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CoStar's Retail News Roundup: Mar. 1 - 7, 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.
March 2, 2009
This week in the Retail Roundup, CoStar reports on expansions or new concepts at Limited Brands, Play N Trade, Aaron Rents, Forever 21, Appliance Direct, and Kohl's; new retail development news in GA, HI, and FL; acquisition, merger, loan or sale activity at Centro Properties Group and Developers Diversified; closings, cutbacks or bankruptcies at Zale, J. Crew, Gap, Z Gallerie, Steve Madden, Fortunoff, and Sears; personnel announcements at Centro; green building at Staples, and more.


Did you miss last week's CoStar Advisor national retail story, "Retail REITs Battle Declining Fundamentals, Impairment Charges?", If so, follow this link 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


Kohl's Ups 2009 Store Opening Plan to 55 Stores
In its fourth quarter earnings call, department store chain, Kohl's Corporation, (NYSE: KSS) said it opened 75 stores during 2008, compared to 112 stores in 2007. During 2009, the company plans to open 55 stores and remodel 51 stores. This plan represents a slight increase over its previous announcement, as some openings were added as a result of the Mervyn's store locations it recently acquired. The company will open its first store in Alaska in 2009, as well as 30 stores in California this year.

Play N Trade Sets Goal for 1,100 Stores in 2011
Play N Trade, a used video game retail chain, is catching on quick. The company has grown, primarily through franchising, into a 250-store chain and has more than 500 franchisees waiting to start stores with hopes to add 200 stores in 2009. In January, the retailer appointed a new CEO; Larry Plotnick, who most recently served as SVP and general manager at Game Crazy. In that announcement, the company said it plans to grow to 1,000 stores by 2011. According to Costar Tenant, the typical Play N Trade is 1,200 square feet.

Forever 21 to Open 11 New Stores by the end of March
Forever 21 is on schedule to open 11 large-format stores by the end of March in former Mervyns locations owned by Macerich(R) (NYSE: MAC). The first phase of openings at Macerich-owned centers include The Mall of Victor Valley in Victorville, CA (opened 2/26), Northridge in Salinas, CA (3/6), South Towne Center in Sandy, UT (3/6), Arrowhead Towne Center in Glendale, AZ (3/27), Lakewood Center in Lakewood, CA (3/27), and Montebello Town Center in Montebello, CA (3/27). Locations to open in the first phase not in Macerich-owned centers are: Mall Del Norte in Laredo, TX; Tucson Mall in Tucson, AZ; Crossroads Plaza in Calexico, CA; Valle Vista Mall in Harlingen, TX; and Antelope Valley Mall in Palmdale, CA. In a December 2008 transaction with Kohl's, Forever 21 acquired 15 former Mervyn's locations. For more on that, click here.

Limited Brands Opening 23 New U.S. Stores in 2009; Including Furthering of Henri Bendel Freestanding Stores
During 2009, Limited Brands (NYSE: LTD), operator of Victoria's Secret and Bath & Body Works stores, plans to grow U.S. square footage by 1%, through the opening of 23 new and 44 "reconstructed" U.S. stores. In addition, the company continues to test is Henri Bendel concept, a budding chain of luxury accessory stores -- it currently operates five of the stores and plans to open six new locations during 2009. The typical Victoria's Secret is 5,500 square feet, while the typical Bath & Body Works is 2,400 square feet and Henri Bendel is 10,000 square feet.

Aaron Rents to Open up to 140 Stores in 2009
Aaron Rents (NYSE: RNT) opened 107 new stores (49 company-owned, 58 franchised) during 2008, resulting in a net store count increase of 2.9% over 2007. The company sold franchise rights for 149 new stores during 2008, building its new store pipeline to 282 stores expected to open over the next several years. During 2009, the company expects between 80 and 140 new stores to open.

Rex Stores Getting Out of Retail, Appliance Direct Expanding Through Assumption of Rex Stores Leases
Central Florida-based discount appliance retailer, Appliance Direct, recently assumed the leases, as well as inventory contained within, associated with 39 Rex Stores, and plans to pursue 44 more stores. Under terms of the agreement with Rex Stores, Appliance Direct is leasing the stores for an initial term of six years with options to renew, carrying annual rent between $65,000 and $85,000 per location. In addition, Appliance Direct may opt to purchase the real estate associated with the stores during the first two years of its lease, for prices between $70 and $76 per square foot. The average Rex store involved in this transaction is about 12,600 square feet -- smaller than Appliance Direct's typical store. Appliance Direct has already begun rebranding the stores.


(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.





NEW SUPPLY


First Tenants Set to Open at Sembler's Canton Marketplace
Canton Marketplace, a $120 million retail development in Canton, GA has completed construction and the first tenants will begin opening this month. The developer, Atlanta-based Sembler, said the 800,000-square-foot project will see 14 tenants open in March and April, including Bed Bath and Beyond, Best Buy, Books-A-Million, Dick’s Sporting Goods, Kirkland’s, Kohl’s, Lowe’s, Off Broadway, Office Max, PetsMart, Rack Room, SuperTarget, T.J. Maxx, and ULTA, as well as outparcel tenants Chick-fil-A, Olive Garden, and SunTrust. The center is located on the south side of Highway 20, east of Interstate 575 at Exit 19, in Canton.

Major Mixed Use Plan Approved for Honolulu
Victoria Ward Ltd, a subsidiary of General Growth Properties (NYSE: GGP) has been approved to develop 60 acres of mixed-use space in Honolulu, Hawaii that could eventually include as much as 5 million square feet of retail, dining and entertainment space, 4,300 residences, 4 million square feet of office space, 700,000 square feet of industrial space, and 14 acres of green space.

Village at Gulfstream Park Opening in 2010
Forest City Enterprises, Inc. (NYSE: FCEA and FCEB) announced it sealed an agreement with the City of Hallandale Beach, FL for 15 years of tax-increment-financing for The Village at Gulfstream Park, a 490,000-square-foot (includes 80,000 sq. ft. of office space), high-end retail and entertainment destination currently under construction in Hallandale Beach. The "leisure, fashion and entertainment destination" is set to open during the first quarter of 2010. According to its website, this is the first phase of the project; it is set to eventually be 1 million square feet, including 1,500 residences.

Tenants on the docket include Crate and Barrel, Pottery Barn, West Elm, Fender Rock & Roll Religion, Martier and Vogue Couture, III Forks, Ola Cuba by Chef Douglas Rodriguez, Texas de Brazil, Santanera Nightclub, Greenhouse Nightclub, American Pie Brick Oven Pizza, Atelier, Brio Tuscan Grille, Cadillac Ranch, Cantina Laredo, Haagen-Dazs, Lamborghini Cafe, Next Authentic, Pacific Paradise, PrimeBar, Rock Star, Romeo and Juliet Couture, Scala, Scene, The Container Store, The Cheese Course, The Playwright Irish Pub, Vahalla Menswear, Venetian Salon, Williams-Sonoma, and Z Gallerie.


(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.





ACQUISITION/MERGER/SALE/LOAN ACTIVITY


Centro Sells More Shopping Centers for Less Than Recent Acquisition Prices, published Feb. 16, 2009
The Atlanta office of HFF (Holliday Fenoglio Fowler, L.P.) announced that Whitney Knoll and Bradley Peterson represented Centro Properties Group in the sale of two shopping centers.

The Shoppes at Letson Farms in McCalla, Alabama sold for $12.625 million ($132.50 psf) during January 2009 to DLC Management Corporation. The neighborhood shopping center was completed between 2002 and 2004, is 95,092 square feet, and was 95% occupied by Food World, Movie Gallery, H&R Block, Subway, and Curves at the time of sale. According to CoStar COMPS ID# 1495483, Peterson represented New Plan (acquired by Centro in 2007) approximately two years ago in its $14.75 million acquisition of Letson Farms.

Hampton Plaza in Tampa, Florida sold for $2.6 million ($58.53 psf) to Gator Investments in November 2008. The 44,420-square-foot neighborhood center was built in 1990 and was 95% occupied by Big Lots, Dollar General and Metro PCS at the time of sale. According to CoStar COMPS ID# 830983, CBL & Associates sold Hampton Plaza to Galileo America Shopping Trust (Centro acquired Galileo in May 2007) for $3.06 million more than five years ago.

In February, Centro sold Goff Brook Shops, a 71,493-square-foot shopping center located at 1267-1309 Silas Deane Highway in Wethersfield, CT, to New England Retail Properties for $6.8 million, or approximately $95 per square foot. Built atop 8.85 acres in 1988 and renovated in 1993, the center was 84% occupied at the time of sale by tenants including Office Depot, Home Town Buffet and Catherine's Plus. Joseph French, CCIM and Neil Golub of Sperry Van Ness in White Plains, NY represented Centro in the transaction. Information was not available on whether this center sold for less than its most recent acquisition price.

Germany's Otto Family to Amass One-Third Stake in Developers Diversified Realty for $118.5M
Cleveland, OH-based national shopping center REIT, Developers Diversified Realty (NYSE: DDR) entered into an agreement to sell 30 million of its common shares (as well as warrants to purchase an additional 10 million shares) to international retail real estate mogul, Alexander Otto and certain members of the Otto family.

The Otto family owns Germany's ECE Projektmanagement, a leading European developer and manager of inner-city shopping centers. ECE manages 111 malls totaling 37 million square feet in 15 Central and Eastern European countries. In addition, Alexander Otto is the largest shareholder of Deutsche EuroShop AG, which owns a $2 billion portfolio of 16 Central European shopping centers.

Additionally, the Otto Family, controls privately owned, New York City-based acquisition, redevelopment and management firm, the Paramount Group. Paramount owns several high-rise buildings in New York City and Washington, D.C. According to CoStar COMPS, the Paramount Group spent approximately 1.7 billion during 2008 to acquire four properties in the New York City area; including the Credit Lyonnais building on the Avenue of Americas and Penn Link at 440 Ninth.

DDR said the Otto family also owns home accessories chain, Crate & Barrel, which has grown to about 160 stores.

The Otto family is acquiring the stake in DDR at $3.50 per share for the first 15 million shares and $4.00 per share for the second 15 million shares (for a total of $112.5 million). These prices represents a premium of approximately 33% and 52%, respectively, to the closing market price of DDR's shares on Friday, February 20, 2009 -- this compares to a closing stock price of $37.12 per share on February 20, 2008. Lastly, five-year warrants were issued to the Otto family to purchase another 10 million shares at $6.00 per share (for a total of $6 million).

According to Yahoo Finance, FMR LLC is currently DDR's largest shareholder - it owns 17.28 million shares accounting for a 14.37% stake. Based on that, the Otto family's 40 million shares would account for approximately one-third ownership in DDR.

Scott Wolstein, DDR's chairman and CEO said, "This transaction would provide us with significant capital for debt reduction, thus allowing us to meet our continued objective of reducing leverage and improving liquidity."

Alexander Otto said, "We continue our heritage of breathing new life into the city center retail trade...We view [DDR] as a valuable investment and a key stepping stone for our global expansion and partnership initiatives."


(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.





CLOSINGS/CUTBACKS/BANKRUPTCIES


Zale Corp. Closing 115 Jewelry Stores; Eliminates 245 Positions
In its fiscal second quarter report on Feb. 25, Dallas-based Zale Corporation (NYSE: ZLC), announced a net loss from operations of $23.6 million, partly due to a 17.9% decrease in revenues and 18.1% decline in comparable store sales posted during the quarter.

Zale also announced the second phase of an $175 million cost reduction plan involving the closure of 115 underperforming stores, the February 2009 elimination of 245 positions, improvement of store efficiencies and inventory reductions. The company is avoiding lease termination expenses, as it plans to close the 115 stores as leases mature.

The retailer currently operates approximately 2,080 stores in the U.S., Puerto Rico, and Canada under brands Zales, Gordon's, Peoples, Mappins, and Piercing Pagoda. This compares to approximately 2,150 stores one year earlier, representing a net decrease of 70 stores.

Z Gallerie Closing 25 Stores
Los Angeles, CA-based eclectic home furnishings, art, and accessories retailer, Z Gallerie, has commenced store closing sales at 25 of its stores across the country. The retailer currently operates 77 stores in 24 states that, according to CoStar Tenant, are typically 10,000 square feet and located in a regional mall or lifestyle center.

Approximately 350 positions would be eliminated as a result of this announcement, and in addition, the company plans to downsize its distribution network. According to CoStar Tenant, Z Gallerie currently leases 264,000 square feet within the Greenwood Industrial Park in McDonough, GA. Its headquarters is an 120,000-square-foot office/warehouse building located at 1855 W 139th St. in Gardena, CA.

While a full list of stores being closed has yet to be released, local reports say that Z Gallerie is exiting Ohio completely (it has four stores in the state). Ohio store locations are at Rockwood Commons in Norwood, Easton Town Center in Columbus, Legacy Village Cleveland in Lyndhurst, and Crocker Park in Cleveland.

J. Crew Eliminates 95 Positions
J. Crew Group, Inc. (NYSE: JCG ) recently announced a cost reduction program "in response to the challenging economic environment" that it expects will save the company $40 million. Aside from suspension of 401K matching and elimination of wage increases, J. Crew is eliminating 95 positions, primarily among its New York headquarters staff, field personnel, and distribution center personnel -- this reduction equates to an approximate 10% reduction in staffing for those departments.

Gap to Open 50; Close 100 Stores in 2009
In its fiscal year 2008 results report released Feb. 26, San Francisco, CA-based Gap Inc. (NYSE:GPS), the apparel retailer reported a 14% decline in comparable store sales for fourth quarter and a 12% decline in the same for the full year. During the year, Gap opened 101 stores, but closed 119 stores, bringing its store count to 3,149. During fiscal 2009, Gap said it would open 50 stores, but only 25 of them will be U.S. stores. Further, it plans to close about 100 stores, primarily in the Gap brand.

Fortunoff Undergoing Liquidation
Last month, the 85-year-old lifestyle home products and jewelry chain, Fortunoff, filed bankruptcy for a second time, this time under the hands of new owners, NRDC Equity Partners (a subsidiary of National Realty & Development Corporation, which also owns Lord & Taylor). Liquidation would be the plight of Fortunoff this time around. After Hilco Merchant Resources and Gordon Brothers both withdrew bids, Great American Group, together with Hudson Capital Partners, SB Capital Group and Tiger Capital, won the auction to liquidate Fortunoff's stores. This is the same group of private investors that handled the liquidation of Steve & Barry's, as well as

Fortunoff's 20 stores, which spread across New York City, Long Island, New Jersey, Pennsylvania, and Connecticut, range in size from 8,000 to 200,000 square feet and include some impressive real estate locations.

Steve Madden Closing up to 13 Stores in 2009
Shoe designer / retailer, Steve Madden (NASDAQ:SHOO ), opened three stores and closed seven stores during 2008, ending the year with 96 retail stores. The company plans to open two to three stores and close between eight and 13 stores during 2009. According to CoStar Tenant, the typical Steve Madden store is 1,500 square feet and located in luxury malls or on high profile shopping streets.

Sears Adds 24 Stores to Closing Tally
In its full year report on Feb. 26, 2009, Bruce Johnson, Sears Holdings' interim CEO and president, said the company "made the decision to close an additional 24 underperforming stores in January 2009." Ed Lampert said in his chairman's message that a "typical Kmart or Sears store has a payroll of between 75 and 115 people, both full and part time," which means the closing of these stores could result in the elimination of as many as 2,760 positions. This announcement follows a November 2008 announcement that the retailer was closing 19 stores during January and early February 2009. (for more on that, 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.





PERSONNEL ANNOUNCEMENTS


Centro Appoints New CEO and President of U.S. Retail
Centro Properties Group has appointed Michael Carroll as the CEO and president of Centro NP, the unit that is a subsidiary of Super LLC, a joint venture between Centro, Centro Retail Trust, and Centro MCS 40. Carroll was promoted from his previous post as EVP and COO of Centro NP; prior to that he served as EVP of real estate operations and SVP of redevelopment for New Plan Excel Realty Trust.


(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.





SUSTAINABILITY/ GREENING


Staples Achieves Gold LEED Certification for Miami Store
Office supply retailer, Staples (Nasdaq: SPLS), was recently awarded gold-level Leadership in Energy and Environmental Design (LEED) certification by the U.S. Green Building Council (USGBC) for a 20,000-square-foot Staples store located at 2121 Biscayne Blvd. in Miami, FL. According to Staples, it is the first store in the county to be awarded gold certification. When Staples first announced this project in fall 2007, it had only planned to achieve silver-level LEED certification.

"Green" elements of the Staples store include rainwater collection; water-efficient fixtures; use of low emitting materials for adhesives, sealants, paints, coatings, carpet and other building products; use of native plants and shrubs in landscaping; building materials made from recycled material; proximity to public transportation, offer of changing facilities and bike racks; indoor temperature controls that adjust to outdoor weather conditions; on-site recycling; and diversion of construction waste from landfills.


(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.

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