CoStar's Retail News Roundup: Nov. 22 - 28, 2009

CoStar's weekly column covering expansions, new concepts, store closings, bankruptcies, cutbacks, acquisition, mergers, sales, loans, shopping center development activity, personnel changes, sustainability, green building, and more in retail real estate.

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By Sasha M Pardy

November 23, 2009

This week in the Retail Roundup, CoStar reports on expansions or new concepts at Electronic Arts and Kebab Café and Salvaje!; closings, cutbacks, defaults, or bankruptcy news at Penn Traffic and Blockbuster; acquisition, merger, loan, sale, or IPO activity at Developers Diversified, Thompson National Properties, City of New York and Thor Equities; new retail development news in NJ and NV; personnel or corporate announcements at Levin Management, Feldman Mall Properties, Up Ventures, and S.L. Nusbaum; sustainability and green building news at Annapolis Town Center; and more.

Did you miss last week's CoStar Advisor national retail story, "Retail REIT Execs Encouraged by 3Q Leasing Activity"?, If so, click here to read the story

(Editor's Note: To keep up on happenings and trends in retail real estate, subscribe to CoStar's Retail News Roundup, a weekly column covering retailer expansions and new concepts, store closings, bankruptcies, cutbacks, acquisition, mergers, sales. new shopping centers, personnel changes, and sustainability. Follow this link for access to back issues of the roundup. In addition to appearing every week in the national news and retail news sections of our web site, you may also receive the Retail News Roundup for free via email by requesting to be added to the distribution list by contacting senior editor, Sasha Pardy at spardy@costar.com Also, click here to subscribe to CoStar's dedicated Retail RSS Feed.

EXPANSIONS / NEW CONCEPTS

Electronic Arts Debuts Stand-Alone Demo Concept Stores
Video game company, Electronic Arts, has opened two stand-alone retail locations that demo the company's EA Sports workout video games. A new concept for the company, the stores invite interested people to set up appointments to try out the games in a free one-hour workout session. The company strategically located the test stores on opposite sides of the country in busy urban spots. One store is located at 156 Newbury Street in Boston, while the other is located at 39 Stockton Street in San Francisco.

Papa Bello Acquires The Kebab Café with Intention of Nationwide Expansion
Baltimore, MD-based Papa Bello Enterprises, an owner, operator and franchisor of food service restaurants in the U.S. and abroad, closed on the acquisition of The Kebab Café. The newly-acquired unit, which specializes in Middle Eastern-Style cuisine with a European flair, operates a flagship location in La Jolla, CA and is in negotiations to open two more corporate-owned locations over the next few months. Papa Bello hopes to turn The Kebab Café into a flourishing franchise concept. The company anticipates rolling out the concept nationwide in the first quarter of 2010.

Salvaje! Opens First U.S. Store in Orlando
Salvaje!, ladies fashion wear designer and retailer with stores in Panama and Venezuela, has opened its first U.S. store in Orlando, according to the Orlando Business Journal. Owned by Brito Commercial Group, the U.S. subsidiary company of Distribuidora Kleinmin CA, Salvaje's store opened November 15 in a 3,200-square-foot space at the Outlet Marketplace on the north end of International Drive in Orlando -- the tenant replaces a former Perry Ellis outlet store. This first store is a test, but reportedly, Salvaje plans to soon follow with another Orlando area store.

CLOSINGS/CUTBACKS/BANKRUPTCIES/DEFAULTS

Multi-Brand Grocer, Penn Traffic, Files Bankruptcy, Again
Syracuse, NY-based Penn Traffic Company, which operates supermarkets under the P&C, Quality Markets and BiLo banners in four Northeast states; filed Chapter 11 on November 18, 2009. The company intends to sell its stores and other assets under bankruptcy court protection.

Penn Traffic reported $150.4 million in assets and $136.9 million in liabilities in its filing. According to Hoover's information service, Penn Traffic employs about 6,200 people.

Initially, the grocery retailer said it intended to keep stores open during the bankruptcy process, however, on November 25, the company changed its tune, saying it would close 53 P&C and Quality Markets in central and western New York by February 15, 2010. The affected stores and warehouses that supply them, employ more than 4,100 people. The layoffs include include 669 jobs at two Syracuse warehouses.

This is not the first time Penn Traffic has been in bankruptcy. In 1997, Penn Traffic had a peak of 265 stores, but following a number of closures over the next two years, the company filed bankruptcy in March 1999 when it had 19,000 employees and 216 stores -- it emerged three months later. In May 2003, the company filed again when it had 212 stores -- it didn't emerge until April 2005 when it had been whittled down to 109 stores.

According to the Syracuse Post Standard, Penn Traffic reported 79 stores in this latest filing. However, the website for Penn Traffic's three store banners indicated 101 stores in operation as of Nov. 23, 2009 -- that list of locations breaks down as follows: P&C has 46 stores, with 2 in VT, 3 in PA, 1 in NH and 40 in NY; Quality Markets has 22 stores with 9 in PA and 13 in NY; and BiLo has 33 stores in PA (for the full list, click here).

Penn Traffic's missed debt payments spurred the need to file. This occurred despite Penn Traffic's $43 million sale of its wholesale grocery division to C&S Wholesale Grocers in December 2008.

The company is rumored to already have a buyer lined up. The asset sale date is set for January 10, 2010.

According to CoStar Tenant, the typical Penn Traffic grocery store is about 35,000 square feet, with locations ranging in size from 12,000 to 72,000 square feet.

Blockbuster to Close 650 Stores Through 2010
Blockbuster provided an update on its store closure intentions on Nov 13, 2009. The company plans to close 400 stores between the fourth quarter of 2009 and early 2010, followed by another 250 store closures through the remainder of 2010. This announcement translates into 650 Blockbuster store closures between now and the end of the company's fiscal 2010, which closes in the first week of January 2010.

According to CoStar Tenant, the average store Blockbuster has opened this decade is about 5,700 square feet, with the typical range between 4,000 and 8,000 square feet. Blockbuster is focused on closing its larger stores.

To read about Blockbuster's September 2009 store closure announcement, click here.

ACQUISITION/MERGER/SALE/LOAN/IPO ACTIVITY

Developers Diversified, Goldman Sachs Put CMBS Deals Back in Action
The first new-issue commercial mortgage backed securities (CMBS) supported by brick-and-mortar properties in nearly two years successfully sold this past week. Be sure to read the full story by CoStar's Mark Heschmeyer.

City of New York Spends $95.6M to Acquire Historic Coney Island Site, Intends to Redevelop
On November 12, New York City Mayor Michael Bloomberg said the City signed a contract to acquired 6.9 acres of land in Coney Island for $95.6 million from Thor Equities. Combining this parcel with the City's three other Coney Island waterfront parcels, the City intends to create a 12.5-acre outdoor amusement park within a new 27-acre amusement and entertainment district.

In July, the City Council approved a plan to preserve and grow the historic amusement area; create a vibrant mixed-use neighborhood with new retail options and nearly 5,000 new units of housing; and generate more than 25,000 construction jobs and 6,000 permanent jobs. In total, the plan is expected to generate more than $14 billion in economic activity for New York City over the course of 30 years.

"Over the last four decades, the amusement district has dwindled to just three acres, but we're now reversing that trend. Like New York City's other great parks, Coney Island's amusement park will be owned by the public, and its future will be in the hands of New Yorkers who have cherished it for generations. What's more, today's announcement means that we can move full-steam ahead with our plan to revitalize Coney Island - not only as America's greatest seaside amusement park - but also as a vibrant community with thousands of new apartments and jobs," said Mayor Bloomberg.

Congressman Nadler said, "With the announcement of the City's agreement with Thor Equities and the issuance of a RFP for an amusement area operator, Coney Island has finally turned the corner and its long awaited redevelopment can finally begin."

Under the city's plan, an amusement developer would begin leasing a portion of the City-owned sites for the first phase of the development, in summer 2010. Under the rezoning, the amusement and entertainment district will be bordered by Surf Avenue to the north, the New York Aquarium to the east, the Boardwalk to the south and Keyspan Park to the west.

Thompson National Properties Successfully Launches I.P.O., Makes First Acquisition
Nearly one year after Irvine, CA-based Thompson National Properties filed its registration statement with the SEC to launch TNP Strategic Retail Trust, a public, non-traded retail REIT, the trust reported success in raising the minimum offering amount of $2 million in shares of its common stock in its initial public offering.

Shortly after the Nov. 12 announcement, TNP closed on the acquisition of its first property, a 94,574-square-foot grocery-anchored shopping center in Moreno Valley, CA. The project is well-occupied and contains two vacant pad sites for future development -- TNP said the purchase fits into the trust's overall acquisition strategy.

TNP said it was also successful in securing a $15 million revolving credit facility from Key Bank.

For more on TNP's initial public offering, click here.

NEW SUPPLY

Grand Opening Set for The Crystals at CityCenter in Las Vegas on December 3
Taubman Centers, the developer of The Crystals at CityCenter on the Las Vegas strip, is set to hold the grand opening of the 500,000-square-foot luxury retail and dining "district" on December 3. The Crystals is part of the 67-acre CityCenter mixed-use resort, which will follow with a full grand opening on December 16.

Large-format luxury retailers set to open at Crystals include Louis Vuitton, Hermes, Prada, Christian Dior, Bulgari, Van Cleef & Arpels, TIFFANY & CO., Mikimoto and Ermenegildo Zegna. Retailers opening their first locations in Las Vegas at CityCenter include Tom Ford, Assouline, Kiton, Miu Miu, Paul Smith, Porsche Design, de Grisogono, H. Stern, Marni and Tourbillon.

Restaurants opening their first Las Vegas locations at Crystals include Eva Longoria Parker’s Beso, Mastro’s Ocean Club and Todd English’s T.E. Pub. Wolfgang Puck will open two innovative new restaurant concepts, The Pods by Wolfgang Puck and Brasserie PUCK at Crystals as well.

On October 22, 2009, the USGBC awarded the Crystals at CityCenter LEED Gold Core & Shell certification, making it the world's largest retail project to earn this level of certification. The project's sustainable elements leading to this certification include radiant floor cooling, use of wood certified by the Forest Stewardship Council, efficient water fixtures, skylights, preferred parking for alternative fuel vehicles, and more.

In addition to Crystals, CityCenter will feature ARIA Resort & Casino, a 4,004-room gaming resort; three luxurious non-gaming hotels encompassing 2,400 residences, including Las Vegas' first Mandarin Oriental, Vdara Hotel and The Harmon (slated to open in late 2010); Veer Towers, the development's only strictly residential buildings; and a Fine Art Collection. CityCenter is a joint venture between MGM MIRAGE (NYSE: MGM) and Infinity World Development Corp, a subsidiary of Dubai World.

NRDC Secures Another Anchor for CooperTowne Center
Purchase, NY-based National Realty & Development Corporation (NRDC) has secured L.A. Fitness as co-anchor for CooperTowne Center, a 385,000-square-foot shopping center redevelopment project at 711 Evesham Avenue in Somerdale, NJ. Set to open in December, the L.A. Fitness will be joined by a Walmart Supercenter in June 2010. Other tenants include a 16-screen Cinemark Theatre, Dollar General, GameStop, and more.

PERSONNEL ANNOUNCEMENTS

Thomas Wirth, President & CFO, Resigns from Feldman Mall Properties
Feldman Mall Properties announced the resignation of Thomas Wirth, the company's President and Chief Financial Officer. Wirth will remain with the company until early December 2009 and thereafter, is set to become Executive Vice President of Portfolio Investment for Brandywine Realty Trust.

In the interim, Feldman board members Bruce Moore and James Sight, as well as other officers and employees, will assume the duties of Wirth.

Brandywine Financial Services Corporation (not affiliated with Brandywine Realty Trust) currently provides Feldman with certain management and financial services through a pre-existing contract.

Feldman's portfolio of malls has been whittled down to four mall properties totaling 3.7 million square feet.

Levin Management Hires Steven Barthel as VP of Contruction
North Plainfield, NJ-based retail landlord, Levin Management, hired Steven Barthel as VP of Construction. In this capacity, Barthel is to oversee all construction activities within the firm's 12.5 million-square-foot retail portfolio, which is primarily comprised of retail development work, but also includes tenant improvement work.

Levin's current projects include a major renovation, repositioning and re-tenanting underway at Post Road Plaza, a 268,000-square-foot shopping center anchored by Fairway Market in Pelham Manor, N.Y. Also, the 157,000-square-foot Somerville Circle Shopping Center in Raritan, N.J., is undergoing a modernizing "facelift" that includes a recent pad site building approval. And Levin is launching major renovations of the 184,000-square-foot Hamilton Square in Hamilton Twp., N.J., and the 163,000-square-foot Hickory Plaza in Hickory, N.C.

Barthel brings 25 years of experience to his new position at Levin. During his career, he has worked with Cargo Ventures LLC, Archon Group/Whitehall Industrial, and Prologis Trust. He will lead a top-flight team of project managers and support staff at Levin that includes John Bowen, assistant vice president-construction, and Gerald A. O'Brien, director of development.

S.L. Nusbaum Joins the X-Team International Brokerage Alliance
Norfolk, VA-based S. L. Nusbaum Realty Co.’s Retail and Shopping Center Division has partnered up with retail brokerage alliance network, X Team International.

Specializing in the Hampton Roads market, S.L. Nusbaum is a full service commercial real estate brokerage company in its 103rd year of business. The firm currently manages over 5.3 million square feet of retail space, over 17,000 apartment units and 2 million square feet of office and industrial properties. X-Team now has affiliates covering 45 major markets in North America and Europe.

Tony Greenberg Launches Up Ventures in NYC
Tony Greenberg has launched a new real estate development and investment company, Up Ventures. In the near term, the company's focus will be on Manhattan retail property development. The company's first project is to convert a mid-rise property into a multi-story restaurant building that will be a "social destination with buzz worthy dining at its core, elevated by progressive architecture, engaging design and intelligent technology."

With 10+ years in New York City real estate development, Greenberg has held positions in development, asset management, property management, leasing, acquisitions/dispositions and finance. Most recently he was Vice President of Hudson Yards Development Corporation where he was in charge of finance on the West Side Rail Yards project. Earlier in his tenure he was Associate, VP of Development and helped structure the RFP’s for the Jacob Javits Convention Center Hotel, Mid Block Garage and the West Side Yards. Prior to HYDC, he was Vice President at Joseph P Day Realty Corporation.

SUSTAINABILITY / GREEN BUILDING

Greenberg Gibbons Receives Phoenix Award for Annapolis Town Center Brownfield Work
Greenberg Gibbons announced that its 2 million-square-foot mixed-use project in Annapolis, MD, the Annapolis Towne Centre at Parole, received a Phoenix Award for its excellence in brownfield redevelopment.

The Phoenix awards honor individuals and groups who are working to solve critical environmental and community challenges when transforming formerly used real estate into productive new uses. The U.S. Environmental Protection Agency issues the same awards in 10 different regions of the country -- the Annapolis project is the 2009 Phoenix Award winner for Region 3, which spans the Mid-Atlantic states.

While Greenberg Gibbons was construction the 35-acre Annapolis Towne Centre, it had to execute a quick clean-up of the grounds, which were the site of one of the largest dry cleaner chemical spills in Maryland’s history. To achieve these goals, Greenberg Gibbons entered into the Maryland Voluntary Cleanup Program and worked closely with the Maryland Department of the Environment and Anne Arundel County, as well as a team of environmental engineers and planners. In the end, Greenberg Gibbons had conducted $5 million worth of environmental remediation of polluted soil and groundwater covering several acres, and put in place a comprehensive storm water management program.

Annapolis Towne Centre is an open-air development anchored by a 170,000-square-foot Target and one of the largest Whole Foods Markets in the country. Other retailers include Anthropologie, Bed Bath & Beyond, Brooks Brothers, Eastern Mountain Sports, Great Gatherings, J.Jill, Sur La Table, Talbots, Origins, Paper Source, Smyth Jewelers, 24 Hour Fitness and restaurants Brio, The Chop House, Gordon Biersch, Metro Silver Diner, PF Chang’s and The Real Seafood Company. The lifestyle center also features Class A office space, luxury condos and apartments.

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