CoStar's Retail News Roundup: Nov. 8 - 14, 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.

E-mail this article

Print this article

By Sasha M Pardy

November 9, 2009

This week in the Retail Roundup, CoStar reports on expansions or new concepts at Sports Fan Attic and Bajio Mexican Grill; closings, cutbacks, defaults, or bankruptcy news at Waldenbooks and Nature Coast Commons; acquisition, merger, loan, sale, or IPO activity at Crown Acquisitions, Goldman Properties and The Feil Organization, Blackstone and Glimcher, Coventry and DDR, Equity One, Kimco and DRA Advisors, KKR and Dollar General, Iconix and Ecko, and Landry's Restaurants; new retail development news in MD; personnel or corporate announcements at Wal-Mart and ICSC, and Developers Diversified; sustainability and green building news at Food Lion; and more.

Did you miss last week's CoStar Advisor national retail story about key expectation for this year's Holiday season in retail?, If so, click here to read the story

Coventry Files $500M Lawsuit Against Developers Diversified
On Nov. 4, New York-based Coventry Real Estate Advisors announced that it filed a a $500 million lawsuit in the New York State Supreme Court of the State of New York against shopping center REIT, Developers Diversified Realty (NYSE: DDR). For the full story, click here.

(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

Sports Fan Attic to Expand Under New Owner Hat World/Genesco
Sports Fan Attic, a chain of retail stores selling licensed sports team apparel, accessories and gifts, was sold to sports hat retailer, Hat World for an undisclosed amount. Hat World is a subsidiary of sports footwear retailer, Genesco (NYSE:GCO). Sports Fan Attic operates 37 stores in seven states and reported revenues of about $30 million for the 12 months ending Sept. 30, 2009.

Hat World said that Sports Fan Attic's core customer profile is very similar to its own and added that the two retailers share many of the same vendors and marketing tactics. Genesco said that this acquisition provides opportunity for growth, both through opening new stores and pursuing future acquisitions of fragmented regional players in the sports fan paraphernalia space.

"Our ambition is to build a national chain with the same scale-based advantages that Hat World enjoys today," said Genesco President and Chief Executive Officer Robert J. Dennis. Founded in 1995, Hat World, Inc. is comprised of more than 850 mall-based, airport, street level and factory outlet stores nationwide, and in Canada and Puerto Rico, operating primarily under the LIDS retail brand.

Abundant Brands Has Eye on Growth As New Owner of Bajio Mexican Grill
Franchise Brands has sold its Bajio Mexican Grill chain and franchise rights to American Fork, UT-based Abundant Brands for an undisclosed amount. Abundant Brands already operated some Bajio restaurants as a franchisee. The fast casual Mexican cuisine restaurant chain said it prepares its dishes fresh.

Logan Hunter, CEO and chairman of Abundant Brands commented, "With Jason Stowe, one of Bajio's original founding partners, assuming the role of company president, we are confident growth will continue, as new markets discover Bajio." Abundant Brands also hired William Bruce as chief operating officer and Curtis Dye as director of marketing.

The first Bajio opened in 2001 in Utah and today has 47 franchised units in 11 states -- 25 of them are in Utah. The typical Bajio is about 2,000 square feet, according to CoStar Tenant.

Abundant Brands is a multi-concept restaurant franchisor that had a hand in the opening of over 250 restaurants in 12 states.

CLOSINGS/CUTBACKS/BANKRUPTCIES/DEFAULTS

Borders Closing 200 Waldenbooks Stores in January
The country's second-largest brick and mortar book retailer, Borders Group, is closing 200 of its mall-based Waldenbooks stores in January. As a result, approximately 1,500 positions--the majority of which are part-time jobs--will be eliminated.

Borders has been whittling down its Waldenbooks chain since 2001, closing an average of 66 stores per year through 2007. In 2008, 112 stores were closed. Following the January 2010 closures, Borders will have 130 Waldenbooks stores remaining.

The typical Borders superstore is much larger than the Waldenbooks format -- about 25,000 square feet compared to Waldenbooks 3,900-square-foot average store size. At this average size, 200 Waldenbooks stores going dark would create about 776,000 square feet of vacant mall space.

"America has a number of malls that continue to do well and draw customer traffic even in the current economy," said Borders Group Chief Executive Officer Ron Marshall. "We believe there remains an opportunity to profitably operate a much smaller Waldenbooks segment that complements our core Borders superstore business. Through this right-sizing, we will reduce the number of stores with operating losses, reduce our overall rent expense and lease-adjusted leverage and generate cash flow through sales and working capital reductions."

Waldenbooks was founded in 1933 by Lawrence Hoyt as a rental library in Bridgeport, Connecticut. Fifteen years later, Hoyt had 250 locations and in 1962, opened his first traditional book store, growing to have locations in every state by 1981. In 1984, Waldenbooks was acquired by Kmart and in 1994, was acquired by Borders.

Click here to download Borders' official list of Waldenbooks stores planned to close.

In Chapter 7, Nature Coast Commons Subject to Bankruptcy Sale
On April 15, Bank of America filed a lawsuit in the Hernando County, Florida Circuit Court to foreclose on the $43 million loan Opus South had on Nature Coast Commons, a 325,000-square-foot shopping center located on US Highway 19 at Wendy Court in Spring Hill, Florida, about 30 miles north of Tampa. One week later, Opus South and 11 of its affiliates, which included Nature Coast Commons L.L.C., filed bankruptcy.

On May 14, Opus South filed a motion to covert the Nature Coast bankruptcy case from Chapter 11 to Chapter 7 liquidation. According to the motion, Bank of America held claims against the project that were in excess of the property's value. On May 27, Magnum Management Services of Boca Raton was appointed as receiver and manager of Nature Coast Commons.

Opus South delivered Nature Coast Commons in the first quarter of 2009. Shadow-anchored by an 105,000-square-foot JC Penney, the project also features Office Depot, A.C. Moore, Aldi, and Best Buy as major tenants. Also tasked with leasing the center, Magnum said Nature Coast is currently 70% leased to national retail tenants.

Magnum is also the firm Bank of America appointed to solicit bids for a Stalking Horse Buyer to acquire Nature Coast Commons, which is subject to a Section 363 Bankruptcy Sale in the first quarter 2010. Magnum reports that the property's proforma stabilized net operating income is approximately $3.44 million.

ACQUISITION/MERGER/SALE/LOAN/IPO ACTIVITY

Blackstone and Glimcher Launch $320M Joint Venture
The Blackstone Group and mall REIT, Glimcher Realty Trust, entered into a joint venture agreement that would be seeded by two of Glimcher's best malls -- Lloyd Center in Portland and WestShore Plaza in Tampa.

Under terms of the joint venture, Blackstone would acquire a 60% stake in the properties, while Glimcher would maintain a 40% stake and continue to lease and manage the center. The gross value for the combined transaction is approximately $320 million, which includes $218 million in mortgage loans in place on the properties. At this value, Blackstone's 60% acquisition price would be approximately $192 million, including the assumption of $130.8 million in debt.

For the complete story on the Blackstone / Glimcher deal, click here.

Kimco Acquires 85% Interest in 21 Shopping Centers for $175M
Shopping center REIT, Kimco Realty Corporation (NYSE:KIM), has acquired an 85% interest in the 21 retail properties held under PL Retail Portfolio, its joint venture fund with DRA Advisors. The$175 million acquisition brings Kimco's ownership in the portfolio to 100%.

Kimco said the purchase price was based on an "enterprise price" of $825 million, which is comprised of $805 million for existing assets and $20 million for development rights at Pentagon Centre mall in Arlington, VA. Included in this total is Kimco's assumption of $564 in non-recourse mortgage debt and $50 million of perpetual preferred stock. Kimco funded the acquisition with its existing credit facility. The capitalization rate was 7.6%, based on NOI of approximately $61 million annually.

For the full story on this Kimco / DRA deal, click here.

$117M Buys Prestigious Fifth Ave Retail Address at St. Regis New York Hotel
An investment group comprised of Crown Acquisitions, Goldman Properties and The Feil Organization, have acquired the retail portion of historic hotel, St. Regis New York, located at 2 East 55th Street at the corner of Fifth Avenue in Manhattan.

Under the name GFC Fifth Avenue LLC, the group acquired the 24,700-square-foot retail space for $117 million, or approximately $4,736.84 per square foot. According to Reuters, this sale price represents a 5% capitalization rate on Starwood's forecasted 2009 net operating income for the retail asset.

For the full story on the St. Regis Hotel retail transaction, click here.

Equity One Acquires Westbury Plaza for $103.7M from Kimco/DRA
On Oct. 29, Equity One acquired Westbury Plaza for $103.7 million from joint owners, Kimco Realty Corporation and DRA Advisors.

Westbury Plaza is a 400,000-square-foot shopping center situated at 1220-1250 Old Country Road in the center of Nassau County, Long Island. Anchored by Walmart (110,054 sq. ft.), Costco (148,925 sq. ft.), Marshalls (45,826 sq. ft.), Sports Authority (43,000 sq. ft.) and Borders (30,550), the center also features restaurant chains Ruby Tuesday, Olive Garden, and California Pizza Kitchen. Westbury Plaza was built in 1993 and was last renovated in 2004. According to CoStar Property, it is currently 100% leased.

For the full story on the Westbury Plaza sale, including commentary from Equity One and Kimco, click here.

Landry's Restaurants to be Acquired by Company Chairman/CEO in $1.2B Deal
Casual restaurant chain, Landry's Restaurants, Inc. (NYSE: LNY) has agreed to merge with a company formed by and wholly-owned by Tilman Ferlitta, Landry's chairman, CEO and president. Under terms of the transaction, Ferlitta would acquire all of Landry's outstanding common stock (not already owned by himself) for $14.75 per share in cash. Total value of the transaction, which is expected to close in the first half 2010, is estimated at $1.2 billion.

The agreed upon share price represents a premium of 37% over the closing share price of Landry's common stock on Nov. 2, the last day of trading before this announcement. As of that day, Ferlitta already owned approximately 55.1% of Landry's outstanding common stock.

Ferlitta had previously proposed an all-stock transaction that was turned down by the board evaluating Landry's strategic alternatives. The transaction is contingent upon Landry's successfully refinancing a portion of its debt and the company may accept alternative offers from other parties through Dec. 17, 2009. Landry's hopes to sell $550 million of debt in a private placement deal.

Landry's portfolio of restaurant banners includes Rainforest Cafe, Saltgrass Steak House, Landry's Seafood House, Charley's Crab, The Chart House, and the Signature Group. The company is also engaged in the ownership and operation of the Golden Nugget Hotels & Casinos in Las Vegas and Laughlin, Nevada.

Iconix Acquires Controlling Interest in Ecko for $109M
Iconix Brand Group, Inc. (NASDAQ:ICON) has completed the acquisition of a 51% controlling interest in the Ecko portfolio of brands, which includes Ecko Unlimited, Marc Ecko, the Rhino logo, and Zoo York. Iconix paid $63.5 million in cash, plus the joint venture formed to hold the company, IP Holdings Unltd LLC, obtained $90 million of financing, bringing the effective purchase price for the 51% interest to approximately $109 million. Iconix said the Ecko portfolio of brands produces over $1 billion in annual global retail sales.

Ecko has about 86 company operated stores, consisting primarily of Ecko and Zoo York outlets, but its branded products are primarily sold to other retailers. Iconix' portfolio already includes such recognizable brands as Candie's, Bongo, Badgley Mischka, Joe Boxer, Rampage, Mudd, Mossimo, London Fog, Op, Danskin, Rocawear, Ed Hardy, Royal Velvet, Waverly, and more.

Kohlberg Kravis Roberts Launching Dollar General IPO
Kohlberg Kravis Roberts (KKR), the firm that took Dollar General private in 2007 for $7.3 billion, said it would sell 34.1 million shares of stock in an initial public offering of the dollar store chain.

Shares would be priced between $21-$23 each, which translates into the possibility of raising $7.5 billion. Specifically, Dollar General would sell 22.7 million shares, while shareholders will sell 11.4 million shares under the IPO. Dollar General would be traded on the New York Stock Exchange under the symbol "DG". The company plans to use proceeds from the IPO to pay down debt. Goldman Sachs, Citigroup and KKR are lead underwriters on this plan.

When KKR bought Dollar General in 2007, the retailer operated about 8,200 stores and said it planned to open 1,400 stores through 2010. Currently, Dollar General operates about 8,700 stores in 35 states, which is a net increase of 400 stores over the last year. According to KKR's website, Dollar General generated nearly $10.5 billion in 2008 revenues, which was up more than 14% over the previous year.

NEW SUPPLY

Woodmore Towne Center Progressing in Prince George's County
In September, vertical construction commenced on Woodmore Towne Center in Glenarden, Maryland, a 245-acre mixed-use project that is planned to eventually encompass 800,000 square feet of retail space, 1 million square feet of office space, 1100 residential units, two hotels and a conference center.

Located at I-495 and Landover Road in Prince George's county, the retail portion will be anchored by Wegman's, Costco and Best Buy. A fine dining restaurant by chef Timothy Dean is also on the docket. The development group on the $500 million project includes Petrie Ross Ventures, Greenberg Gibbons Commercial and Hovnanian Land Investment Group.

The first phase of the project is scheduled to open in fall 2010.

PERSONNEL ANNOUNCEMENTS

Former Wal-Mart Realty President, Paul Carter, Passes Away at 69
Paul R. Carter, longtime former head of Wal-Mart's U.S. real estate division and a past trustee of the International Council of Shopping Centers, passed away on Oct. 31, 2009 at the age of 69.

Carter worked for Wal-Mart for nearly 30 years, with his last position being president of Wal-Mart realty from 1995 to 2003, when he retired. During this time, Carter played a key role in Wal-Mart's unparalleled expansion pace -- the retailer grew from $82.5 billion in sales and 143 Supercenters in 1995 to $218 billion in sales and 1,006 Supercenters in 2002. Carter was successful in overcoming significant community opposition to Wal-Mart's expansion plans in markets all over the country.

From 2000 to 2003, Carter served as an ICSC trustee. Scott Wolstein, a past ICSC trustee and current CEO of Developers Diversified Realty, described Carter as a "humble guy" and a "people person" who formed strong relationships with developers and service providers

Prior to joining Wal-Mart in 1977 as a corporate controller, Carter was a CFO for Howard-Gibco, a discount retailer in Texas. In 1979, Carter was promoted to Wal-Mart's VP of special divisions, eventually became an EVP and in 1988, was named CFO and was also elected to Wal-Mart's board of directors, which he served on for 10 years.

Carter was also a member of the American Institute of Certified Public Accountants; the Arkansas Society of Certified Public Accountants; a trustee at Harding University in Searcy, Ark; a director for the Care Foundation of Springdale, Ark.; a director for Cincinnati, Ohio-based Cintas Corp. and an elder at the Bentonville Church of Christ.

Developers Diversified to Start New Year with Hurwitz as President & CEO
Cleveland-based Developers Diversified Realty Corporation (NYSE:DDR) announced that, effective January 1, 2010, Daniel B. Hurwitz will officially take over as President & Chief Executive Officer, succeeding Scott A. Wolstein, who will continue to serve as Executive Chairman of DDR's Board.

As President and CEO, Hurwitz will be responsible for planning, formulating and coordinating the development and execution of DDR's corporate strategy, policies, goals and objectives. As Executive Chairman, Wolstein will work closely with Hurwitz to develop DDR's strategic plan and will ensure the Board of Directors fulfills its oversight and governance responsibilities. In addition, Wolstein, on behalf of DDR, will maintain his historic capital markets and tenant relationships and will continue to serve on the company's Investment Committee.

Hurwitz joined DDR in 1999 as Executive Vice President and in May 2005, was promoted to Senior EVP and Chief Investment Officer. In May 2007, he became President and Chief Operating Officer and re-joined the Board of Director in June 2009. Prior to DDR, Hurwitz served as Senior Vice President and Director of Real Estate and Corporate Development for Boscov's Department Store; and prior to that, he served as Development Director for the Shopco Group, a New York City-based developer and acquirer of regional and super regional shopping malls.

Hurwitz is a graduate of Colgate University and the Wharton School of Business Management Program at the University of Pennsylvania. He also serves on the Boards of U-Store-It Trust (NYSE:YSI), the International Council of Shopping Centers, Colgate University and Regents for the University System of Ohio.

In his new role, Mr. Hurwitz will be responsible for planning, formulating and coordinating the development and execution of corporate strategy, policies, goals and objectives. This role is accountable for Company performance and reports directly to the Board of Directors.

Wolstein has served as Chief Executive Officer and a Director of DDR since its organization in 1992 and has been Chairman of the Board since May 1997. Prior to DDR, Wolstein was a principal and executive officer of Developers Diversified Group, the REIT's predecessor.

Wolstein is a graduate of the Wharton School at the University of Pennsylvania and the University of Michigan Law School. He is currently a member of the Board of Governors and Executive Committee of the National Association of Real Estate Investment Trusts (NAREIT); Board of Directors of the Real Estate Roundtable; Board of Trustees of Case Western Reserve University; and the Executive Committee and Board of Trustees of the Zell-Lurie Wharton Real Estate Center.

SUSTAINABILITY / GREEN BUILDING

Food Lion Unveils New Sustainable Refrigeration Technology in Georgia Store
Food Lion recently unveiled a new refrigeration system in its grocery store located at 5432 River Station Boulevard College Park, Georgia store. Manufactured by Kysor/Warren, the sustainable refrigeration technology is referred to as the "grocery industry's first cascading refrigeration system with naturally occurring carbon dioxide (CO2)" that keeps frozen and fresh foods cold.

A member of the U.S. Environmental Protection Agency's (EPA) GreenChill Advanced Refrigeration Partnership, Food Lion's launch of this refrigeration technology at the College Park store marks the company's fourth store qualifying under the program. The system is estimated to reduce the amount of refrigerants needed by 30% or more.

Food Lion was one of the EPA's first ENERGY STAR® partners and has 892 certified stores, accounting more than half of the ENERGY STAR certified stores in the United States. In addition, Food Lion said it is the only grocery chain to win eight consecutive EPA ENERGY STAR awards.

More Houston Commercial Real Estate News Stories:

Next Steps

800-204-5960

Email Us

®

# 1 Commercial Real Estate Information Company