By Globe St, Thursday, June 26, 2014

Lending Space Is Extremely Competitive


Lending Competition Is Fierce

LOS ANGELES—Real estate lending in its many forms is back, and the arena is more competitive than ever, said panelists at yesterday’s RealShare National Investment & Finance conference here. Both domestic and international investors continue to seek a piece of the pie, driving pricing upward and making yields harder to find.

“There’s no lack of interest from overseas in US properties,” said Rodney Richerson, regional president, Western US, for KBS Realty Advisors. “Pricing is being paid. It’s competitive out there, and there’s lots of money chasing deals.”

Stephen Corrigan, managing director of BlackRock, added that his firm—which focuses on the apartment space first, followed by industrial and retail—is looking beyond pure core markets for more yield. Regions like Northeast Texas and Western states other than California are some of the markets his firm is examining.

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By Bloomberg, Monday, April 21, 2014

Amazon Sales Take a Hit in States With Online Tax

Amazon sales decline in state where sale taxes are collected

Amazon sales decline in state where sale taxes are collected

In one of the first efforts to quantify the impact of states accruing more tax revenue from Web purchases, researchers at Ohio State University published a paper this month that found sales dropped for Amazon when the online charge was introduced. In states that have the tax, households reduced their spending on Amazon by about 10 percent compared to those in states that don’t have the levy. For online purchases of more than $300, sales fell by 24 percent, according to the report titled “The Amazon Tax.”

The findings add to concerns about how much the world’s largest online retailer can expand. The Seattle-based company, which reports quarterly earnings on April 24, has been grappling with decelerating revenue growth amid heavy spending by Chief Executive Officer Jeff Bezos on new initiatives. Amazon has enjoyed an edge against brick-and-mortar retailers because consumers didn’t have to pay a sales tax for purchases from the e-commerce site, yet that has eroded as states including California and Texas have unveiled the levies.

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By SCTWeek, Friday, April 11, 2014

Family Dollar to close 370 stores, cut prices

FAMILY DOLLAR Closes 370 Stores

Family Dollar, a juggernaut of expansion in recent years, announced plans to close 370 of its 8,100 stores in the second half, and to slow new-store growth to about 400 per year (from 525 in fiscal 2014) beginning next year. The announcement comes on the heels of a slow holiday sales season for the chain. Family Dollar posted a 6.1 percent year-on-year drop in net sales for the fiscal second quarter (ended March 1). Same-store sales fell 3.8 percent during the quarter, while net income dropped to $90.9 million, from $140.1 million for the year-ago quarter.

“The 2013 holiday season was challenged by a more promotional competitive environment and a more financially constrained consumer,” said Howard R. Levine, chairman and CEO, in a press release. “In addition, like many retailers, our second-quarter results were significantly impacted by severe winter weather — which resulted in numerous store closings [and] disrupted merchandise deliveries — and higher-than-expected utility and store-maintenance expenses.”

Family Dollar will also try to boost traffic by slashing prices on about 1,000 basic merchandise items, and to increase profits by slashing an unspecified number of jobs, Levine says. The store closures and staff reductions should result in annual savings of about $45 million, he says.

During the first half of the fiscal year, the chain opened 244 stores, closed 22 and renovated, relocated or expanded 319. Family Dollar says it anticipates that same-store sales for the fiscal third quarter will decline in the low-single-digits range. For the coming fiscal fourth quarter, the company predicts that same-store sales will be flat or up slightly.

By SCT Week, Friday, April 11, 2014

March sales growth tops February’s

March retail sales tops February

U.S. chain-store sales grew by 3.6 percent year on year for March, according to ICSC’s index. March sales improved on February’s 2.2 percent growth, which was severely hampered by adverse weather, says Michael P. Niemira, ICSC’s chief economist, vice president and director of research. “A number of retailers commented that the shift in Easter [it falls on April 20 this year, versus March 31 last year] had a negative impact on March sales,” Niemira said. “ICSC research estimates that the March Easter shift subtracted about one percentage point for the industry as a whole from monthly sales growth. However, that one percentage point will be ‘added back’ to the April pace.”

For April, ICSC is forecasting a same-store sales increase of between 3.5 and 4 percent, taking into account the potential for a weather drag on sales, as milder spring weather seems to be slow thus far to roll in.

By Shopping Center Business, Monday, March 10, 2014

Improving Retail Sales and Leasing Activity

shopping center
Investor interest in retail properties surging.

Retail investment sales and leasing experienced an uptick in activity in 2013, a sign the slowly improving economy is finally trickling down to one of the sectors hit the hardest by the recession.

Retail investment sales in 2013 totaled approximately $60 billion, up seven percent year over year, according to Dan Fasulo, managing director of Real Capital Analytics. “Retail is not the best performing asset class, but certain segments of the market like strip centers outperformed in 2013,” he says.

A real sign of a healthy market is the diversity of participants acquiring properties, Fasulo says. “The retail market is seeing action from institutional investors, but also public and private REITs. Private buyers are back in a big way, partly fueled by CMBS resurgence.”

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By NPR, Sunday, February 17, 2014

Demographic Shifts Contribute To The Changing Face Of Retail

So far this year, retail chains have announced some heavy cuts. J.C. Penney said it would . Macy’s said it would . Sears will close its flagship Chicago store in April.

That’s creating a glut of excess space. But that’s just one of several forces changing the face of retail.

Jason Moser, an analyst at Motley Fool One, focuses on one key number in retail: revenue per employee. In Amazon’s case, every person the company employs generates an average of $800,000 in sales. For Best Buy? The number is much less than half that.

“What that means is that Amazon is able to do a lot more with a lot less,” Moser says.

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By Forbes, Monday, February 18, 2014

Are Grocery Stores Doomed?

Study Shows More Shoppers Buying Food At Target, Walmart, Pharmacies…

Thanks to a proliferation of press attention (guilty as charged), it may often seem like Whole Foods, Trader Joe’s and farmers markets peddling organic kale are today’s favored grocery shopping destinations.

Not so, according to a new study published by retail design firm King Retail Solutions in conjunction with the University of Arizona’s Terry J. Lundgren Center for Retailing.

In fact, more than ever, consumers are looking to big box stores like Walmart and Target as well as convenience stores, dollar stores and pharmacy chains including Walgreen ’s and CVS to fulfill their grocery lists.

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By SCTWeek, Friday, February 14, 2014

Retail REITs boost operating income in fourth quarter

Strong demand from retailers helped landlords boost income at their properties during the fourth quarter. At DDR Corp., leasing spreads grew by 13.9 percent year on year for new leases and by 7.9 percent on renewals, driving same-center net operating income up 3.1 percent. “We expect operating metrics to accelerate further in 2014,” said Daniel B. Hurwitz, DDR’s chief executive, in a press release. At Regency Centers, same-center NOI grew by 2.7 percent in the fourth quarter, thanks in part to a 10.7 percent year-on-year increase in the rental rate on new leases and a 5.6 percent increase in the rental rate on renewals. Federal Realty Investment Trust reported a 4.3 percent rise in same-center NOI for the quarter. “2013’s completed leases, which overall were written at 20 percent higher than the prior tenant, will serve as a great start to 2014 growth,” said Federal Realty President and CEO Donald Wood. Meanwhile, Kimco Realty Corp. had a busy quarter bringing in higher-paying tenants to occupy former Kmart and Sears spaces, among other activities. In Ocala, Fla., Kimco re-leased a vacant Kmart box to Burlington Coat Factory for a 179 percent rent increase. “We continue to monitor our tenant watch list, as we believe, in this environment, recapturing boxes will create strong leasing spreads and redevelopment opportunities,” said COO Conor Flynn. Same-center NOI at the firm rose 4.1 percent during the fourth quarter.

Among mall REITs, increased rents helped boost fourth-quarter profits, as well. General Growth Properties’ same-center NOI increased by 6.2 percent, thanks in part to strong leasing that is carrying over into 2014, said CEO Sandeep Mathrani. “We’ve completed over 70 percent of the leasing required to achieve our 2014 goal,” he said. At Macerich average base rents increased by 8.7 percent year on year, while same-center NOI increased by 4.9 percent. “This increase was driven by increased occupancy, positive re-leasing spreads and annual CPI increases on leases,” said Thomas E. O’Hern, the firm’s senior vice president, CFO and treasurer. Meanwhile, at Taubman Centers’ upscale properties, tenant sales set a company record of $721 per square foot. Same-center NOI grew by 1.9 percent, while average rent per square foot increased by 3.7 percent year on year. CBL & Associates Properties reported an 11.8 percent increase in average base rent year on year and a same-center NOI increase of 0.9 percent.

 By LA Times, Thursday, February 13, 2014<

San Gabriel becomes brand-name destination for Chinese tourists

These are boom times for the once quiet suburb of San Gabriel, which is in the midst of a transformation built on the growing international reputation of its Chinese food and services.

Statistics show about a third of Chinese tourists who travel to the United States spend at least some time in Los Angeles. Some are shunning coastal resorts and Beverly Hills opulence in favor of San Gabriel, a city of 40,000 best known for its historic mission.

“San Gabriel is famous in China,” said David Lee, chief executive of Hing Wa Lee Group, which recently opened a flagship jewelry store in San Gabriel a few hundred feet from a Hilton hotel, where many Chinese tourists stay. “It has become a brand-name destination.”

The tourism boom has helped spark new development. A 316-room Crowne Plaza Hotel is slated to open next door to the Hilton in 2015, taking over an overgrown lot that once housed a Norm’s restaurant.

Hilton developer Sunny Chen is applying to build another hotel right next to that at the site of an old furniture store. With no beaches, no major landmarks and few A-list shops or restaurants, San Gabriel is an unlikely tourist destination.

Read more…

 By SCTWeek, Friday, February 7, 2014

Net-lease big-box cap rates shrink: Report

Sluggish retailer expansion and intense competition among investors is making net-lease big-box deals more expensive, according to The Boulder Group. The national cap rate on net-leased big-box stores fell by 63 basis points year on year in the fourth quarter, to 7.1 percent, the firm says. Even so, net-leased big boxes are trading at a 25-basis-point discount to other net-leased retail types. The average cap rate for the net-lease retail sector overall in the fourth quarter was 6.85 percent, Boulder Group says.

Big-box properties leased to national credit tenants were the most popular with investors, but most of the credit tenants expanding these days — including Costco, Target and Walmart — tend to own their stores. These high costs led many investors to buy properties they might have avoided in the past, including those leased to such noncredit tenants as Academy Sports, Best Buy and Hobby Lobby, according to research director John Feeney’s analysis in the Boulder Group report.

The firm predicts that the number of big-box transactions will pick up later this year, despite a continued lack of new property developments. “The low supply of new construction assets should be offset by maturing CMBS loans,” wrote Feeney. “Property owners with maturing debt will have the option to either refinance at low interest rates by historical standards or sell to take advantage of the low cap rates available.”