Issue 43 for the week of December 4, 1996

The Dealmakers Issue Number 43 for the week of December 4, 1996.

My Way by Ted Kraus

In my former life, I was a leasing agent for Arlen Shopping Centers, (the second cousin, on its mothers side, to CBL & Associates) who, at the time, was the world's largest shopping center developer. "We" (actually Arthur Cohen, the Chairman) were great when it came to financing and leasing, but "we" left a lot to be desired when it came to construction, management and long term planning. Arlen's real estate overall was excellent, but because of their decision to purchase Korvettes and Atlantic Department Stores (these were the great grand daddies in discounting to Kmart and Wal*Mart for all you youngsters out there), being so alien to shopping center development, it finally lead to the company's demise. After realizing they weren't retailers and never would be, Arlen decided to close numerous stores. The good/bad news was we did not liquidate the chains (in those days, there was no one to liquidate to anyway, and since the developer owned the retailer, what good would it be to go bankrupt and disavow the leases). We became pioneers in developing the concept of "converting" these "big boxes" into alternate uses. The better properties, of course, remained retail and were leased to Kmart (who was the super star of retailing at the time), WoolCo and Grant City (man am I old), but like the current state of chain liquidation, getting rid of the good stuff was never a problem (the top executives handled these leases), but the poorer locations were a pain to lease, so the lower echelon of leasing agents were given these assignments (that's where I came in).

Anyway, one thing I will give Arlen credit for was having some of the brightest people in retail real estate working for them (of course, since the shopping center industry was in its infancy at the time, they really didn't really know what they were doing, there were no "rules" to go by, but they were great at guessing and proved to be right more times than not). Top management in charge of the conversion program knew that some of the centers could never be leased as retail and alternate uses were the only way to go.

Since conversion/alternate uses was a brand new concept 20 years ago, they had renderings drawn up for prospective tenants on what could be done with the property; i.e. convert a vacant Spartan Atlantic store into a shopping center/mini mall, school, motel, etc. A picture/rendering is worth 1000 words and they wanted to expedite the program and make the properties easier to understand for prospective tenants.

All of the above brings me to why I'm writing. I received a call from Steve Felix, an old, old friend (almost as old as MaryAnn) telling me that while cleaning up his office recently he came across 16 or so of the original renderings depicting what Arlen had proposed. Steve had them because he used to be involved in "turn around" management and found Arlen's ideas useful when marketing his property.

I asked for a copy to be sent, since I hadn't seen 'em in two decades. Making a long story longer, I just received the package and they are as relevant today as they were 20 years ago (if you want us to fax you a few for review, fax us a note at 609-587-3511 along with your fax number). I think I'm going to have our art department update them and include them in our Alternate Use Program.

I guess the moral of the story is, if you want to know how to cure today's problems, just look at the past. It's been nearly 20 years and the need to convert poorly planned retail to alternate uses is still relevant; guess we never learn.

On a different subject, retailers are beginning to learn all the benefits of just saying no (but I bet most did inhale when they were younger). A friend of mine represents a retail chain and when we use to talk about his expansion program, he semi bragged about his great deals at $14-17 per ft., and what a great negotiator he was. Well, for various reasons, they won't be expanding as much this year, so he's saying "no" to developers more often. We just had lunch together and he was amazed at how much more TI, options and other "extras" were available if he would just say "yes" instead of "no." His "deals" have improved by 25%. The minimum rents are basically the same (developers have mortgage payments to meet), but the overall deal is a lot sweeter. If you're a retailer, give it a try. What do you have to lose?

I receive dozens of calls a week from developers wanting to know if I know of a tenant that might be interested in their vacancies. Most of the time they just want help and don't want me to play broker (which is fine) and I provide some ideas and phone numbers. Other times they say: "Why don't you earn a commission and make the deal?" To understand where I "come" from, most of the deals I work on are problemed properties, so we charge a retainer against a commission because we have to work twice as hard to produce half the rent/commission. In a few rare cases, if I think I can lease the property in a short period of time, I'm willing to play traditional broker, but that's the exception, not the rule. Anyway, a few days ago someone called wanting to know if I'd be interested in leasing their property. I did a little checking around, thought I had a fighting chance of producing a tenant, and sent our standard contract (which is very negotiable) that gives us a one year exclusive with the right for the client to cancel if we're not in active negotiation with a tenant within six months (which I think is fair.) I waited a few days after I sent the contract and followed up with a phone call.

I asked the potential client "what they wanted to do" and they said, "Why do we need a contract?, we'll pay you if you bring us a tenant. Can't we operate on trust?" This is the most common response when I send a contract to someone who wants me to lease their property. While I try to be somewhat diplomatic, my answer, is always "no." Unless I know someone extremely well, trust is not part of our relationship. I find the client to be much more untrustworthy than me. If they are not willing to sign a contract, the odds of them paying is really low and I'm only in this for the money.

Over the last few years, I find I'm being much more selective on which centers I work on. I may not be as busy, but I'm making more money and that's just fine. However, I can't understand the broker that's willing to work on leasing a property based solely on trust. That was great 10 years ago, but not in today's world. I speak to a dozen brokers a week who spent six months working on "trust" and then somehow get the shaft.

On an "interesting note," 30 developers in New Jersey are sponsoring legislation that would require brokers to disclose who they represent (are they representing a retailer/tenant or are they representing the best interests of the developer). If they represent the tenant, then that's who pays them, not the developer. If it's passed and then catches on with the rest of the nation, it will have a radical effect on our industry. In my humble opinion, the concept is good, but I am opposed to giving the "Evil Empire" anymore regulating authority, they'll just abuse it. If this law is passed however, we should pass another one that reads "if you don't pay the broker the full commission, on time, then you'll be flogged." I highly recommend you keep an eye on this situation.

FYI: In the last My Way, I talked about the Internet and how most of the "surfers" are brokers & developers, not retailers. Well, some retailers are learning to surf the Net to do deals. Payless Shoes is using the net, both by posting to the various user groups and having a Home Page (http://www.paylesshoesource.com) to market their surplus properties, so the Net is changing and growing rapidly. I suggest, highly you get on board, it's the future.

Bealls, Inc. Expands Its Four Store Concepts; Opens New One

Bealls, Inc., an 80-year retail chain operating more than 175 department stores, outlet stores, specialty apparel stores and gifts stores, has combined annual sales exceeding $340 million. The company operates the majority of its stores in FL, but also has units in AZ and GA. Aggressive expansion is planned with sites being sought in FL, AZ, GA, NV and Southern CA.

Bealls Department Stores operates 57 units in FL. The department stores, offering moderate priced family apparel, shoes and gifts, occupy spaces of 35,000 sq.ft. to 70,000 sq.ft. in strip centers anchored by supermarkets and general merchandise tenants. Plans call for as many as two openings annually during the coming five years. Expansion will take place in the existing market. The company is currently retrofitting a 71,000 sq.ft. department store in a former Wal*Mart location at Mariner Square in Spring Hill, FL. Wal*Mart recently moved to a Supercenter adjacent to Mariner Square.

Bealls Outlets operates 107 units in AZ, FL and GA. The stores, selling branded apparel, gifts and domestics at up to 70% off department store prices, occupy spaces of 8,000 sq.ft. to 25,000 sq.ft. in strip centers and regional malls. Strip centers should be anchored by supermarkets. Plans call for eight openings by August 1997 and 20 openings annually thereafter. Expansion will take place in AZ, FL, GA, NV and Southern CA. The company is looking to open stores in strip centers.

Out and Out Gifts operates 12 locations in FL. The stores, which sell gifts for the family at discounted prices, occupy spaces of 2,500 sq.ft. to 5,000 sq.ft. in regional malls. Plans call for 16 openings annually with expansion taking place throughout the Southeastern region.

Outlooks operates two locations in FL. The stores, selling junior and young men's apparel, occupy spaces of 5,000 sq.ft. to 8,000 sq.ft. in regional malls. Plans call for as many as two openings annually with expansion taking place in the existing market.

Swim Depot is a new concept that will have two stores operating in FL by March 1997. The stores will offer swimwear, beach apparel and beach accessories while occupying spaces running 3,000 sq.ft. to 6,000 sq.ft. in strip centers located near beaches and having heavy tourist traffic. Growth opportunities will be sought for the concept throughout FL.

For more information on Bealls, Inc., contact Seth B. Layton, Vice President of Real Estate, Bealls, Inc., 1806 38th Avenue East, Bradenton, FL 34208; 941-747-2355, Ext. 330, Fax 747-5741.

Food Tenants Hungry for Sites in The Southeastern Region

Kasapis Brothers, Inc. does business as Ram's Horn Family Restaurants at 28 locations in MI. The family restaurants occupy spaces of 4,400 sq.ft. in freestanding facilities, regional malls, outlet and power centers. Plans call for two openings in the coming 18 months. Expansion will take place in FL and MI. Preferred demographics include a population of 300,000 within three to five miles earning at least $30,000 as the average family income. The company is franchising.

For more information, contact Gus Kasapis, Kasapis Brothers, Inc., 24225 West Nine Mile Road #214, Southfield, MI 48034; 810-350-3430, Fax 350-1024.

Tutti's operates one unit in FL. The Italian restaurant occupies a 6,000 sq.ft. freestanding facility. Growth opportunities are sought in the existing market and possibly outside of FL.

For more information, contact Ken Klein, Tutti's, 4612 LaJune Road, Coral Gables, FL 33146; 305-663-0077, Fax 389-5202.

Rainforest Cafe, Inc. trades as Rainforest Cafe at four locations in FL, IL and MN. The casual dining restaurants occupy spaces of 15,000 sq.ft. to 25,000 sq.ft. in regional malls and urban centers. Plans call for six openings during 1997. Expansion will take place in FL, CA, MD and NY.

For more information, contact Martin O'Dowd, Rainforest Cafe, Inc., 720 South 5th Avenue, Hopins, MN 55343; 612-449-7088, Fax 945-5444.

Spinnaker's Restaurants, Inc. operates 18 locations in AL, FL, GA, NC, SC, TN, VA, MD, MO, OH, CO and NV. The restaurants occupy spaces of 5,000 sq.ft. in freestanding facilities, power and specialty centers. Plans call for two openings in the coming 18 months. Expansion will take place in the Southeastern region. Preferred demographics include a population of 25,000 within five miles earning $50,000 as the average income. Leases running 15 years are typical.

For more information, contact Terry Murray, Spinnaker's Restaurants, Inc., 5211 Maryland Way #2020, Brentwood, TN 37027; 615-370-0001, Fax 371-5320.

Bresler's Industries, Inc. trades as Bresler's Ice Cream & Yogurt at 302 locations throughout the Southeastern, Southwestern and West Coast regions. The restaurants, serving ice cream and frozen yogurt, occupy spaces of 300 sq.ft. to 1,000 sq.ft. in regional malls. Plans call for 25 openings in the coming 18 months. Expansion will take place in the Southern and Western regions.

The company also trades as Larrys Ice Cream & Yogurt at 40 locations in FL and GA. The restaurants, serving ice cream and frozen yogurt, occupy spaces of 300 sq.ft. to 1,400 sq.ft. in regional malls. Plans call for six openings in the coming 18 months. Expansion will take place in the Southeastern region.

For more information, contact Herbie Ahitow, Bresler's Industries, 999 East Touhey Avenue, Suite 333, Des Plaines, IL 60018; 708-298-1100, Fax 298-0697.

Buyers & Sellers of Commercial Properrties

The Rouse Company recently purchased its partners' 25% minority interest in Beachwood Place in Beachwood, OH, giving Rouse Company complete ownership of the project. The 454,000 sq.ft. mall is being expanded to 917,000 sq.ft. and will include a 215,000 sq.ft. Nordstrom, a 247,000 sq.ft. Dillard's, a 102,000 sq.ft. Saks and 353,000 sq.ft. of specialty store space. The expansion is expected to be completed during September 1997.

For more information, contact The Rouse Company at (410-992-6326).

Goldstein Realty Group, Inc. brokered the sale of 2.5 acres of land in Jacksonville, FL. The site was sold to Roadhouse Grill for $780,000. The company also brokered the sale of a Winn-Dixie leased property in Jacksonville, FL. The investment property was acquired by Minnetonka Associates for $1.425 million.

For more information, contact Barry Goldstein at (904-348-3900).

New Plan Realty Trust recently acquired Renaissance Center East in Las Vegas, NV. The 146,000 sq.ft. project is anchored by Lucky's supermarket. The company acquired Rutland Plaza in St. Petersburg, FL. The 150,000 sq.ft. project is anchored by Winn Dixie supermarket, Big Lots and Eckerd Drugs. The company also recently acquired Dillsburg Shopping Center in Dillsburg, PA. The 66,000 sq.ft. project is anchored by Giant Foods, Thrift Drug, Radio Shack and Little Caesars.

For more information, contact Ron Frankel at (212-869-3000).

Cohen Edrey Real Estate has the listing to sell a 23,500 sq.ft. OfficeMax currently under construction in Rapid City, SD. The project is located near a regional mall and is net leased for 20 years. The asking price is $2.4 million. The company has the listing to sell Blue Ridge Annex Shopping Center in Independence, MO. The 30,864 sq.ft. project has excellent visibility. The asking price is $2.295 million. The company has the listing to sell the Farm Shopping and Office Center in Grand View, MO. The 94,000 sq.ft. mixed-use project has a pad site available and upside potential. The asking price is $5 million. The company has the listing to sell Barry Woods Shopping Center in Kansas City, MO. The 240,000 sq.ft. power center, which is currently being developed, is anchored by an AMC 24 Theater, Bed Bath & Beyond, Barnes & Noble, Steinmart and Old Navy. The project is expected to open during June 1997. The asking price is $33 million. The company also has the listing to sell Grandview Plaza Shopping Center in Grand View, MO. The 34,140 sq.ft. neighborhood strip center has an asking price of $2.2 million.

For more information, contact David Breyner at (816-531-8100), Fax (531-4470).

Auerbach Associates, Inc. has the listing to sell Springtree Center in Fort Lauderdale, FL. The 46,759 sq.ft. project is anchored by Mattressmagic and Party Supermarket. The asking price is $4.5 million. The company has the listing to sell Presidential Plaza in Fort Lauderdale, FL. The 88,334 sq.ft. project is anchored by Winn Dixie and Eckerd. The asking price is $5.5 million. The company has the listing to sell Pembroke Plaza in Hollywood, FL. The 20,250 sq.ft. project is anchored by Barnett Bank and Colortyme TV Rental. The asking price is $2.1 million. The company also has the listing to sell Emerald Plaza in Fort Lauderdale, FL. The 13,650 sq.ft. project is anchored by Circle K. The asking price is $1.2 million.

For more information, contact Stuart Auerbach at (305-672-0492), Fax (534-6643).

Summit Realty has the listing to sell Plant City Shopping Center in Plant City, FL. The 19,800 sq.ft. project is attached to a Bud's Warehouse. The asking price is $1.2 million.

For more information, contact Camille Guliano at (561-368-2043), Fax (392-2551).

United Industry, Inc. has the listing to sell vacant land and outparcels at The Marketplace in Billings, MT. The 400,000 sq.ft. power center, which is the largest power center in a 400 mile radius, is anchored by Wal*Mart, Toys 'R Us, Eagle Hardware, Future Shop, Applebee's, Pizza Hut and three banks. Approximately 70 acres are undeveloped, as are outparcels ranging in size from one acre to 20 acres. Asking prices vary.

For more information, contact James Swenson at (406-255-7135), Fax (255-7149).

Pinnacle Realty has the listing to sell an Applebee's restaurant in Coeur D'Alene, ID. The project is NNN leases with 19 years remaining. The asking price is $1.783 million.

For more information, contact Bill Brooks at (509-747-7777), Fax (625-1800).

Lambert Smith Hampton has the listing to sell an Eckerd Drug store in GA. The project has a new 20 year absolute net lease. The asking price is $1.89 million and financing is available. The company also represents clients in the market to acquire single tenant NNN leased investments. Preferred projects are credit tenants having long term leases.

For more information, contact Terry Marks at (310-273-2999), Fax (550-4564).

Woodmont Realty Associates is in the market to acquire mall peripheral development or redevelopment opportunities nationwide.

For more information, contact J.C. Burciaga at (817-377-7794), Fax (735-4738).

Urban Shopping Centers, Inc. recently reached an agreement to acquire Old Orchard Shopping Center in the northern suburbs of Chicago, IL. The 1.8 million sq.ft. project is anchored by Bloomingdale's, Lord & Taylor, Marshall Field & Co., Nordstrom, Saks Fifth Avenue, Barnes & Noble and 550,000 sq.ft. of specialty store space. The purchase price was $106 million.

For more information, contact Adam Metz at (312-915-3568).

CB Commercial Real Estate Group, Inc. represented Aetna Life Insurance Company of San Jose, CA in its sale of Playa Galleria Shopping Center in Santon, CA. The 143,291 sq.ft. project is anchored by HomeBase, Pizza Hut and Blimpie's. The site was sold to Playa Galleria LLC for $7 million.

For more information, contact Donald MacLellan at (714-939-2221).

Retailers Looking for Sites in Florida

Terry's Auto Supply, Inc. trades as Terry Auto Supply at nine locations in FL. The automotive paint and supply stores occupy spaces of 35,000 sq.ft. in freestanding facilities and strip centers. Growth opportunities are sought in the existing market. The company prefers to purchase its sites.

For more information, contact Steve Fink, Terry's Auto Supply, Inc., 524 North Dixie Highway, Hollywood, FL 33020; 954-920-4844, Fax 920-0399.

Ridgefield Corp. does business as French Novelty at four locations in FL and GA. The stores, selling missy and junior apparel and accessories at upper price-points, occupy spaces of 2,500 sq.ft. in regional malls, specialty and strip centers. Plans call for two openings in the coming 18 months. Expansion will take place in the existing markets.

For more information, contact Jack Mizrahi, Ridgefield Corp., 1910 Wells Road, Orange Park, FL 32073; 904-269-4050, Fax 269-4050.

Miller Enterprises, Inc. trades as Handy Way Convenience Stores at 117 locations in FL. The convenience stores, which also sell gasoline, occupy spaces of 2,400 sq.ft. in freestanding facilities and strip centers. Growth opportunities are sought in the existing markets.

For more information, contact Don Davis, Miller Enterprises, Inc., 331 Central Avenue, Crescent City, FL 32112; 904-698-3200, Fax 698-4065.

Sound Advice operates 21 locations in FL. The consumer electronics stores occupy spaces of 17,000 sq.ft. in freestanding facilities. Growth opportunities are sought in the existing market.

For more information, contact Joel Dreher, Sound Advice, 1901 Tigertale Boulevard, Dania, FL 33004; 954-922-4434.

Matrix Southeast, Inc. does business as Coleman's Sport Shops at three locations in FL. The sporting goods stores occupy spaces of 2,800 sq.ft to 4,000 sq.ft. in freestanding facilities and strip centers. Growth opportunities are sought in the existing market.

For more information, contact Mr. D. Coleman, Matrix Southeast, Inc., 6817 Norwood Avenue, Jacksonville, FL 32208; 904-768-3183, Fax 768-6478.

Al Stephen's Salons operates two locations in FL. The hair salons occupy spaces of 1,500 sq.ft. to 2,000 sq.ft. in downtown store fronts and regional malls. Growth opportunities are sought in the existing market.

For more information, contact Alfred Ditraglia, Al Stephen's Salons, 11401 Pines Boulevard, Pembrook Pines, FL 33026; 954-438-1550, Fax 438-6370.

Leader's Holding Company trades as Leader's Casual Furniture at 11 locations in FL. The furniture stores occupy spaces of 6,000 sq.ft. to 8,000 sq.ft. in freestanding facilities and strip centers. Growth opportunities are sought in the existing market.

For more information, contact Jerry Newton, Leader's Holding Company, 5040 140th Street, Clearwater, FL 34620; 813-538-5577, Ext. 225, Fax 524-8161.

Automotive 1 Parts Stores, Inc. trades as Automotive 1 Parts Stores at 24 locations in FL. The automotive parts and accessories stores occupy spaces of 6,000 sq.ft. in a variety of real estate settings. Plans call for as many as three openings in the coming 18 months. Expansion will take place in central FL. The company does its own build out.

For more information, contact Bobby Gentry, III, Automotive 1 Parts Stores, Inc., 701 Church Street, Orlando, FL 32805; 407-422-1110, Fax 422-1041.

Beyond Personal Electronics, Inc. trades as Beyond Personal Electronics at 12 locations in FL. The stores, selling upscale, unique personal electronics and accessories, occupy spaces of 1,500 sq.ft. to 2,000 sq.ft. in regional malls. Growth opportunities are sought in the existing market.

For more information, contact Sender Rosen, Beyond Personal Electronics, Inc., 6802 NW 77 Court, Miami, FL 33166; 305-592-1904, Fax 477-0864.

King James Co. does business as King James Big & Tall at four locations in FL. The stores, selling men's large size apparel, occupy spaces of 2,400 sq.ft. in freestanding facilities and regional malls. Plans call for at least one opening in the coming 18 months. Expansion will take place in the existing market.

For more information, contact James Montoney, King James Co., 4333 South Tamiami Trail, Sarasota, FL 34231; 941-922-3790.

Flash Foods, Inc. trades as Flash Foods at 150 locations in FL and GA. The convenience stores occupy spaces of 2,400 sq.ft. in freestanding facilities. Plans call for 12 openings in the coming 18 months. Expansion will take place in the existing markets. The company prefers to purchase its sites.

For more information, contact Tony Rentz, Flash Foods, Inc., PO Box 2149, Waycross, GA 31502; 912-285-4011, Fax 285-5610.

Bruno's, Inc. trades as Bruno's at 288 locations in FL, GA, AL, MS and TN. The supermarkets occupy spaces of 48,000 sq.ft. to 60,000 sq.ft. in freestanding facilities and strip centers. Growth opportunities are sought in the existing markets.

For more information, contact Richard Fitzsimmons, Bruno's, Inc., 800 Lakeshore Drive, Birmingham, AL 35211; 204-940-9400, Fax 912-4619.

Who's Opening and Where...

The Disney Store (818-265-3382) recently opened a 15,000 sq.ft. store at the corner of 7th Avenue and 42nd Street in New York City, NY. The company also announced plans to open a 25,000 sq.ft. Club Disney, an indoor family play center along the lines of Discovery Zone, in Los Angeles, CA. Other openings nationwide are also planned. The concept will feature computers hooked up to the Internet, mildly competitive sports games, a children's play area, rooms for parties, a quick-serve restaurant and a retail shop.

Warner Brothers (818-954-3809) recently reopened its Studio Store in Manhattan, NY. The store was expanded from 30,000 sq.ft. on three floors to 75,000 sq.ft. on nine floors.

Target Stores (612-304-6099) recently opened a 96,000 sq.ft. store in Chester, VA; a 117,000 sq.ft. store at Virginia Center Marketplace in Richmond, VA and a 117,000 sq.ft. in Norfolk, VA across from Janaf Shopping Center. The company plans to buy and convert a former Macy's store at Birdcage Walk in Sacramento, CA into a Target store. The 178,000 sq.ft. site, which may be occupied by more than one store, is expected to open during mid-1997.

Barnes & Noble (212-633-3300) recently opened a 24,000 sq.ft. bookstore at Lakewood Mall in Lakewood, WA and plans to open a 21,000 sq.ft. bookstore at Richland Fashion Mall in Columbia, SC during August 1997.

Einstein/Noah Bagel Corp. (303-202-3326) recently announced that its area developers plan to open 300 to 350 stores during 1997, up from the previous planned openings of 250 to 300 units.

AMC (816-221-4000) plans to open a 24-screen movie complex at Neshaminy Mall in Bensalem, PA.

Ziebart International Corp. (810-588-4100), which signed a franchise agreement that calls for the development of 60 stores in United Kingdom in the coming five years, recently saw its first store open in Edinburgh, Scotland. Additional units are planned for Edinburgh, Falkirk, Stirling, Perth and Glasgow.

Pursue The Mortgagor? Sue The Guarantor?

Do You Really Want To Do Both at The Same Time?

by Kenneth A. Rosen, Esq. and Carole B. Ravin, Esq.

Typically, when a mortgagee first forecloses on property and also looks to guarantors for payment, the guarantors assert a right to a fair market value credit for the property. When a commercial loan is made, the lender may choose to pursue the guarantor first and then look to the property to satisfy a default on the loan. In a recent case a New Jersey appellate court held that National Westminster Bank could not be granted both a foreclosure judgment and a simultaneous judgment for the full amount of the debt against the guarantors of a commercial loan. The law does not grant the commercial creditor the right to a windfall.

In July 1988, NatWest loaned Hott Properties ("Hott") $2,220,000 secured by a mortgage on commercial property consisting of land and a seven-story office building. The principals of the Hott company, Timothy, Sandra and Jacqueline Hott (the "guarantors/defendants") each guaranteed payment to NatWest. In 1992, NatWest loaned Hott an additional $35,000 secured by another mortgage on the property. Hott defaulted on its payments.

In June 1994, NatWest filed a complaint against Hott seeking repayment of its loan on the two defaulted mortgages. On January 18, 1995, the trial court in the foreclosure proceeding entered an order striking the defendants' answer and defenses and transferred the case to the Office of Foreclosure which granted NatWest a final judgment of foreclosure on April 17, 1995. On January 20, 1995 NatWest also filed a motion in the court of the guarantee litigation for a judgment against the guarantors. On March 22, 1995 NatWest received a final judgment against the guarantors in the amount of $2,254,553.06 on the first mortgage and $19,931.48 on the second mortgage. After foreclosure, NatWest purchased the property at a sheriff's sale for $100. Thus, NatWest now owned the property and also had a money judgment against the guarantors.

The guarantors at trial and on appeal admitted their liability under the terms of the note and guarantees, but asserted their right to a fair market value credit for the property before final judgment could be entered against them. Each guaranty contained a clause providing that, in the event of default, NatWest had the right to collect by legal action or otherwise from the guarantor without first proceeding against the borrower (Hott) and without first resorting to any security held as collateral for payment.

The trial court granted a final judgment against the guarantors for the total amount due under the note on the grounds that the clause entitled NatWest to proceed against the guarantors, or against the property, or both, simultaneously or severally. But the appellate court stated that that decision was based on a misinterpretation of an earlier case that merely permitted the commercial lender to choose whether to pursue the guarantor first and then the property if the guarantors' assets were insufficient. The appellate court reasoned that, if NatWest had just sued the guarantors personally, the guarantors could have sold the property to pay off their debt and not subject their personal assets beyond what might be obtained from the property. However, they were unable to sell the property themselves because of NatWest's simultaneous foreclosure action. The appellate court noted that NatWest received its final judgment in foreclosure less than one month after it received its judgment for money damages against the guarantors, thus creating a windfall. The court reminded NatWest that a creditor can only recover up to the full amount of its loss. The appellate court stated that to prevent a "windfall" when the creditor has already foreclosed, the trial court should conduct a fair market value hearing prior to the entry of a judgment on money damages to determine if the value of the foreclosed property would satisfy the loan.

NatWest argued that a 1994 appraisal of the property for $2,780,000 which was prepared on its behalf did not reflect the downturn in the real estate market or the vacancies in the building. The guarantors relied on that appraisal to argue that NatWest's recovery was excessive. Noting that the 1994 appraisal was almost $1,000,000 less than a 1991 appraisal and therefore already accounted for the vacancies, the appellate court stated that a fair market value hearing was particularly appropriate where there was evidence derived from the creditor that the value of the property exceeded the debt.

Additionally, the appellate court concluded that if a fair market hearing determined that the property was valued at less than the entire amount due on the mortgage notes, then NatWest must look to the partnership assets to satisfy the shortfall. Only when the partnership funds were exhausted, could it look to the guarantors. Therefore, the appellate court held that judgment may be entered against the partnership in the amount due as a final judgment, but against the individual partners as to liability only.

Reminder, if you are the mortgagee or the mortgagor, ask if there are any appraisals of recent vintage. Also, this case proves that, sometimes, it is best not to pursue all remedies at once (or that it is best - depending on your perspective).

Kenneth Rosen, Esq. and Carole B. Ravin, Esq. are attorney with the law firm of Ravin, Sarasohn, Cook, Baumgarten, Fisch & Rosen, P.C., 103 Eisenhower Parkway, Roseland, NJ 07068-1072; 201-228-9600, Fax 228-9250.

Financial News...

IHOP Corp. (818-240-6055) reported that its third quarter net income increased 13.7% to $5.389 million from $4.741 million during the third quarter last year. System-wide sales for the quarter increased 12.4% to $209 million with comparable store sales systemwide increasing 2.7%. During the quarter, the company opened 19 restaurants and currently operates 711 units in 36 states, Canada and Japan.

Wal*Mart Stores, Inc. (501-273-4000) reported that sales for its third quarter increased 12% to $25.644 billion, with its net income for the quarter up 12% to $684 million. By division, Wal*Mart posted a 13% increase in sales to $18.316 billion from $16.198 billion and a 10% increase in profits from $1.156 billion to $1.27 billion. Sam's Club showed a four percent increase in sales to $4.901 billion from $4.71 billion and had a five percent increase in profits from $197 million to $207 million. The company's International Division posted a 37% increase in sales to $1.219 billion from $893 million, but had an operating loss of $15 million, compared to an operating loss of $10 million during the third quarter last year. At the end of the third quarter, the company operated 1,948 Wal*Mart stores, 335 Supercenters, 437 Sam's Clubs, 4 Argentina units, 5 Brazilian units, 135 Canadian Wal*Marts, 139 Mexican units, 11 Puerto Rico units, two China stores and 1 Indonesian Supercenter.

OfficeMax, Inc. (216-295-6411) reported that its third quarter net income increased 28% to $23.719 million from $18.584 million during the third quarter last year. Operating income increased 36% to $37.102 million from $27.227 million and sales increased 27% to $859.781 million from $679.017 million. Comparable store sales increased 10%. The company currently operates more than 530 stores nationwide.

The TJX Companies, Inc. (508-390-3000) reported that its third quarter net sales increased 100% to $1.72 billion from $860 million during the third quarter last year. Comparable stores sales increased eight percent, seven percent at T.J. Maxx stores and nine percent at Marshall's stores. The company currently operates 589 T.J. Maxx stores, 463 Marshall's stores, 63 Winners Apparel stores, 23 HomeGoods stores and 18 T.K. Maxx stores in the United Kingdom.

Moovies, Inc. (864-213-1700) reported that revenues for the third quarter were $22.094 million, up from $7.028 million during the third quarter last year. Net income for the quarter was $541,000, up from $490,000 last year and comparable store sales fell 2.8%. During the quarter, the company opened 21 video stores and currently operates 210 stores in 16 states.

The Home Depot (770-433-8211) reported that its third quarter net earnings increased 26% to $221 million from $175 million. Sales for the quarter increased 23% to $4.922 billion from $3.998 billion with comparable store sales up seven percent. During the quarter, the company opened 22 stores and currently operates 479 stores throughout North America.

Gadzooks, Inc. (214-991-5500) reported that net income for its third quarter increased 106.2% to $1.918 million from $930,000 during the third quarter last year. Net sales for the quarter increased 53.2% to $31.171 million from $20.346 million and comparable store sales were up 5.9% for the quarter. The company currently operates 174 stores in 24 states.

Claire's Stores, Inc. (305-433-3900) reported that its net income for the third quarter was $7.578 million, a 51% increase over last year's net income of $5.016 million. Net sales for the quarter were $102.634 million, a 29% increase from $79.842 million last year. Comparable store sales increased 10% for the quarter. The company currently operates 1,535 stores in 49 states, the Caribbean, Canada, Japan and the United Kingdom.

Ames Department Stores, Inc. (203-257-2659) reported that its third quarter net income was $421,000, compared to a $4.9 million net loss reported during the third quarter last year. Net sales for the quarter increased 3.1% to $516.9 million from $501.6 million. Comparable store sales for the quarter increased 1.2%. During the quarter, the company opened two stores and currently operates 303 stores in 14 states.

Neostar Retail Group (612-893-7801), which is operating under Chapter 11, announced that it has put its Babbage's and Software Etc. stores up for sale after failed attempts to obtain financing to reorganize. The company operates 650 stores nationwide and recently closed 42 stores.

Ernst Home Center (206-621-6700) announced that it plans to sell its remaining 53 hardware and garden centers it operates in six states. The company has been operating under Chapter 11 protection since July and at one time operated 80 stores in nine states.

Tandy Corporation (817-390-3011) reportedly is considering a further restructuring of its Incredible Universe chain, including the possibility closing the entire 17-unit chain.

Uni-Marts, Inc. (814-234-6000) reported that net earnings for fiscal 1996 were $2.971 million, down from $4.153 million during FY95. Revenues increased to $333.8 million from $327 million. Comparable store sales increased 1.1% for the year. The company operates 405 convenience stores in DE, MD, NJ, NY, PA and VA. Self-service gasoline is offered at 298 locations.

Perkins Family Restaurants (901-766-6400) reported that its third quarter net income increased 16% to $4.872 million from $4.2 million during the quarter last year. Comparable restaurant sales increased 2.4%. The company operates 134 restaurants and franchises 329 units in 32 states and four Canadian provinces.

Exclusives: Leasing & Management Association

Exline North America (214-741-7000), which represents Alrenco, Inc., Rent Way, Inc. and ColorTyme, Inc., announces that all three have accelerated their growth plans and are looking to open stores in MD, PA, NY, OH, IN, MI and IL. Properties of interest range in size from 3,000 sq.ft. to 4,000 sq.ft. in anchored strip centers and freestanding buildings with good visibility. Preferred demographics include a high percentage of renters versus home owners and the companies cater to a lower income bracket.

Harvey Lindsay Commercial Real Estate (804-640-8234) has been named the exclusive leasing agent for a 5,000 sq.ft. former Color Tile building at Parkview Shopping Center in Chesapeake, VA. The company has been named the exclusive leasing and management agent for Tidewater Shopping Center in Norfolk, VA. The 326,000 sq.ft. project is anchored by Kmart and Rack 'N Sack. The company is also exclusively representing Rite Aid in the Tidewater area of VA to sublease five former Rite Aid stores. Sites range from 5,000 sq.ft. to 10,000 sq.ft. and are located in Newport News, Portsmouth and Chesapeake, VA.

Urban Retail Properties Co. (312-915-3568) has been named the managing agent of Carousel Mall in San Bernardino, CA. The one million sq.ft. project is anchored by Harris', J.C. Penney and Montgomery Ward. An expansion and redevelopment will be undertaken.

Aries Deitch & Endelson (914-949-2800) has been named the exclusive leasing agent of Crossroads Plaza in Peekskill, NY. The 50,260 sq.ft. project is anchored by Rite Aid, Family Dollar Stores and Rent-A-Center. Approximately 9,000 sq.ft. is available for lease.

CB Commercial Real Estate Group, Inc. of San Jose, CA (408-453-7440) has been named the exclusive leasing and marketing agent of Hacienda Crossings in Dublin, CA. The 420,000 sq.ft. project, which will be developed beginning Spring 1997, will be anchored by a mega-plex theater, several national big box retailers, restaurants and entertainment oriented tenants. The site will be located adjacent to an Auto Nation used car complex. A Fall 1997 openings in planned.

Space Place

California

Capitola- Brown Ranch Marketplace is anchored by Trader Joe's, Drug Emporium and Fresh Choice Restaurant. The 83,000 sq.ft. project has spaces of 547 sq.ft., 800 sq.ft., 1,208 sq.ft., 1,511 sq.ft. and 4,220 sq.ft. available for lease. The site is located adjacent to Capitola Mall.

For details, contact Barclay Brown of Brown Ranch Marketplace at (408-475-0500).

Florida

Brandon- A two+ acre corner site near Brandon Towne Center Mall is available for lease. In Clearwater- A 180 ft. by 290 ft. space is available for lease fronting Gulf to Bay Boulevard. In Palm Harbor- A two+ acre site with visibility on U.S. 19 is available for lease. In Pinellas County- A 10+ acre site and an 11+ acre site are available for lease.

For details, Bill Eshenbaugh of Eshenbaugh, Inc. at (1-800-456-6161).

Fern Park- A freestanding 116,805 sq.ft. building is available for lease at Fern Park Shopping Center. In Tampa- Columbus Plaza Shopping Center is anchored by Kash 'N Karry and Eckerd Drugs. The 155,000 sq.ft. project has space available for lease. In Temple Terrace- Temple Terrace Shopping Center is anchored by Kash 'N Karry and T.J. Maxx. The 106,767 sq.ft. project has space available for lease.

For details, contact Mary Ann Savarese of RD Management, Inc. at (212-265-6600).

Fort Meyers- A 13,000 sq.ft. co-anchor space is available for lease. Other spaces available for lease are located in Citrus County, Hillsborough and Pinellas.

For details, contact Jan Estevez of The Krauss Organization at (813-885-5656).

Palm Beach County- Spaces from 1,200 sq.ft. to 7,100 sq.ft. are available for lease at Congress Square, a 76,600 sq.ft. project fronting Atlantic Avenue. Also in Palm Beach County- Polo Marketplace is anchored by Aaron Rents and The Rag Shop. The 70,000 sq.ft. project has spaces from 1,200 sq.ft. to 12,000 sq.ft. available for lease. The site fronts Military Trail.

For details, contact David Flett of HHH Management, Inc. at (561-994-2233, Ext. 119).

Georgia

Madison- An 8,450 sq.ft. space is available for lease at a strip center. In Perry- A 7,500 sq.ft. space is available for lease at a strip center.

For details, contact Jim Mathews of Prime Locations at (214-991-7000).

Mississippi

Columbia- A 58,000 sq.ft. former Kmart is available for lease at Towne Square Shopping Center.

For details, contact Daniel Kamin of Kamin Realty Co. at (412-661-5233), Fax (661-8160).

New Jersey

Bayonne- South Cove Shopping Center is anchored by Pathmark Supermarket. The 210,000 sq.ft. project, which is under construction, has spaces from 1,800 sq.ft. to 140,000 sq.ft. available for lease. In Lakewood- CVS Plaza is anchored by CVS and Quick Check. The 24,325 sq.ft. project, which is under construction, has spaces of 1,500 sq.ft., 3,000 sq.ft., 3,200 sq.ft. and 4,000 sq.ft. available for lease.

For details, contact Howard Wein of Jeffrey Realty at (908-668-9600), Fax (668-5225).

Ohio

Sylvania- Sylvania Marketplace is anchored by The Pharm and Major Magic. The 91,265 sq.ft. project has spaces from 1,600 sq.ft. to 15,000 sq.ft. available for lease as well as an outlot. The site is located near Franklin Park Mall.

For details, contact William Cosgrove of Zyndorf/Serchuk, Inc. at (419-249-7070), Fax (255-2439).

Tennessee

Millington- An 84,200 sq.ft. former Kmart, with an 8,900 sq.ft. garden area, is available for lease at Millington Square.

For details, contact Daniel Kamin of Kamin Realty Co. at (412-661-5233), Fax (661-8160).

Lead Sheet

Claire's Stores

dba Claire's, Boutiquest, Topkapi,

Dara Michele, Icing Stores

Dominic Portanova

3 SW 129 Avenue

Pembroke Pines, FL 33027

305-433-3900, Fax 433-3999

Accessories

The 1,452-unit chain operates locations throughout North America, Puerto Rico and the Virgin Islands. The stores, selling ladies accessories, occupy spaces of 850 sq.ft. to 1,500 sq.ft. in regional malls and specialty centers. Plans call for 130 openings annually. Expansion will take place nationwide as well as in Japan and in Europe.

Campus Lifestyles

dba Guitars & Cadillacs

Kent Redding

1804 Chicon, Suite 100

Austin, TX 78702

512-322-9406, Fax 322-0150

Apparel

The 11-unit chain operates locations in TX. The apparel stores, selling Texas-style sports and beach wear, occupy spaces of 1,500 sq.ft. in regional malls and specialty centers. Growth opportunities are sought in the existing market.

The Book Rack Management, Inc.

dba The Book Rack

Fred Darnell

2715 East Commercial Boulevard

Fort Lauderdale, FL 33308

954-771-4310

Books

The 287-unit chain operates locations nationwide. The stores, selling mostly used books, occupy spaces of 1,200 sq.ft. to 1,500 sq.ft. in strip centers. Growth opportunities are sought nationwide. The company is franchising and franchisees find their own sites.

Besche Oil Co.

dba Quik Shop

Don Frankewitz

PO Box 277

Waldorf, MD 20604

301-645-7061, Fax 645-8727

Convenience Store

The eight-unit chain operates locations in MD and VA. The convenience stores, which also sell gasoline, occupy spaces of 2,000 sq.ft. in freestanding facilities. Plans call for one opening in the coming 18 months. Expansion will take place in either MD or northern VA. Preferred demographics include a five-mile population of 50,000 earning $25,000 as the average income. Leases running 20 years are typical and the company is seeking freestanding sites where gas pumps can be installed.

Hills Department Store Co.

dba Hills Department Stores

Don Orlando

3010 Green Garden Road

Aliquippa, PA 15001

412-378-0511, Fax 378-4250

Discount

The 165-unit chain operates locations throughout the Northeastern region, NC and VA. The discount department stores occupy spaces of 90,000 sq.ft. in a variety of real estate settings. Plans call for as many as four openings in the coming 18 months. Expansion will take place within the existing markets.

One Hour Martinizing Dry Cleaning

Jerry Laesser

2005 Ross Avenue

Cincinnati, OH 45212

513-351-6211, Fax 731-5513

Dry Cleaners

The 814-unit chain operates locations nationwide. The dry cleaners occupy spaces of 1,200 sq.ft. to 2,500 sq.ft. in a variety of real estate settings. Plans call for 50 openings in the coming 18 months. Expansion will take place nationwide. The company is franchising and assists franchisees in finding property.

Bills Dollar Store, Inc.

dba Bills Dollar Store

Bill Pate

3800 Interstate 55 North

Jackson, MS 39211

601-981-7171

General Merchandise

The 475-unit chain operates locations in AL, FL, GA, MO, LA, MS, KS, KY, NC, TN, TX, OK and SC. The general merchandise stores occupy spaces of 6,000 sq.ft. to 8,000 sq.ft. in downtown store fronts, freestanding facilities and strip centers. Plans call for as many as 25 openings in the coming 18 months. Expansion will take place in the existing markets.

The Home Lumber & Supply Co.

John Humphreys

PO Box 427

Ashland, KS 67831

316-635-2207, Fax 635-2209

Home Improvement

The 16-unit chain operates locations in KS and OK. The home improvement stores occupy spaces of 3,000 sq.ft. to 30,000 sq.ft. in freestanding facilities. An outdoor area for a lumber yard is required. Growth opportunities are sought in the existing markets.

Carlyle & Co. Jewelers

dba J.E. Caldwell & Co.,

Carlyle & Co., Jewel Box

Martin Bernstein

PO Box 21768

Greensboro, NC 27420-1768

910-218-7290, Fax 294-2679

Jewelry

The 82-unit chain operates locations in AL, DE, FL, GA, KY, NJ, NC, PA, SC, TN, VA and WV. The Jewel Box stores occupy spaces of 1,000 sq.ft. to 1,500 sq.ft.; the Carlyle & Co. stores occupy spaces of 1,200 sq.ft. to 2,000 sq.ft. and the J.E. Caldwell stores occupy spaces of 2,500 sq.ft. to 4,000 sq.ft. in freestanding facilities and regional malls. Plans call for seven openings in the coming 18 months. Expansion will take place in the existing markets.

Bentley's Luggage Corp.

dba Bentley's Luggage

Robert Young

3353 NW 74th Avenue

Miami, FL 33122

305-591-9700, Fax 477-4131

Luggage

The 104-unit chain operates locations in AL, FL, GA, MI, PA, IL, MD, MN, MS, OH, SC, VA, KY, MA, TN, WV, WI, DE and Puerto Rico. The stores, selling luggage, business cases, lifestyle items and gifts, occupy spaces of 2,200 sq.ft. to 5,000 sq.ft. in outlet centers and regional malls. Plans call for at least four openings in the coming 18 months. Expansion will take place nationwide.

Raymond Opticians, Inc.

dba Raymond Opticians

Raymond Kolkmann, Sr.

359 East Main Street

Mount Kisco, NY 10549

914-666-4202, Fax 666-8118

Optical

The 12-unit chain operates locations in NY. The optical stores occupy spaces of 1,500 sq.ft. in downtown store fronts, freestanding facilities, regional malls and strip centers. Growth opportunities are sought throughout Westchester and Duchess counties in NY.

Minuteman Press International

dba Minuteman Press

Bob Titus

1640 New Highway

Farmingdale, NY 11735

516-249-1370, Fax 249-5618

Printing

The 900+-unit chain operates locations nationwide. The print shops occupy spaces of 1,000 sq.ft. to 1,200 sq.ft. in strip centers. Plans call for 50 openings in the coming 18 months. Expansion will take place nationwide as well as in Mexico, Latin America, the Caribbean and the United Kingdom. The company is franchising and assists in property searches.

Ray's Shoes, Inc.

dba Ray's Shoes

Dan Belz

212 Main Street

Watertown, WI 53094

414-261-2638

Shoes

The five-unit chain operates locations in WI. The stores, selling shoes and related items, occupy spaces of 7,000 sq.ft. to 10,000 sq.ft. in downtown store fronts, regional malls and strip centers. Plans call for two openings in the coming 18 months. Expansion will take place in the existing market.

Asics Tiger Corp.

dba Asics Tiger

Mr. Nelson

10540 Talbert Avenue West

Fountain Valley, CA 92708

714-962-7654, Fax 962-6661

Specialty

The two-unit chain operates locations in CA. The stores, selling Asics athletic footwear, apparel and accessories, occupy spaces of 3,000 sq.ft. to 4,000 sq.ft. in outlet centers. Plans call for three openings in the coming 18 months. Expansion will take place in the Eastern and Midwestern regions.

Green Mountain Corp.

dba Peter Glenn Ski & Sport

Martin Underwood

2901 West Oakland Park Boulevard

Fort Lauderdale, FL 33311

954-484-7800, Ext. 125, Fax 739-5724

Sporting Goods

The 16-unit chain operates locations in AK, AZ, CA, FL, GA and VT. The stores, selling ski, rollerblade and water skiing equipment and apparel, occupy spaces of 4,500 sq.ft. to 9,000 sq.ft. in freestanding facilities and strip centers. Plans call for three openings in the coming 18 months. Expansion will take place nationwide.

Smith's Food & Drug Centers, Inc.<