PSF

Linear Retail Properties LLC, of Burlington, MA, acquired a 6,943-square-foot retail building at 58-60 Summer St. in Boston from McDonalds Real Estate Co. for $2.38 million, or approximately $342 per square foot.

The Class C building was built in 1950 and was formerly occupied by a McDonalds restaurant. It is in Suffolk County within the financial district.

John Butterworth of CB Richard Ellis--New England represented the seller. Christopher Lawrence of Colliers Meredith & Grew represented the buyer.

Source: Costar

Target asked to spin off its real estate

Target Corp. has made its name by pushing the edges in fashion, store design and advertising. Now, one of Target's biggest shareholders is pushing it to be financially edgy as well.

On Wednesday, Wall Street tycoon Bill Ackman and his Pershing Square Capital Management laid out a proposal that would spin off Target's land into a stand-alone real estate investment trust (REIT), unlocking the value of a real estate portfolio Ackman said is worth $39.1 billion.

Target would sign 75-year leases with the REIT, giving Target the freedom to do whatever it wished with the buildings atop the land -- tear down structures and rebuild, remodel or expand.

It's a setup that hasn't been tried before, and Ackman acknowledged that he is asking the board of directors "to do something transformational for the company." . . . more

Wednesday, October 29, 2008

Office Depot posts loss, delays new stores

NEW YORK — — Office Depot Inc. said it would delay opening new stores in a weak economy after posting a surprising quarterly loss Wednesday, pushing its shares 7 per cent higher.

Office Depot's sales have suffered as small business owners and retail consumers spend less on office supplies. The trend, which has also hurt peers OfficeMax Inc and industry leader Staples, has worsened in the past six weeks with a global financial crisis, the company said.

Office Depot said it is evaluating potential store closures in the current quarter as consumers continue to cut back on bigger investment items such as laptops and business machines in favour of basics like ink, toner and paper.

It also plans to open fewer stores in 2009. Office Depot already signed leases for 40 new stores next year but may delay opening some of those locations, as it may be cheaper to pay rent while keeping the stores dark.

“We are not rushing to open stores in this environment,” said Chief Executive Steve Odland on a call with analysts.. . . more

All Eyes Are On Circuit City, Tweeter

Store closings could flood market with fire-sale inventory, pummeling prices

NEW YORK — While the CE industry is already holding its collective breath over the coming holiday season, the wild cards that are Circuit City and Tweeter are adding to the anxiety.

The fates of the No. 2 CE specialty chain, and to a lesser extent Tweeter, could have far-reaching effects on their suppliers and competitors, and hasten an industry-wide restructuring anticipated by some industry observers.

An immediate concern is that possible store closings and fire sales by Circuit City, suggested in a Wall Street Journal report last week, would flood the market with deeply discounted product and put added promotional pressure on retailers.

With credit markets frozen, Circuit might be forced to close more than 20 percent of its stores and liquidate $350 million in inventory to keep the company afloat through Christmas, the article quoted sources as saying.

Jim Ristow, executive VP of Home Entertainment Source (HES), the specialty A/V division of the Brand Source buying group, outlined three possible scenarios for the chain during a fourth-quarter Webinar presentation for members last week:. . . more

Rent-A-Center Halts Financial Services Growth

Rent-A-Center will cease opening any new in-store financial service locations until its existing sites are profitable, executives said at the company’s third-quarter conference call.
The units offer check-cashing, short-term loans, cash advances, money transfers, money orders and tax services. However, they have not performed up to expectations and performance actually declined in the third quarter, said Mark E. Speese, chairman and CEO.
. . . more

General Growth Puts Malls on the Block

Mall giant General Growth Properties will try to use three malls on the Strip to escape the looming shadow of billions of dollars in debt.

On Monday the company announced plans to offer Fashion Show, Grand Canal Shoppes and Shoppes at Palazzo malls for sale, as well as an overhaul of the senior management.

The move looks like a last-ditch effort to save the second- biggest real estate investment trust, or REIT, in the country from an outright takeover or bankruptcy.

But it may be too little, too late, analysts said.

General Growth has $900 million in loans due by the end of November and about $4 billion by the end of 2009.

"I think it is indicative that the end is near and they are going to get sold," said Rich Moore, an analyst with RBC Capital Markets.

Moore says he is doubtful General Growth will find buyers for the Las Vegas properties as individual entities.

It's likely they offered the big-name properties in an effort to slow a crippling slide in stock value that's forced upper management to dump shares by the bushel to meet margin calls and made it . . . more

Grocery stores look at going lean

PORTLAND, Ore. - Grocery stores, like consumers' food budgets, are shrinking.
This month Wal-Mart Stores Inc. opened four pilot Marketplace stores in Arizona that are half the size of a traditional supermarket.

Supervalu-owned Jewel-Osco is testing its own small-format store in Chicago known as Urban Fresh. Safeway trialed its version in Southern California. And Whole Foods has said it is scaling down the size of its new stores.

The format has worked for some companies, such as Trader Joe's, for years. But the idea is spreading as grocers are coping with rising costs and limited capital and find themselves pressed to find more profitable formats. It's part of increasing competition with existing small stores and British company Tesco PLC, which launched its first small Fresh & Easy store about a year ago and now has nearly 100 around the West.

"It's safe to speculate that a lot of the growth in the grocery business in the years ahead is going to be focused on these small stores," said Bill Bishop, a food retailing consultant at Willard Bishop Consulting. . . . more

Tuesday, October 28, 2008

Pershing Square to present potential Target deal; Target voices "concerns"

Shares of Target Corp. were up more than 7 percent Tuesday after Pershing Square Capital Management, the hedge fund controlled by William Ackman, said it would unveil a proposed transaction that would, Pershing argued, “build long-term value for Target.”

In a response, Target said it was reviewing Pershing's ideas for an "alternative ownership structure related to Target real estate," but that an analysis with its outside advisers raised "serious concerns."

New York-based Pershing, which owns slightly less than 10 percent of the Minneapolis-based retail company’s common stock, said in a release that it would present public information and its own analysis on Wednesday to explain the investment, and that it would be of interest to “investors and analysts focused on retail, real estate, fixed income and credit.”. . . more

FAO Schwarz back in game

Four years after departing its flagship Boylston Street store, famed toy store FAO Schwarz Inc. is opening toy stores inside 10 Massachusetts Macy’s locations.

The stores are located in Downtown Crossing, the Natick Mall and the Northshore Mall in Peabody and other places.

The New York toy company and Macy’s Inc., based in Cincinnati, announced the agreement to open FAO Schwarz-themed toy stores in about 275 U.S. stores in May.

In 2002, FAO Schwarz’s parent company, Right Start, filed for Chapter 11 bankruptcy, emerging from the restructuring in 2003. The company closed its Boston location, known for its bronze bear landmark, in 2004.

Source: Boston Business Journal

Key consumer measure at all-time low

NEW YORK (CNNMoney.com) -- A key measure of consumer confidence fell to an all-time low in October as the financial crisis weighed on American household budgets.

The Conference Board, a New York-based business research group, said Tuesday that its Consumer Confidence Index plummeted to 38 in October from an upwardly revised reading of 61.4 in September.

Last month's decline brings the index to its lowest level since its inception in 1967.

"Consumers certainly appear to think the sky is falling," said Adam York, economic analyst at Wachovia Economics Group, in a research note. . . . more

Dillard's Inc. stock rises amid talk of CEO ouster

Shares of Dillard's Inc. soared the most in at least 28 years on Monday after two shareholders asked three independent board members of the department-store chain to work with other directors to replace CEO William Dillard II.

Barington Capital Group LP and Clinton Group Inc., which said in a regulatory filing that they together control 5.3 percent of Dillard's, asked the board last month to buy back all of its outstanding Class B shares and leave it with only one class of stock. The shareholders told Robert Connor, Peter Johnson and Warren Stephens in a letter Friday that they had been "recently informed" that the CEO had no plans to sell the Class B shares, no matter the price.

Since Dillard was appointed CEO in May 1998, the Little Rock-based retailer's market value has "plummeted" from more than $4.36 billion to less than $246 million Friday, the two shareholders said. Sales at the 70-year-old company have declined for six straight quarters, a sign that William Dillard II's attempt to sell more expensive items isn't drawing customers.

"The company's management team led by Mr. Dillard and his siblings must be replaced," Barington head James A. Mitarotonda and Clinton CEO George Hall wrote. "A management team with a comparable record of poor performance at any other company would have been fired long ago." . . . more

Aldi: A Grocer for the Recession

Just past noon, Anna Chernova, a 68-year-old retiree, pushed her black metal shopping cart into an Aldi store here. After arriving from Russia 16 years ago, Chernova regularly shopped at conventional supermarkets like Dominick's and Jewel, but no more. "They're too expensive," Chernova says, clutching her shopping list with one hand. Now she visits Aldi once a week, drawn by the deep discounter's $2.69 one-gallon jugs of milk, and 33-cent boxes of salt. "I've got to save my pennies," she says, heading into the store. Chernova certainly isn't alone.

Spooked by the gravest economic crisis in decades, Americans are curtailing their spending. They're making fewer trips to supermarkets, and migrating from grocers like Albertson's and Whole Foods to deep discounters like Aldi and Save-a-Lot. And it's not just retirees like Chernova. These Spartan bastions of private-label goods are looking a lot better to a broader range of shoppers. "Prior to the economic slowdown, we were prospering. But now, we're seeing customers looking to save money, and our foot traffic has increased," says Jason Hart, president of Aldi US, based in Batavia, Ill. "There seems to be more demand for our stores, and people don't want to sacrifice quality." Aldi arrived in the U.S. in 1976, hoping to replicate a business model that proved successful in Europe. With U.S. food inflation then in the double digits, the company's timing couldn't have been better. Aldi was one of the first so-called "box" or "no-frills" stores, grocers that featured rock-bottom pricing by offering a limited inventory and squeezing out all unnecessary costs, from coupons to butcher shops to fancy displays.. . . more

Pershing to unveil real-estate deal for Target

SAN FRANCISCO (MarketWatch) -- Pershing Square Capital Management, a hedge fund firm run by Bill Ackman, plans to unveil a potential transaction that could help unlock some of the value of Target Corp.'s real estate, according to a press release on Tuesday.

Pershing said it will present details on Wednesday about a potential transaction that the firm reckons "will build long term value for Target and all its stakeholders."

The deal will be of particular interest to investors and analysts focused on retail, real estate, fixed income, and credit, the hedge fund firm added in a statement.

Pershing, which is known as an activist investor, began investing in Target in April 2007 and has built its stake to almost 10% of the giant retailer's outstanding shares.

Activist hedge funds have clashed with many companies in recent years, but Pershing suggested on Tuesday that it's developed a productive relationship with the management of Target.

. . . more

Sam's Club opening new store called Mas Club

NEW YORK, Oct 28 (Reuters) - Wal-Mart Stores Inc's (WMT.N: Quote, Profile, Research, Stock Buzz) 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.

Customers pay an annual fee to shop in Sam's Club locations, which sell everything from diamond rings and digital cameras to bulk sized packages of paper towels and soda. . . . more

Value City to Liquidate

Value City Department Stores (Columbus, Ohio) has announced that it plans to liquidate following the filing of a voluntary Chapter 11 petition in a Manhattan bankruptcy court over the weekend.

After shutting over 75 stores since last December, Value City has 66 units in the Midwest, Mid-Atlantic and Southern U.S. The filing estimates both assets and liabilities of between $100 million and $500 million.

According to an affidavit filed by cfo Stephen Darr, the retailer incurred losses of $70 million for the seven months ended Aug. 31, 2008, and has experienced declining sales and profitability over the “last several years.” His affidavit also stated that the rough credit markets, as well as decline in consumer discretionary spending and tightening of credit terms by Value City’s suppliers and factors, has “decimated” the retailer’s “core market.”

The retailer first opened its doors in Columbus in 1917. It became a public company in June 1991 as a division of Schottenstein. In 2003, it became a wholly owned subsidiary of Retail Ventures Inc., which also owns Filene’s Basement and the DSW retail footwear chain, in 2004. In January, Retail Ventures sold 81 percent of its stake in Value City to VCHI Acquisition Co., a consortium that included VCDS Acquisition Holdings LLC, Emerald Capital Management LLC and Crystal Value LLC.

Wal-Mart scaling back US namesake store growth

NEW YORK — Wal-Mart Stores Inc., with its emphasis on low prices and improved merchandise, is stealing market share from competitors and is well-positioned for the holiday season, CEO and President Lee Scott told investors Monday.

The company, nevertheless, is scaling back the growth of its namesake stores in the U.S. and focusing on remodeling existing locations as it responds to a tough consumer spending climate.

"It is clear in this environment that the customer is more cautious and more thoughtful about what they buy and they're more thoughtful about when they buy it," Scott said in an address to analysts gathered on the first day of the company's two-day investor meeting in Bentonville, Ark.

Nevertheless, he said, "We see this as an opportunity to widen our moat. ... This is Wal-Mart time.". . . more

Monday, October 27, 2008

Towson Town inaugurates a high-end 'luxury wing'

Defying a faltering economy, addition features Burberry, Louis Vuitton, Lacoste stores

Towson Town Center probably didn't have the best timing yesterday when it unveiled a new luxury wing featuring a Burberry apparel store and plans for Louis Vuitton and Lacoste amid an economy that continues to falter.

Shoppers faced with declining stock portfolios, job losses, devalued homes and less access to credit presumably have little room in their budgets for $600 purses and $1,000 coats. Retailers across the country have shut their doors as shoppers spend less.

And General Growth Properties, the owner of Towson Town and several other regional malls, has said debt problems exacerbated by the economic climate could force it to sell assets or even the whole company."I can't think of a worse a time" to open high-end retail, said Geoffrey Mackler, a principal with retail brokerage H&R Retail.

But mall executives, who acknowledged that the weak economy has affected consumers, said they believe the new 110,000-square-foot, 32-store addition fills a void for the Baltimore region's affluent shoppers. Some of the retailers opening in the new wing will bring their first stores to the Baltimore area. Shoppers now travel to Tysons Corner and Pentagon City in Virginia or Mazza Galleria in Chevy Chase for pricey pumps and handbags.. . . more

Black Friday: Deep discounts coming

Ad showing Sears' planned sales for the day after Thanksgiving include a Kenmore washer-dryer set for $600, up to 60% off on clothing and bargains on flatscreen TVs.

NEW YORK (CNNMoney.com) -- Judging from what appears to be a leaked ad for day-after-Thanksgiving sales, major stores will tempt shoppers - whose help is desperately needed to bolster the economy - with huge discounts.

Brad Olson, founder of Gottadeal.com, a Web site that markets itself as one of many "official" Black Friday deals sites, said he recently received a copy of what appeared to be Sears' circular.

His reaction: "The deals are definitely better than last year."

That's not surprising given that most retailers -including Sears - have struggled all year with slumping sales amid a weak economy. Retailers are counting on a spending pick-up in the weeks ahead to salvage their year.. . . more

General Growth to sell assets, changes management

NEW YORK, Oct 27 (Reuters) - Mall and land owner General Growth Properties Inc GGP.N, whose stock has dropped more than 90 percent in the past year, said on Monday it had replaced its CEO and planned to sell properties in Las Vegas.

The company also said it had discovered that its former chief financial officer had received a $90 million unsecured loan, breaching company disclosure policy.

Independent director Adam Metz was named interim chief executive, replacing John Bucksbaum, who will remain chairman.

Independent director Thomas Nolan Jr. will become interim president while former president Robert Michaels will give up his seat on the board but continue as chief operating officer.

"We believe investors may be encouraged to see two outsiders (people without an emotional attachment) running the process and willing to liquidate trophy assets," Wachovia Capital Markets analyst Jeffrey Donnelly said in a client note. "We expect shares will outperform today on this news.". . . more

Stores get early start on wooing holiday shoppers

If you think layaway went away with rotary dial phones and disco, think again.

Retailers are using that old-fashioned perk, as well as newfangled promotions, to persuade cash-strapped consumers to spend, spend, spend.

The promotional push is critical for retailers. The holiday season — which can make up as much as 40 percent of a retailer’s annual sales — is projected to be modest at best this year as consumers plan to shop less, differently and more carefully.

“Everyone I know is just hurting, and the stores are going to have to offer some lower prices or something to get people in,” said Shannon Lowe, a stay-at-home mother of two from De Soto. “I’m going with every place that has a deal.”

Indeed, a new survey of more than 7,000 consumers by the National Retail Federation found that consumers plan to spend an average of $832 on holiday-related shopping, up a paltry 1.9 percent from 2007’s $817. That’s the smallest increase in planned consumer spending since the survey began six years ago.

Despite the tepid outlook, Stacy Janiak, spokeswoman for the consulting firm Deloitte, said that low inventory levels mean retailers may not have to resort to “fire sales.” Instead, stores may expand private labels, enhance rewards programs and offer extra values such as layaway and savings coupons.. . . more

The Fresh Market Eyes N.Y. Entry

The Southeastern grocer is reportedly looking for, and may have found, its first location in the Empire State.

Southern-bred specialty operator The Fresh Market appears to be heading north to the home turf of Golub Price Chopper in New York State, according to a report in the Schenectady Daily Gazette, which identified The Fresh Market as a tenant in a redevelopment in the town of Colonie, bordering Schenectady County, N.Y.

A spokeswoman for the Greensboro, N.C.-based grocer said the chain is looking for “something in the area,” but did not confirm that it had found a site.

“All I know is they’re looking,” Jennifer Foushee of The Fresh Market told the Schenectady newspaper. “We’re just not at a point we can talk about anything because we don’t have anything finalized. . . . more

Despite Dodgy Economy, Ahold's Q3 Sales Rise

Stop & Shop/Giant-Landover and Giant-Carlisle saw growth in net, ID, and comp sales.

Ahold Friday late last week posted consolidated net sales of 5.8 billion euros for its third quarter ending Oct. 5, 2008, a gain of 3.9 percent (7.6 percent at constant exchange rates) against performance in the year-ago period.

“In the turbulent economic environment, our continued focus on bringing value to our customers led to a solid performance,” said the multichain grocer. “We remain vigilant and will respond to any changes in consumer and competitor behavior.”

The solid performance the Amsterdam-based company extended to its U.S. banners, which have in the past have struggled in their highly competitive retail landscapes. . . . more

Value City files for Chapter 11 bankruptcy

NEW YORK, Oct 27 (Reuters) - Discount department store chain Value City Department Stores filed for Chapter 11 bankruptcy protection, citing the slowing U.S. economy and tightened credit terms, according to court filings.

Sliding consumer spending and the tightening of credit terms by Value City's suppliers have hurt profitability and liquidity, the company said in its filing in the bankruptcy court of the Southern District of New York on Sunday.

The Columbus, Ohio-based retailer of apparel, accessories and home decor listed assets and liabilities of between $100 million and $500 million in its filing. . . . more

Experts: Retail Turns ‘Darwinian’

These are excerpts from a roundtable discussion sponsored by Incisive Media and Sperry Van Ness. The full text will appear in the November issue of Real Estate New York magazine.

NEW YORK CITY-A combination of tight credit and consumers’ increasing reluctance to open their wallets will make the next 12 to 18 months tough sledding for the retail sector, a panel of experts warned on Monday evening. However, there will be bright spots for operators who are positioned to weather the “turbulent times” cited by moderator Joseph French, national director of retail properties at Sperry Van Ness.

“We’re entering something of a Darwinian period for retail,” said Joshua Podell, vice president of real estate at Jones Apparel Group. He predicted a “very rough” 12 months ahead for retail in general, as did Patrick Breslin, president of the Eastern retail group for Grubb & Ellis. The assessment by Stephen Ifshin, chairman and co-founder of DLC Management Corp., was along similar lines: “Only the strong will survive.” Further shakeout among retailers is ahead of us, he said, and Breslin said this holiday selling season will be make-or-break time for many marginally-performing stores
. . . more

Friday, October 24, 2008

DDR Sells 13 Assets for $890M, Keeps Share

CLEVELAND-Determined to operate more conservatively in the current environment, locally based Developers Diversified is suspending development in Russia and future building in Brazil and is continuing to pursue asset sales, as shown by an $890 million deal announced this morning. The company has reached an agreement to sell 13 stabilized assets, totaling 5.9 million (of which 5.1 million is company-owned) to a joint venture with an institutional investor. The joint venture is expected to close in mid-December, at which point DDR will own 20% and the partner 80%. The company also will receive property management and development/redevelopment fees, a promoted interest, and leasing and ancillary fees upon closing.

The firm also is in various stages of negotiations to sell some $163 million in assets to buyers ranging from private individuals to large REITs, said David J. Oakes, EVP and CIO, speaking at the company’s third quarter conference call.

"We have sold assets in the past and will continue to do so, as it’s one of the least expensive sources of capital," said Oakes in a press release. The company also is suspending its fourth quarter dividend. . . . more

Macy's to resume monthly sales reports

ATLANTA, Oct 24 (Reuters) - Macy's Inc (M.N: Quote, Profile, Research, Stock Buzz) 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.. . . more

Existing home sales jump, prices sink

Home sales rose in September, but prices declined by 9% from a year earlier.

NEW YORK (CNNMoney.com) -- Sales of existing homes rose in September, according to the latest reading on the battered housing market by an industry trade group released Friday.

The National Association of Realtors reported that sales by homeowners jumped in September to an annual pace of 5.18 million, up 1.4% from a year ago. It was the first time that sales rose compared to a year earlier since November 2005.

September sales were up 5% from the August reading of 4.91 million, marking the largest month-to-month increase since July 2003. Economists surveyed by Briefing.com had expected the report to show existing home sales rose to an annual pace of 4.95 million
.. . . more

High-end restaurants start discounting: Owners lower profit margin to fill tables

Facing the scary proposition of rooms full of empty tables and piles of bills that have to be paid, restaurant owners are cutting menu prices to entice diners to eat out. At the area's two Ruth's Chris Steak Houses, there are new happy hour specials starting at $7.95, and a special deal Mondays through Wednesdays that allows diners to buy one and get another at half off.
The chain has also introduced an "economy proof" $35.95 meal option that allows people to select a soup or salad, an entree and a side dish from a set menu of items for the set price.

"In the normal days, just a few months ago, just the filet would have been $35," said David Sadeghi, chief operating officer for Big Steaks Management, the Baltimore company that owns the Triangle restaurants. "We broaden our demographic by providing a menu that is a lot more affordable."

Sadeghi acknowledged that the deals definitely do cut into the profit margin on those items. "We know for a fact that we will not bring in the profit margin that will take us on a Hawaii trip," he said. "But it keeps our employees employed, and it keeps our consumer attached to us."
More and more restaurants are being forced to make similar decisions as discounting becomes a "competitive necessity," said Bob Goldin, executive vice president of Chicago food industry research firm Technomic. Fast-food chains and casual dining restaurants have always discounted and offered coupons. The move by more upscale restaurants into discounting is a more troubling sign for the industry.. . . more

Target Promises More Deals, Fewer New Stores

Locally based Target Corp., seeing its stock price go from around $50 per share at the beginning of the year to less than $35 per today, put out a three-pronged approach to convince those at its annual meeting Thursday that it will continue to be a viable company, and strong discount competitor, in 2009. Basically, company officials said they plan to: remind shoppers that their stores do have deals as good as Wal-Mart; cut store openings by about a third of usual; and to be more strict with Target credit card users.

The company, which operates 1,685 stores in most states including, just this month, two in Alaska, will pare down average new store openings from about 100 a year to a net 70 for 2009. In comparison, the retailer opened 118 new stores in 2007 and has opened 104 this year, including 45 stores on Oct. 12. The firm still plans to enter the Hawaii market next year.

“We’ve chosen to delay construction on some projects, such as where our co-tenants’ development plans have stalled, or where updated site specific sales estimates no longer justify the investment, at least in the near term,” said a company development official at the meeting. “We’d prefer to have new store growth, but by thoughtfully executing this strategy we think we can meet our fiduciary relationships.” . . . more

$15M Takes Grocery-Anchored Retail Center



BALTIMORE- Cedar Shopping Centers of Port Washington, NY, has closed on a $15.25 million, or $212 per sf, acquisition of Metro Square, a 72,000-sf shopping center located at 11120 & 11130 Reisterstown Rd. in the Owings Mills submarket. Gil Neuman and Chris Kubler of NAI KLNB represented the seller, a New York City-based individual that purchased the center in a 1031 Exchange, Neuman tells GlobeSt.com.

Situated on 9.6 acres, Metro Square is nine years old and anchored by Shoppers Food Warehouse. Additional retailers include Dry Clean Centre and Mattress Warehouse. The center’s location in the Baltimore-Washington Corridor--Reisterstown Road is a major north-south transportation hub--whetted the appetite for the asset, Neuman says. The volume of investment retail sales in this market is down 70% to 80%, compared to last year, he continues, "so obviously we are very pleased to have successfully closed this transaction." There was assumable financing in place, he says, "that wasn't necessarily the most attractive or high leverage debt out there. Also, the buyer is an institutional investor that does not have to rely solely on financing to make an acquisition.". . . more

Thursday, October 23, 2008

Blockbuster reiterates positive 2008 outlook

LOS ANGELES (Reuters) - Blockbuster Inc reiterated its full-year 2008 forecast on Wednesday and said it was comfortable with analysts' third quarter estimates, saying its core DVD rental business was providing excellent value to consumers during these "challenging" times.

In August, Blockbuster said it expected 2008 adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the range of $300 million to $315 million, which corresponds to net income in the range of $21 million to $36 million.

"In this environment, reaffirmation of guidance is great news and this gives more credence to the theory that people are staying at home rather going out and spending money," Stern Agee analyst Arvind Bhatia said.

But the "nesting" theory has not corresponded positively to Blockbuster rival online DVD rental company Netflix Inc which provides movies through a monthly subscription model.

Netflix this week cut its current-quarter subscriber and revenue outlook for the second time in two weeks due to the weakening economy.. . . more

American Eagle debuts mom-friendly '77kids' line

The role of mothers -- soccer or hockey -- may be controversial in some circles, but their power is not in question among the staff leading American Eagle Outfitters' carefully plotted strategy to start dressing some of the youngest Americans.

Hence, the inclusion of a "play. wash. repeat." feature on the Web site for the company's new 77kids by american eagle line, which launches today. What, you think the kids are worrying about how those jeans will look after 77 trips through the washing machine?

The mom-friendly laundry tool goes live today at the online store targeting children ages 2 to 10 years old, and it adds a reassuring value message to the virtual showroom featuring cute kids dressed in a colorfully, stylish goulash of hoodies, skinny jeans, tanks and even a tutu.

"We want to think like a mom and see like a kid," said Chris Fiore, senior vice president for 77kids. That means making clothes that look cool, feel good on the body and can stand up to a few washings.

American Eagle's timing in trying out a new concept -- any concept -- could be better. The nation's economic kerplunk has been hard on retailers and has drained consumer traffic from many malls.

Yet, the South Side company isn't taking this to the malls right away. The children's store at http://www.77kids.com/ marks American Eagle's first attempt at birthing a new concept entirely online, a move that protects the company from real estate expenses and payroll issues inherent in physical stores.. . . more

New Study Predicts 5% Decline In Holiday Spending

While none of the major forecasts for retail spending in the upcoming holiday season has been exactly jolly, the latest prediction is downright depressing: Brand Keys says it expects to see sales decline by some 5%.

Based on a survey of 16,000 consumers across all nine census regions, the New York-based brand and customer loyalty research consultancy finds that 35% say they plan to spend less on this year's shopping-- shelling out an average of about $775.

That estimate is decidedly more downbeat than projections recently released by the National Retail Federation, which is predicting a small increase of 1.9%, with shoppers spending an average of $832.36 on holiday-related shopping. The International Council of Shopping Centers just released its forecast, calling for a gain of 1.7%. And last week, NPD Group predicted flat-to-declining sales. . . . more

Retail project boom now barely an echo

Developers are turning to filling existing space by offering rent deals and sprucing up malls.

Proposals for new retail projects have effectively screeched to a halt in southern Maine.

After a building boom that added hundreds of thousands of square feet of retail space to the region in the past several years, new projects have dried up, according to industry watchers and building statistics. Developers are now focusing on filling the space they have by making deals on rent, renovating existing malls and reaching out to local merchants.

"New retail space has come to a standstill right now," said Mark Malone, owner of Malone Commercial Brokers, whose company tracks retail activity in Greater Portland.

Last month, contracts for future nonresidential construction in southern Maine plummeted 62 percent compared with September 2007, from $22 million to $8 million, according to McGraw-Hill Construction, which provides analysis to the construction industry. For the year, contracts for future nonresidential construction -- which includes industrial and office construction as well as retail --have dropped 12 percent from the year before, from $281 million to $247 million.

Malone said he expects the retail vacancy rate in Greater Portland, which has hovered around 1 percent in recent years, to climb to 6 or 7 percent by year's end. It's all the result of a glut of new retail space, lackluster sales, the national credit crunch and the dismal national chain restaurant climate, said Malone and other industry watchers.. . . more

PNC Bank, Giant Food Unveil Banking Services Plans

PNC Bank and Giant Food banking services program's first phase Includes 41 new n-store branches and 180 additional ATMs in Virginia, Maryland, Delaware and District of Columbia. PNC bank will create 225 banking positions.

The PNC Financial Services Group, Inc. (NYSE: PNC) and Giant Food LLC of Landover, Maryland, today announced an exclusive, 10-year agreement under which PNC will provide banking services in Giant supermarket locations across Virginia, Maryland, Delaware and the District of Columbia.

"This agreement significantly expands our presence in PNC's fastest-growing region around Washington and Baltimore as we continue to make banking easier and more convenient for PNC customers," said Joseph C. Guyaux, president of PNC. "With Giant, we will expand our successful in-store banking program with the region's No. 1 grocer in market share, create 225 positions and build upon our business model that differentiates us from other banks.".
. . more

Five Guys follows simple formula for success

Like our region's own Primanti Bros. or Quaker Steak & Lube, Five Guys Burgers and Fries began as a local legend, famed for their tasty burgers, hot dogs and fries.

The family-owned franchise has gobbled up best-burger plaudits from numerous newspaper and magazine polls in the Washington, D.C., area, where it was founded in the mid-'80s by Janie and Jerry Murrell, who named it for their five sons. Their formula for success: a simple, virtually minimalist menu of freshly prepared food, served at nearly the speed of a fast-food establishment.

They grill their burgers to order, with meat that's never frozen, and serve them on fresh buns, with a choice of almost a dozen free toppings. They've since expanded into a nationwide franchise of more than 300 stores, including those in Oakland and the Waterworks Mall in Pittsburgh near Fox Chapel.

The Waterworks location has at least seven tables on the sidewalk and additional seating inside. Forget ambience. It's cavernous and loud, with red and white tile accents on the walls, a red counter and red ductwork snaking along the black-painted ceiling. A bulletin board full of children's drawings seems to attest to the restaurant's popularity, although one crayon missive, with a smiley face, read, "Good food. Music too loud.". . . more

Boscov's survival chances may vary

Oct. 23--As a federal bankruptcy judge weighs the future of Boscov's Inc., the distressed department store chain's survival chances may vary considerably under competing ownership bids.

"It looks like Boscov's is going to survive in some form. It might be like a poodle that's been to a barbershop, but it could survive," said Howard Brownstein, a principal at Nachman Hays Brownstein Inc., a Philadelphia-area turnaround firm.

"The question is, does it deserve to stay in business and can people make money on this?"

Boscov's, which filed for bankruptcy protection in early August, is the target of rival efforts for control between at least two parties -- a Philadelphia private equity firm and a group led by the Reading-based chain's former CEO, Al Boscov. The successful bidder's prospects could hinge on things shoppers may hardly notice, but would help restore financial balance. A hearing is scheduled Monday in U.S. Bankruptcy Court in Delaware.

Boscov's, which operates stores at the Mall at Steamtown and in Wilkes-Barre, closed 10 of its 49 locations after declaring bankruptcy. Stores in Scranton, Wilkes-Barre and Hazleton remain open. The chain reported debt of $479 million as of early May, against assets of $538 million, and the feeble retail climate stirs curiosity about how Boscov's might continue and how the owners would obtain financing during the ongoing credit crisis.

"The company is disintegrating badly and sales are terrible," said Howard Davidowitz, a New York City retail consultant and investment banker. "Can anybody get financing, including the Boscov family, to continue this business? The banks aren't even lending to each other." . . . more

Wednesday, October 22, 2008

Bleak Outlook for Retail Real Estate in 2009 … and 2010

Hoping for a quick turnaround in the retail real estate sector? Don’t bet on it. That’s, at least, the opinion of more than 700 commercial real estate experts surveyed for the Urban Land Institute’s and PricewaterhouseCoopers’ annual Emerging Trends in Real Estate report.

“We’ve all got to pray for retail,” said Jonathan Miller, a consultant with Urban Land Institute and the report’s principal author during a Tuesday presentation of the report’s findings. “It’s had a great run. But it’s in for a tough time. … Class-B and -C malls will lose stores as chains consolidate into better malls. It’s going to be ugly.”

In judging prospects for property types in 2009, respondents ranked retail only above for-sale housing. On a scale of 1 to 9 with 9 being excellent and 1 being abysmal, retail came in with a 4.26 rating as an investment option and a 3.95 rating as a development option. Among 11 sub-sectors, regional malls ranked last (3.89 investment, 3.11 development), power centers ranked tenth (4.06 investment, 3.50 development) and neighborhood and community centers ranked sixth (4.67 investment, 4.08 development).

Respondents expect power center cap rates to rise 66 basis points from July 2008 (6.91 percent) to December 2009 (7.57 percent), regional mall cap rates to rise 59 basis points during the same time period (6.19 percent to 6.77 percent) and neighborhood and community center cap rates to rise 52 basis points (7.01 percent to 7.54 percent). . . . more

Coach Continues Domestic, Asia Expansion

Despite a slowdown in the United States, Coach continues to expand in North America, while making major plans in Asia, executives said at the company’s first quarter conference call.

The company still plans to open 46 retail stores this year in North America, consisting of 40 full-price stores and six outlets, including 14 market debuts. In time, North American can support 500 retail stores, including “at least” 20 in Canada, said Lew Frankfort, chairman and CEO.

“We have been careful to open new stores in a very balanced way,” said Michael Tucci, president, retail division, North America, adding that next year’s openings are geared toward new markets. . . . more

Forrester: Economy will slow online holiday sales

A struggling economy will be a big reason why US online retail sales this holiday season will have the slowest growth to date, Forrester Research Inc., a Cambridge research company, said today.
Forrester projects that US online holiday spending will reach $44 billion, up 12 percent over last year. Many retailers would kill for a 12-percent holiday gain, but that figure is puny and disappointing in the context of the exponential growth that online retailers have often enjoyed as online shopping evolved into a mainstream option for most consumers.. . . more

Retailers say economic fallout is limited — so far

Buyers are more careful, but stores still see OK sales

On a recent weekday morning Michael Finn, owner of the jewelry company E.B. Horn Co., looked around his Downtown Crossing store, crammed with polished watches, diamond engagement rings and cuff links, and noted that while store traffic has slowed during the past few weeks as consumers nervously eye the stock market, sales have yet to suffer. As for the coming months, Finn is uncertain about what the current financial crisis will mean for the holiday season.

“The jewelry business is very much affected by the stock market,” said Finn, noting that sales have been flat to slightly up year to date. “When people perceive that they are wealthy, they feel inclined to buy something that’s viewed as discretionary.”

Below the surface of frenzied media reports of the dramatic fallout from the global financial crisis, Boston-based retailers report that while consumers are indeed taking more care with their dollars, stores are still ringing up sales. And stores in areas frequented by tourists have been bolstered by both local shoppers and overseas travelers. . . more

Report: Commercial real estate market to hit bottom next year

Real estate investors and professionals say financial and real estate markets in the U.S. will hit bottom in 2009 and continue to slump for much of 2010, according to a report released Tuesday by the Urban Land Institute and PricewaterhouseCoopers LLP.

The annual industry outlook includes responses from more than 600 real estate experts, including investors, developers, property company representatives, lenders, brokers and consultants.

The report projects 15 percent to 20 percent losses in real estate values next year from the mid-2007 peak on a national level.

In general, respondents say financial institutions will continue to be pressured into moving bad loans off balance sheets, using auctions to speed up the process. . . . more

294,075-SF Center Leasehold Interest On Block

BROOKLYN, NY-CB Richard Ellis has been retained by Saltru Associates to sell the leasehold interest in Ceasar's Bay Shopping Center, a 294,075-sf big-box asset located at 8973 Bay Pkwy., also locally known as 1640 Shore Pkwy. The 100%-occupied shopping center sits directly along Gravesend Bay at Exit 5 on the Belt Parkway midway between the Verrazano Narrows Bridge and Coney Island and contains 1,194 parking spaces.

Ned Midgley, a senior vice president at CBRE, who is leading the marketing team along with Tim Sheehan and Dan Kaplan, tells GlobeSt.com that the property is owned by a partnership of multiple investors, which gained control of the property through an assignment of the ground lease in 1982. Bill Shanahan and Jeff Babikian are assisting the sales effort as well.

Midgley explains that CBRE is targeting an institutional buyer "due to the size of the potential transaction and the large amount of equity required by today's market conditions." He notes that the property, which sits next to New York Harbor, is truly one-of-a-kind. "It is essentially a suburban, big-box, power center in the heart of Brooklyn with its own exit and entrance ramp to one of Brooklyn's most traveled highways," he says. The Belt Parkway is the main connection from Brooklyn and Long Island to the Verrazano Narrows Bridge, Interstate 278--the Staten Island Expressway--Staten Island and the state of New Jersey and it various the major highways--including Interstate 95 and the New Jersey Turnpike. . . . more

Tuesday, October 21, 2008

Worst Real Estate Downturn Since 1991-1992, ULI Report Concludes

Brace yourself for the worst year in commercial real estate since the “1991-1992 depression,” according to Emerging Trends, a joint report by PricewaterhouseCoopers and the Urban Land Institute released this afternoon. Commercial property values could drop 15% to 20% from the peak realized in mid-2007. Losses could be even more severe for lesser-quality commercial properties in secondary markets, the gloomy report concludes.

“The aftershocks of rampant over-the-top lending that batter the entire credit system leave property markets substantially overleveraged and vulnerable to significant depreciation,” the report states. Controlled development, which has largely shielded the commercial sector, is no longer providing protection from the one-two punch of the ongoing housing meltdown and tight credit softening demand as consumers curtail spending and employers cut jobs.

The emerging consensus of more than 600 real estate professionals, including investors, developers, lenders, brokers and consultants is that the U.S. financial and real estate markets will bottom out in 2009 and flounder well into 2010. Investors can expect more foreclosures and delinquencies and a limping economy that will continue to crimp property cash flows.

“Residential led us into decline, and commercial real estate is way behind the curve. Is 2009 going to be worse for commercial real estate? Maybe. It is a lagging indicator that reacts to the economy,” said Stephen Blank, senior resident fellow of real estate finance with ULI during a webcast this afternoon that highlighted the survey results. . . . more

Circuit City store closures seen aiding Best Buy

ATLANTA, Oct 20 (Reuters) - Closing poorly performing stores may bring Circuit City Stores Inc (CC.N: Quote, Profile, Research, Stock Buzz) some relief as it looks to restore profitability, but rival Best Buy Co (BBY.N: Quote, Profile, Research, Stock Buzz) could benefit greatly from such actions, analysts said.

The Wall Street Journal reported on Monday that Circuit City was considering closing at least 150 stores and cutting thousands of jobs. Citing people familiar with the company, the newspaper reported that the consumer electronics retailer has also been exploring how much money it could raise by liquidating hundreds of millions of dollars in inventory.

"If you can renegotiate leases and can favorably exit some stores without getting clobbered on your cash flow, these are the things you want to do to try to survive a pretty difficult time," said Dan Binder, an analyst with Jefferies & Co.. . . more

Big Lots Announces Launch of E-Commerce Business

Just in Time for the Holidays, Company Brings Amazing Values to the Internet

COLUMBUS, Ohio, Oct. 21 /PRNewswire-FirstCall/ -- Big Lots, Inc. (NYSE: BIG - News) today announced the launch of its e-commerce website aimed at featuring on the internet the same treasure hunt atmosphere and incredible values that it provides to customers in 1,361 stores across the country.

Commenting on the launch of this new business initiative, Steve Fishman, Chairman, Chief Executive Officer and President stated, "We are excited about the start of our e-commerce business today and the opportunity to bring closeout shopping to the internet in a Big Lots way. The online deal of the day concept is something that we believe is fun and different, and with unbelievable values and great brands, it's just in time for the holidays. Shop early and shop often because the items, brands, and types of merchandise will change daily.". . . more

Goody's Family Clothing, Inc. Emerges from Bankruptcy

KNOXVILLE, Tenn., Oct. 20 /PRNewswire/ -- Goody's Family Clothing, Inc. (Goody's), a moderately priced family apparel retailer operating in small to midsize markets primarily throughout the Southeast, announced that the Company's Second Amended Plan of Reorganization proposed by Goody's Family Clothing, Inc., its Subsidiary Debtors and the Official Committee of Unsecured Creditors (the "Plan") became effective today, marking the Company's emergence from Chapter 11 bankruptcy. The Plan was confirmed by order of the United States Bankruptcy Court for the District of Delaware on October 7, 2008.

During the Chapter 11 bankruptcy, Goody's streamlined and reorganized its operations to improve the business model, significantly reduced operating costs, and maximized the value of core assets. This included the closure and liquidation of 69 underperforming retail locations in 18 states, the closing of a distribution center in Arkansas and a corporate office in New York, and the elimination of excessive corporate spending. In addition, Goody's eliminated the Company's e-commerce business, as well as an associated distribution center in Tennessee. . . . more

Tight lending climate easing

As credit market thaws, only firms in good shape may readily get loans

NEW YORK - As bank-to-bank lending rates slide lower, the credit climate is looking a bit brighter - at least for stronger companies.

The fear of a complete shutdown in lending is fading, but there remains a sense that when it comes to getting loans, U.S. businesses are going to be divided into haves and have-nots. As a result, the corporate landscape could look very different a year from now.

''The general economy was weakening, and that weakening has taken a turn for the worse. And any company that was already facing more challenging business conditions, when they're confronted by tighter credit, it gives them one less degree of flexibility,'' said Robert DiClemente, an economist at Citigroup.

The auto industry remains in a state of disarray. General Motors Corp., which has been burning through more than $1 billion per month, wants to buy Chrysler to access its currency stockpile, but GM appears to be having trouble lining up financing for the deal.

Some other companies are also having trouble nailing down funds to tide them over. Circuit City Stores Inc., for one, is considering closing a fifth of its stores and cutting thousands of jobs to avoid filing for Chapter 11 bankruptcy protection, The Wall Street Journal reported. The Journal said Circuit City has retained investment bank Rothschild Inc. to talk to banks and get emergency financing. . . . more

Approval of Billerica Home Depot could be years away

BILLERICA, MA -- More than three years have passed since the owner of the Billerica Mall came forward with a plan to redevelop the dilapidated shopping plaza and bring Home Depot to town.

It could be two more years before it's decided if the project moves forward.

From coffee shops to candidate forums, the proposed renovation of the plaza is a topic that comes up frequently in Billerica. Officials are now urging residents who are anxious about the mall's future to be patient.

"It could be a couple of years if a settlement isn't reached," said Patrick Costello, town counsel for Billerica. "It's somewhat difficult to predict the time frame of these things."

The rejuvenation of the Boston Road mall, which has been plagued by vacancies for more than a decade, was halted in May when the Planning Board denied the permit.

FB Billerica Realty Investors, the mall's owner, is now requesting that the Massachusetts Land Court annul the board's decision. It says the Planning Board's denial was "in excess of its authority." . . . more

8 Kmart, 4 Sears stores to close Jan. 31

Sears Holdings Corp. plans to close a dozen underperforming stores early next year, a decision that comes as retailers pull back heading into what is forecast to be one of the toughest holiday seasons in decades.

The Hoffman Estates-based retailer told employees last week that it intends to shutter eight Kmart and four Sears stores, company spokeswoman Kimberly Freely said Monday. The stores, none of which is in Illinois, are slated to close Jan. 31. Liquidation sales are scheduled to begin in early November.

Kmart, which shed hundreds of discount stores when it went through Chapter 11 bankruptcy reorganization in 2002, has been quietly closing stores for three years, as it loses market share to Wal-Mart and Target. . . . more

Monday, October 20, 2008

High-dividend REITs offer haven for nervous money

Caution should temper the drive for yield, industry experts stress

Shellshocked investors who are seeking refuge from plummeting stock prices might consider certain real estate investment trusts that offer dividend yields in excess of 10% on common stock — and even more on preferred shares.

However, fund managers and analysts cautioned, it is crucial for investors to look at the individual REITs' cash flow, debt load, lease expirations and credit rating to ensure that the dividend isn't at risk of being cut.

"There are a lot of good opportunities," said Larry Antonatos, portfolio manager at Chicago-based Heitman LLC.

Equity REITs currently offer dividend yields of 7.3% on average, while mortgage REIT yields average 19.9%, according to the National Association of Real Estate Investment Trusts in Washington.

Certain property sectors offer even bigger yields, with commercial mortgage REITs generating 30.6% and lodging REITs producing 14.7% on average. Yields on individual REITs vary from as low as 3.0% at Public Storage Inc. (PSA) of Glendale, Calif., to as high as 48% at RAIT Financial Trust (RAS) in Philadelphia.

"The reason some of the yields are so high is because there is perceived risk in the marketplace that some of them won't be able to pay the dividends," said Sam Lieber, chief executive of Alpine Woods Capital Investors LLC in Purchase, N.Y.

Indeed, a decision this month by General Growth Properties Inc. to suspend its dividend shook up investors, who nervously began wondering which REIT might be next. . . . more

General Growth Wrestles With Its Debt

Mall owner General Growth Properties Inc. is canvassing private-equity firms, hedge funds and other investors in a bid to sell $1.5 billion to $2 billion in preferred shares as it races to refinance or pay off billions of dollars in debt due in the coming months.

The company's bankers at Goldman Sachs Group Inc. have in recent weeks made the rounds of potential investors including Blackstone Group LP, Colony Capital LLC and Vornado Realty Trust, according to people familiar with the situation. The effort is led by Byron Trott, the Goldman banker who recently brokered similar sales of preferred shares for Goldman and General Electric Co. to Warren Buffett's Berkshire Hathaway Inc., these people say.
[General Growth Properties]

It was unclear whether Goldman has found any takers for the General Growth offer, or if the preferred shares offered could eventually be converted to common stock. Representatives of Goldman declined to comment. "We are actively pursuing all alternatives," General Growth spokesman Tim Goebel said, declining to comment further. . . . more

Wal-Mart launches a $10 toy war


Rival retail chains answer the salvo


Holiday price wars are starting early this year, and the latest weapon is the $10 toy -- a signal that retailers are bracing for a rough-and-tumble Christmas shopping season.

Wal-Mart Stores, accounting for more than one-fourth of U.S. toy sales, has sent a clear message that it doesn't plan to be undersold when it announced 10 well-known toys, including some Barbie dolls and Hot Wheels car sets, for $10.

KB Toys, the nation's largest mall-based toy seller by stores, told Wal-Mart to bring it on. It cut prices to $10 or less on more than 200 toys, including other Hot Wheels sets, Matchbox cars and classic games such as Yahtzee.

Following Wal-Mart's cuts, which were 25 percent to 40 percent below the prices of Toys "R" Us and Amazon.com, Target began matching prices on three of the four toys it shares with Wal-Mart's $10 list.

Amazon and the individual toy sellers it promotes on its sites also matched prices, but their discounts were offset by shipping charges. A Barbie Mariposa doll cost $10, for example, but had a $6 shipping fee.

The lower prices highlight an emphasis on high-volume staples as retailers gird for a Christmas season in which cash-strapped consumers may favor no-frills basics over flashier merchandise
.. . . more

Toys"R"Us Announces Key Trends That Will Influence Kids' Wish Lists This Holiday Season

Adorable Animatronics, $avvy Savers and Earth-Friendly Fun Among theTop Toy Trends

WAYNE, N.J., Oct. 20 /PRNewswire/ -- Today, Toys"R"Us announced its2008 list of toy trends that will influence kids' wish lists this holidayseason. Toys"R"Us has identified the following five toy trends for Holiday2008: Adorable Animatronics, Curious Kids, Earth-Friendly Fun, Music: MyWay, and $avvy Savers. With children's interests constantly changing,Toys"R"Us each year compiles a list of the season's most popular toy trendsto help shoppers find the perfect gift.

"With global merchants in 34 countries, Toys"R"Us is able to track andstudy toy trends throughout the world. Through this process we'veidentified five trends that reflect the types of toys that kids will bedreaming of on Christmas Eve," said Bob Giampietro, Senior Vice President,Trend and Innovation, Toys"R"Us, Inc. "Children continually emulate andadapt based on what they see and hear in real life, and this is reflectedin the trends we've recognized this year."

Following are the top five toy trends identified by Toys"R"Us for the2008 holiday season, accompanied by some of the best product examples ineach category. Some of the toys are new for 2008 and were recently named tothe Toys"R"Us Hot Toy list, while others are simply great toys - both oldfavorites and new hits. All of the items listed can be found at Toys"R"Usstores nationwide or online at http://www.toysrus.com/.. . . more