Issue Number 33 for the week of September 12, 1997
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The Dealmakers Issue Number 33 for the week of September 12, 1997.

My Way by Ted Kraus

I've been working on three deals for the past four or five months that won't die and can't seem to close, they just linger on forever. At first, I thought the problem was incompetency on behalf of the "opposition," but as the deals continued to linger and I got to know the developers, brokers and retailers involved better, I'm trying to decide if it's incompetency, laziness or deceit on their behalf that's causing the problems. I personally believe that one of the major problems is just plain laziness, they just don't want to work too hard to make the deal happen. One landlord claims the reason for all the delays is that he has to give priority to a 75,000 sq.ft. anchor deal he's working on. I could understand that if it was delaying the deal for a week or so while you're meeting with the tenant, lawyers, architects, etc., but after three months, that's bull, all you're doing on the deal (if it's real) is making a few calls everyday to "check" on things, making a deal is not a eight hour a day, five days a week project for months on end.

Another deal is being delayed because the leasing agent has been checking with his boss to see if it will be approved, for over four months (if he can't get in to see his boss for over four months, he has real problems); and on the third deal we've been waiting for some "numbers" from accounting for over 60 days. Now I understand there can be real delays and I can accept we're being stalled while they're trying to finalize a better deal with a replacement to ours, but enough is enough. I've fought with one developer for the last two weeks trying to get an answer, ending all my conversations with; "If it's not acceptable, kill the deal," which he won't. Maybe he has a crush on me and it's the only excuse he can come up with to hear from me everyday. I think the major reason why most deals take so long is there are too many lazy people in the industry, in addition to being too scared to push their boss for an answer/decision or stay a little longer at the end of the day to put everything together or maybe they just figure no decision is the best decision.

Changing the subject, I was talking to Murray Shor of Shopping Center Digest and the subject of hi-tech and the internet came up. Murray mentioned he was writing an editorial on the subject (which should be out by now). Our conversation got me thinking. I'm not trying to compete with Murray (I have no idea what he's writing about), but I feel the need to express my thoughts. While I do believe technology is great, few real estate people use it to its full potential and most don't know what to use. Without sounding like a braggart (FYI we don't use all our systems and software to it's nth degree either), TKO was one of the first companies to have a fax machine (11 to 13 years ago) when, against Ann's protest, I went out and bought one; she contended it was a waste of money, there was no one else that had one, so who could we fax too? Now we have three, with numbers that roll over so there is rarely a busy signal. On most days, we receive more faxes than mail, which by my way of thinking is correct, faxes provide instant gratification and "proof" of delivery. Why anyone would mail a press release or flyer instead of faxing it makes no sense to me, especially since in most cases the fax is cheaper. We were also one of the first leasing companies to computerize (our first computer was kept in a central location and treated as a demigod, now everyone has one, but they are treated as glorified typewriters/calculators). We were also one of the first to network our computers, but we've also ripped out the network twice in the last 10 years and I doubt if we'll try again. Networking for small companies can be more trouble than benefit. We were also one of the first commercial real estate companies on the Internet to develop a Home Page for marketing purposes (http://www.dealmakers.net). On a typical day, I receive 75 to 200 e-mail messages, (not including spam), but few our from are subscribers or the people I deal with daily, they're from a new "universe" of real estate professionals who look at the Net as another tool, like their phone or fax. E-mail is fast, cheap and easy. Why it's not used more always mystifies me. We also publish a newsletter available only via e-mail or on the Net (The Real Estate Investors Classified) along with two directories on CD/floppy (Tenant Search and Contacts). However, I notice that most people in our company often prefer to use the hard copy version of Tenant Search or other directories we have in our "library" instead of the computerized version, something I don't think I'll ever understand. Continuing with a list of our "pioneering skills" (not that anyone cares) we were one of the first to use broadcast faxing for leasing purposes or utilizing a database for filling space. I was also one of the first to have a cellular phone, but Ann took mine away because she said I abused it.

TKO also manages five e-mail forums on commercial real estate with over 9,500 members, which sounds great, but since the forums are free and cover all aspects of real estate, why aren't there tens of thousands of users? (The answer probably goes back to my first statement about laziness). With 9,500 members on our forums and 5,000 to 6,000 visitors a day on our Home Page, we're probably one of the largest commercial real estate sites on the Net, but the reason for our "success" is simple, first, we're totally free (brokers and retailers are cheap) and second we belive in KISS (keep it simple stupid). The forums send out dozens of e-mail messages a day and e-mail is the equivalent on the Net as faxing is to the office, anyone can do it.

Our office has all sorts of computers, writable CDs, scanners, modems, various directories on retailers and shopping centers on CD, all types of software as well, hopefully making us more productive. So I'm a believer in "hi-tech" and we'd be out of business if we didn't have the equipment. However, we do not have voice mail and I doubt we ever will. That's using technology to abuse your customers and callers, lazy people love it, I don't.

Most companies today are also computerized, few don't have a fax, more are connecting to the Net everyday and beginning to buy the various reference directories available on floppy, so they're getting there, but very slowly. I'm the "support department" for Tenant Search and it always amazes me how little most people know about their computer or their software. I don't mean that as a put down; when my car breaks down, the only thing I know to do is to call the shop. But the proper use of the computers and software can increase productivity tremendously and be a great time saver. Not using the Net is insane. Six months ago I heard of two or three deals a month that were made because of the Net, now I hear of four or five a week, soon that number will become a daily figure.

At the same time, there are dozens of companies starting Internet services geared towards the commercial real estate industry (there are over 18,000 real estate Home Pages on the Internet, most are free). Some are useful, but there are a lot that charge for access and in most cases are overpriced reference books that are not really that useful and because of graphics, can take forever to download. Most of the companies starting these services have a minimum understanding of what the real estate industry needs and definitely do not understand pricing. They think because it's available via the Net they can charge four or five times what it's worth. It doesn't work that way, and a lot of people must agree with me, since 50% of the paid sites that I've tracked in the last year have failed. However as a down and dirty reference tool, the Internet can be great, quick and free. I recently posted a question to our e-mail forums, asking for feedback on how everyone's specific market was doing. Within hours, I received dozens of responses from throughout the country (one response was from France). Within 24 hours, I had received nearly 100 replies providing a pretty good overview on the commercial real estate industry. I was impressed.

To recap what information I received, overall the real estate industry is in great shape nationwide, with vacancies in all commercial real estate down, prices up and CAPS down. Areas reported they were either hotter than hot or doing okay. Office sales and leasing seem to be doing better than retail. Residential sales prices are up in some areas in double digit increases. Out of nearly 100 responses, there was not one negative reply. I tend to put more credence in the informal responses of 100 real estate professionals over what the government tells us. In this instance, they seem to be agreeing, but to shove in my usually pessimistic viewpoint, with everyone reporting higher rents and sales prices, in addition to the unusually high increases the UPS drivers extracted which will set the tone for all union contracts, higher inflation is around the corner and we know what that means to interest rates. Oh well, might as well enjoy the good times while they last.

 

Tenants Seeking Sites in The Midwestern Region

Book Emporium, Inc. trades as Seidler's Hallmark and Book Emporium at 16 locations in IL and IA. The stores, selling Hallmark Cards, books, magazines, gifts and candy, occupy spaces of 4,000 sq.ft. to 6,000 sq.ft. in strip centers. Growth opportunities are sought in the central IL market.

For more information, contact Nancy Seidler, Book Emporium, Inc., 1301 S.W. Washington Street, Peoria, IL 61602; 309-673-2327, Fax 673-8883.

Dollar Video operates 10 locations in IL. The video stores occupy spaces of 7,000 sq.ft. to 8,000 sq.ft. in freestanding facilities. Plans call for three openings in the coming 18 months. Expansion will take place in the existing market.

For more information, contact John Caesar, Dollar Video, 228 Florence Street, Crystal Lake, IL 60014; 815-334-8663.

Eagle Food Centers, Inc. trades as Eagle Country Market Place, Eagle Food Center and Eagle Country Warehouse at 91 locations in IL, IN and IA. The supermarkets occupy spaces of 52,000 sq.ft. to 60,000 sq.ft. in freestanding facilities, power and strip centers. Preferred co-tenants include mass merchandisers. Plans call for as many as 15 openings in the coming 18 months. Expansion will take place in the Chicago, IL metropolitan market. Preferred demographics include a population of 40,000 within two miles earning $45,000 as the average income. The company cites Jewel and Dominick's as competition.

For more information, contact Larry Sanford, Eagle Food Centers, Inc., Route 67 & Knoxville Road, Milan, IL 61264; 309-787-7670, Fax 787-7284.

Aloni Cafe operates 37 locations in CT, IL, NJ, NY and TX. The restaurants occupy spaces of 1,200 sq.ft. to 2,500 sq.ft. in downtown store fronts. Plans call for as many as 10 openings in the coming 18 months. Expansion will take place in IL, NY and TX.

For more information, contact David Firestein, Aloni Cafe, c/o Northwest Atlantic Partners, 709 Westchester Avenue #103, White Plains, NY 10604; 914-328-2222.

Hartig Drug Co., Inc. trades as Hartig Drug Store at seven locations in IL and IA. The drug stores occupy spaces of 9,000 sq.ft. in freestanding facilities and strip centers. Preferred anchors include supermarkets. Plans call for two openings in the coming 18 months. Expansion will take place in the existing markets. Preferred demographics include a population of 6,000 within one mile earning at least $30,000 as the average income. Leases running 10 years are typical and the company cites Walgreens and Osco as competition.

For more information, contact Richard Hartig, Hartig Drug Co., Inc., 703 Town Clock Plaza, Dubuque, IA 52004-0709; 319-588-8700, Fax 588-8725.

Dominick's Finer Foods, Inc. trades as Dominick's Finer Foods, Dominick's Fresh Stores, Dominick's Food & Drug and Omni Super Store at 97 locations in IL and IN. The supermarkets occupy spaces of 70,000 sq.ft. in strip and power centers. Plans call for 12 openings in the coming 18 months. Expansion will take place in the existing markets.

For more information, contact Andrew Witherell, Dominick's Finer Foods, Inc., 505 Railroad Avenue, Northlake, IL 60164-1652; 708-562-1000, Fax 409-3876.

Timber Lodge Steakhouse, Inc. trades as Timber Lodge Steakhouse at 16 locations in IL, MN, NY, SD and WI. The restaurants occupy spaces of 7,000 sq.ft. in freestanding facilities. Plans call for nine openings in the coming 18 months. Expansion will take place in IL, IN, MI and OH. Preferred demographics includes a population of 100,000 within three miles earning $40,000 as the average income. Leases running 10 years are typical.

For more information, contact Dermot Rowland, Timber Lodge Steakhouse, Inc., 4021 Vernon Avenue South, St. Louis Park, MN 55416-2831; 612-929-9353, Fax 929-5658.

Quincy Farm & Home Supply Co. trades as Hannibal Farm & Home Supply, Jerseyville Farm & Home Supply, Midland Farm & Home Supply, Pittsfield Farm & Home Supply and Quincy Farm & Home Supply at five locations in IL and MO. The home improvement centers occupy spaces of 40,000 sq.ft. to 50,000 sq.ft. in freestanding facilities. Preferred co-anchors include Wal*Mart. Plans call for one opening in the coming year. Expansion will take place in IL, IA or MO. Preferred demographics include a population of 50,000 within seven miles earning $30,000 as the average income. The company prefers to own its locations.

For more information, contact Cindy Neiswender, Quincy Farm & Home Supply Co., 4601 Broadway Street, Quincy, IL 62301-9181; 217-223-6970, Fax 223-1611.

Fagen Health Services trades as Fagen Pharmacy and America's Drug Store at 20 locations in IL and IN. The drug stores occupy spaces of 5,000 sq.ft. in downtown store fronts, freestanding facilities and strip centers. Plans call for two openings in the coming 18 months. Expansion will take place in the existing markets. Leases running 10 years are typical.

For more information, contact Gerald Fagen, Fagen Health Services, 830 Hallack, Demotte, IN 46310; 219-987-6468, Fax 987-7226.

The Fruitful Yield National Food & Vitamin Stores trades as The Fruitful Yield at eight locations in IL. The health food stores occupy spaces of 4,000 sq.ft. in freestanding facilities and strip centers. Preferred co-tenants include health-related retailers. Plans call for three openings in the coming 18 months. Expansion will take place in the existing market. Preferred demographics include a population of 100,000 within three miles earning at least $50,000 as the average income. Leases running five years are typical and the company, which cites GNC as competition, prefers a vanilla shell.

For more information, contact Al Powers, The Fruitful Yield National Food & Vitamin Stores, 550 Mitchell Road, Glendale Heights, IL 60139-2581; 630-545-9098, Fax 545-9075.

Kroger, Central Division trades as Kroger at 122 locations in IL, IN, MI, MO and OH. The supermarkets occupy spaces of at least 50,000 sq.ft. in strip centers. Growth opportunities are sought in the existing markets as well as in WI.

For more information, contact Nick Alm, Kroger, Central Division, 5960 Castleway West Drive, Indianapolis, IN 46250-1977; 317-579-8392, Fax 579-8092.

Carson Pirie Scott & Co. trades as Carson Pirie Scott, Bergner's and Boston Store at 54 locations in IL, IN, MN and WI. The department stores occupy spaces of 100,000 sq.ft. in regional malls. Plans call for as many as five openings in the coming year. Expansion will take place in the Midwestern region.

For more information, contact Paul Ruby, Carson Pirie Scott & Co., 331 West Wisconsin Avenue, Milwaukee, WI 53202-2201; 414-347-5306, Fax 276-9108.

Harris Chernin, Inc. trades as Chernin's Shoes at 10 locations in IL. The stores, selling name brand family shoes at discount price-points, occupy spaces of 3,500 sq.ft. to 4,500 sq.ft. in downtown store fronts, freestanding facilities and strip centers. Plans call for as many as six openings in the coming 18 months. Expansion will take place in IL and IN.

For more information, contact Steve Larrick, Harris Chernin, Inc., 1001 South Clinton Street, Chicago, IL 60607; 312-922-5900, Fax 922-3673.

The White House, Inc. trades as The White House and Black Market at 46 locations in AZ, CA, FL, MD, NJ, NC, PA, SC, TX and VA. The stores, selling women apparel in only shades of white or black, respectively, occupy spaces of 1,000 sq.ft. in freestanding facilities and specialty centers. Plans call for 10 openings in the coming 18 months. Expansion will take place in CO and IL. Leases running eight to 10 years are typical.

For more information, contact Richard Sarmiento or Shelley Welsh-Pellegrino, The White House, Inc., 7600 Energy Parkway, Baltimore, MD 21226-1733; 410-437-7747, Fax 437-8922.

The Bee-Gee Shoe Corp. trades as El-Bee Shoe Outlets and Shoebilee at 60 locations in IL, IN, KY, MI, OH and PA. The stores, selling branded shoes for the family, occupy spaces of 4,500 sq.ft. to 5,000 sq.ft. in regional malls, outlet, power and strip centers. Preferred anchors include T.J. Maxx and women's ready-to-wear retailers. Plans call for 10 openings in the coming 18 months. Expansion will take place in the Midwestern region. Preferred demographics include a population of 30,000 within five miles earning $50,000 as the average income. Leases running five years are typical and the company cites Famous Footwear and Rack Room as competition.

For more information, contact Robert Bedore, The Bee-Gee Shoe Corp., 3155 Elbee Road, Dayton, OH 45439; 937-296-2805, Fax 296-2813.

Convenient Food Mart operates 44 locations in IL. The convenience stores occupy spaces of 3,000 sq.ft. in strip centers. Plans call for the opening of four units in the coming 18 months. Expansion will take place in the existing market. Leases running at least 20 years are typical and the company is franchising.

For more information, contact Abbas Dossaji, Convenient Food Mart, 628 Golf Road, Arlington Heights, IL 60005-40612; 708-439-3112, Fax 439-3031.

The Leathermakers Ltd. does business as Route 66 at six locations in IL, IN and WI. The stores, selling themed apparel, gifts and leather, occupy kiosk spaces in regional malls. Growth opportunities are sought in the existing markets, with plans to take the concept nationwide. Leases running three years are typical.

For more information, contact Jerome Sirt, The Leathermakers Ltd., 9800 North Milwaukee Avenue, Niles, IL 60714; 847-827-3300.

Krigel's Jewelers, Inc. trades as Krigel's Jewelers at 21 locations in IL, KS, KY, MO and OH. The jewelry stores occupy spaces of 1,500 sq.ft. in regional malls. Plans call for as many as four openings in the coming 18 months. Expansion will take place in CO, IL, KS, KY, MO and OH. Leases running 10 years are typical.

For more information, contact Scott Krigel, Krigel's Jewelers, Inc., PO Box 7809, Shawnee Mission, KS 66207; 913-642-3901, Fax 642-8710.

Chicago Pizza Franchises, Inc. trades as Chicago's Pizza at 10 locations in IN. The restaurants, serving pizza and sandwiches, occupy spaces of 2,800 sq.ft. in freestanding facilities and strip centers. Preferred anchors include supermarkets. Plans call for the opening of four units in the coming 18 months. Expansion will take place in IL, KY, MI and OH. Leases running three to five years are typical and the company is franchising.

For more information, contact Robert McDonald, Chicago Pizza Franchises, Inc., 1111 North Broadway, Greenfield, IN 46140-1212; 317-462-9878.

Foreman & Clark of Minnesota trades as Foreman's at 11 locations in IL, IA, KS, MN, NE and WI. The men's apparel stores occupy spaces of 3,000 sq.ft. in regional malls. Plans call for three openings in the coming 18 months. Expansion will take place in the Midwestern region.

For more information, contact Scott Foreman, Foreman & Clark of Minnesota, 1545 Livingston Avenue, West St. Paul, MN 55118; 612-450-0102.

 

Bankruptcy: To Be or Not To Be Assigned, Assumed or Rejected

The commercial real estate market has fluctuated wildly in the past two decades. After a booming market in the early eighties and the bust in the mid-eighties, retail lease rates have experienced a steady rise in recent years. What does this mean to the retail real estate department in the midst of a bankruptcy reorganization? Its leases may hold substantial value, which could be vital to the successful reorganization of the company.

One might argue that the steady rise in the real estate market, being indicative of a healthy economy, also insulates corporations from the fear of bankruptcy. However, bankruptcy courts are not vacant, and bankruptcy lawyers are not lined up at the unemployment office. Although a bankruptcy filing is not the most desirable solution for a struggling retailer, it is never an impossibility. In the unfortunate instance of a chapter 11 reorganization, corporate real estate analysts should be prepared to look at their leases in a new light. They must shift their focus away from merely considering the site's value to the company, to focusing on the lease's potential value to other users.

Bankruptcy bestows potent tools to the reorganizing retailer in the form of the power to reject, assume, and assign unexpired leases. The real estate department should be prepared to use these tools intelligently, avoiding missed opportunities to increase the corporation's value. The choice of one of these options involves an analysis of the site's profitability in the company's core business, as well as an analysis of the value of the lease itself. A few of the factors that should be considered in choosing the most economically beneficial course of action for a reorganizing retailer are discussed here.

The bankruptcy code provides a framework of rights and responsibilities within which the retail debtor has three options of how to treat the lease. First, the retailer may reject the lease and be liable for only a percentage of the damages for its breach. Second, the retailer may assume the lease and undertake certain obligations as to payment. Third, if the retailer assumes the lease, it may also wish to assign that lease to a third party for a profit.

In order to be able to determine which course of action to take concerning each lease, the real estate analyst must be familiar with the consequences of each action in the bankruptcy arena. For a retailer, the decision whether to retain a particular leasehold interest should focus on more than the profitability of sales at that location. The lease itself may be a saleable asset. Factors outside of the ordinary course of business for the company must be considered in the decision whether to retain a lease.

REJECTION

The first option available to the debtor is to reject the lease which is, in effect, a decision to breach the terms of the lease. The only limit on the debtor's right to reject an unexpired lease of commercial real estate is whether it is in the best interest of the estate. If the store is not profitable and the contract rent is greater than the market rent, the debtor will opt to reject the lease. Obviously, where the retail store is operationally unprofitable and the lease has no value, it is in the best interest of the estate to reject.

Rejection is not a termination of the lease, although some courts have treated it in such a manner. Rather, it is generally considered breach of contract which will leave the landlord with a claim for damages. However, the amount of damages is limited by the bankruptcy code at fifteen percent of the remaining rental payments due under the lease but not more than three years, or less than one year (unless there is less than one year remaining on the lease). This calculation "caps" the total amount of money that a landlord may be awarded, but actual damages could be less (depending on the landlord's continuing obligation to mitigate damages).

To determine whether to reject a lease, one must first consider the amount of damages that will be allowed against the debtor versus the potential loss (or profit) in operating at the site through the end of the term. The real estate analyst must also consider the potential value of the lease to third parties. A store that generates no profit for the company is usually considered a liability which must be eliminated. In bankruptcy, the analysis must not be so limited. As is discussed in the following sections, the lease to a store which currently generates no profit for the corporation may still be a valuable asset.

The code provides that the debtor must make the decision to assume or reject a lease within 60 days from filing (or any timely extension thereof) or the lease will be deemed rejected by default. If the store is not profitable and the contract rent is greater than market rent, the debtor will opt to reject the lease. However, in the active management of a bankruptcy estate, threatening rejection as the default position would risk throwing away money. In this situation the debtor has the power or leverage to re-negotiate the obligations under the lease. Most landlords are aware of market rents and the costs associated with obtaining them in the event a debtor rejects its lease. Most landlords also recognize that amending the lease terms to keep the retailer as a tenant will be to their benefit. The retail debtor can realize great savings going forward if it takes proper advantage of this opportunity.

ASSUMPTION

In assuming a lease the debtor commits to abide by its existing terms. At one time, the bankruptcy code allowed for an adjustment of the rates that a debtor paid to the landlord, but now the rates in the lease will be controlling when assumed. Once the lease is assumed, the debtor must also pay the rents due on schedule. Moreover, the liabilities of the lease are given the priority of an administrative expense. Thus, the landlord of an assumed lease will be paid even though the general unsecured creditors wait for the bankruptcy process to unfold.

Unlike the choice to reject a lease, the bankruptcy code subjects assumption and assignment to a number of limitations and qualifications. The code requires a debtor to take certain measures, remedial and otherwise, before allowing it to assume a lease. Where the debtor has defaulted under the lease that default must be cured. However, courts will generally not require the debtor to cure those defaults which are incapable of curing (e.g. prohibitions of going out of business sales, continuous operating clauses, etc). Prior to assumption of its lease, the landlord has the right to require the debtor to provide "adequate assurance of future performance." This issue has spawned much litigation, making a succinct definition of "adequate assurance" difficult. Primarily, the debtor will need to show that it (or its assignee) can meet the obligations under the lease. Some courts have also considered the net worth of the retailer when it signed the lease and compared it with that of the debtor (or its assignee) when assuming it.

The retailer will assume a lease for one of two reasons. The first is that the store returns a profit for the company. This profit is easily recognizable through properly stated P&L's or store operating statements. Accordingly, the lease on a store that is returning a profit, and is projected to continue to do so, should be assumed.

The second reason to assume an unexpired lease may be less readily apparent to a reorganizing company. The value of commercial space fluctuates. A site that is currently valued at $10 per square foot (p.s.f.) was not always that price. If the retailer acquired the leasehold interest for $5 p.s.f., it holds an equity interest of $5 a foot. For a store that is not making a profit, the first instinct of the debtor may be to reject the lease. In the described situation, this course of action would be akin to the landlord allowing the debtor to use the space for free. Under the circumstances, the debtor can assume the lease and acquire as an asset the $5 p.s.f. difference between the contract rent and the current market rent. The debtor can turn this equity into cash by assigning the lease to a third party who would be willing to pay a lump-sum premium for the right to pay the below market rent. As an alternative, the landlord, itself, may pay for a termination of the lease in order to recapture the gap between the market and contract rents.

ASSIGNMENT

Assignment is a vehicle through which a company can at least, in part, finance its reorganization. When assigning a lease, the debtor sells its leasehold interest to a third party for a profit. After the assignment, the landlord receives the same rate for the use of the property as under the original lease. The amount of money the third party is willing to pay the debtor for the use of the property over the amount which the landlord collects is an asset of the debtor's estate. This profit is usually in the form of a lump sum cash payment (often referred to as "key money") but it can be in the form of a promissory note with continuing periodic payments. (Incidentally, this method of finding value in retailers' leases can be a useful tool for all companies, whether in bankruptcy or not). Thus, a lease on a poorly performing site may become a source of considerable income if the lease is below market.

Analysts must be aware of the trends in market valuation of commercial space. For example, a lease signed during the booming market of the early eighties may remain overvalued now more than ten years later. Analysts should also be aware of other financial terms of the leases which would result in value to the debtor. For example "gross" leases and those with "caps" in triple net charges may hold significant value even though the contract and market rents are comparable.

The marketing of leases is similar to selling real property subject to mortgages. Any amount received greater than that which is owed to the mortgage holder is a profit for the seller. The recent steady climb in the commercial real estate market combined with the limited amount of new space, especially for retailers, has created value in leases as little as two years old. For example, a lease signed in 1995 specifying a rate of $10 p.s.f. may now be worth $12 p.s.f. If the lease is assigned at the new market value, the corporation can gain that $2 p.s.f. as a profit. In a site that is losing money for the corporation, value can still be found. Therefore, before a lease is rejected, the real estate analyst must consider the value of the lease to others as well as the value of the store to the company's core business.

Central to an analysis of this type is expertise in the selling market. Determining the current market value of the site is an initial step. Next, the seller must determine who would be interested in the site, i.e. whose criteria match the specifications of the site. Then, potential buyers must be pursued. Finally, the selling process itself must be managed in such a way as to maximize the selling price. Each of these steps are critical to reaching the market value when selling the retailer's interest in the site. A passive approach will not create the maximum gain for the corporation. However, when a valuable lease is treated properly, the corporation can gain a new source of income, with which it may finance the reorganization.

The bankruptcy code places a few limitations on the assignment of leases. First, the debtor must assume the lease. To assume the lease the debtor must, as discussed above, cure all defaults. The second requirement of assignment is treated slightly different than assumption. A landlord will not be forced to accept the assignment of the lease to a third party absent "adequate assurance of future performance" by the third party. As when the debtor is assuming the lease, a definition of "adequate assurance" is made difficult by the different interpretations of courts. The requirements may be as strict as the third party being of similar economic standing as the debtor at the initial signing of the lease, or as minimal as the third party being reasonably able to fulfill the obligations of the lease. If the court is convinced that the prospective assignee is acceptable, the debtor may sell the leasehold interest, pocketing the equity in the lease.

There is a silver lining in the darkest of clouds. A retail real estate department should be prepared to mine the silver lining before the clouds dissipate (as they always do!). Understand the new rules under which you are governed (always check with your attorneys!) and be ready to reap the benefits that the bankruptcy code will grant you.

For more information contact, Jim Matthews, Prime Locations Consulting, Inc. at 972-991-7000, Fax (972-991-1218). u

 

Buyers & Sellers

The Marcus Corporation has the listing to sell two one-acre parcels in front of Marcus Cinema in Addison, IL. The sites are located at the intersection of US 20 and Rt. 53. The company has the listing to sell a 75,000 sq.ft. site in front of a Cub Foods in Tinley Park, IL. The site is located at the intersection of 159th and Harlem. The company has the listing to sell two 31,000 sq.ft. outlots in front of Western Heights Cinema in Chicago Heights, IL. The sites are located at the intersection of US 30 and Western Avenue. The company has the listing to sell a one acre site in front of Marcus Cinema in Orland Park, IL. The site is located at the intersection of 163rd and LaGrange. The company has the listing to sell a 41,500 sq.ft. site adjacent to a Budgetel Inn in Hoffman Estates, IL. The site is located at the intersection of Barrington Road and Hassel Road at I-90. The company also has the listing to sell a 2.43 acre site adjacent to a Budgetel Inn in Matteson, IL. The site is located on Southwick Drive at I-57 and US 30.

For more information, contact Rob Lally at (414-274-0371).

Maverick Management Corp. has the listing to sell a six-story building, formerly occupied by JC Penney, in the Hyde Park business district of Chicago, IL. Neighboring retailers include Payless Shoes, Wendy's and Walgreens. The asking price is $500,000. The company also has the listing to sell a two-story building in the Hyde Park business district in Chicago, IL. Neighboring retailers include Popeye Chicken, McDonald's and Walgreens. The asking price is $250,000.

For more information, contact Max Perl at (800-435-5556, Ext. 245), Fax (718-927-1625), E-mail (RetailRE@msn.com).

Marathon Oil Company has the listing to sell 44 acres of land in Dyer, IN. The site is located at US 30 and Calumet. The company has the listing to sell 100 acres of land in Matteson, IL. The site is located at US 30 at Exit 340 of I-57. The company also has the listing to sell 11 acres of land in Auburn Hills, MI. The site is located at Exit 79 of I-75.

For more information, contact Marathon Oil Company at (419-421-2215), Home Page (www.marathon.com/realest).

Keen Realty Consultants, Inc. has the listing to sell a 134,644 sq.ft. shopping center fronting Ohio Pike in Amelia, OH. The project's demographics include a five-mile population of 63,363 earning $50,985 as the average household income. The site is located across from Thriftway. The company also has the listing to sell a 99,450 sq.ft. shopping center fronting Dixie Highway in Fairfield, OH. The project's demographics include a five-mile population of 127,389 earning $58,287 as the average household income.

For more information, contact Keen Realty Consultants, Inc. at (516-482-2700), Fax (482-5764), E-mail (keen2700@aol.com).

Westcer Partners, L.L.C. recently completed its acquisition of a 172,000 sq.ft. power center in Cerritos, CA from the Price REIT for $17.4 million. The project is anchored by Home Depot, AMC Theaters and LA Fitness.

For more information, contact Westcer Partners at (818-878-9300).

 

Who's Opening & Where

The Gap (415-952-4400) recently opened a 20,000 sq.ft. Old Navy store at the former Horne's department store location at Penn Avenue Place in downtown Pittsburgh, PA. In addition, the company is planning to open a 15,000 sq.ft. Old Navy store in Clovis, CA during November and a 15,000 sq.ft. Old Navy store at a former Spec's Music location in downtown Miami, FL during February 1998.

Orchard Supply Hardware (408-281-3500) plans to enter the Sacramento County, CA market with a 55,000 sq.ft. store at Laguna Crossroads Shopping Center in Elk Grove. A deal is near for a second store in Folsom, CA as well.

Payless ShoeSource, Inc. (913-233-5171) plans to open five stores in the Toronto, Ontario market before the end of the year. The stores will be the company's first outside of the United States or its territories.

Ames Department Stores, Inc. (860-257-2659) plans to open a 76,000 sq.ft. store at Bradford Mall in Bradford, PA.

Woodman's Food Markets, Inc. (608-754-8382) recently opened a 252,000 sq.ft. supermarket in Kenosha, WI. The store is believed to be the largest full-service grocery store in the nation. The company currently operates six supermarkets averaging more than 196,000 sq.ft. The company plans to open a seventh unit, at 240,000 sq.ft., in Green Bay, WI during 2000.

Eckerd Drug Store (813-399-6355) plans to open an 11,200 sq.ft. unit in Pace, FL during January 1998.

Walgreens (847-940-2500) plans to open a drug store at a former Ultrazone location in Richmond, VA. Ultrazone is vacating the site because it is too small for its current operations.

 

Closings

Western Auto Supply (816-346-4449) recently closed all nine of its Arlington and Fort Worth, TX stores and exited the north TX area. In addition, the company recently closed two stores in Macon, GA. The company, which is converting many of its Western Auto stores to Parts America units, closed the stores because its locations were not suitable for conversion to the Parts America concept.

Payless Cashways, Inc. (816-234-6630) recently received permission from the bankruptcy court to close 29 of its home improvement stores nationwide, including stores in Boston, MA and Houston TX, where the company plans to exit the market.

L. Luria & Son (305-557-9000) plans to close 11 more stores in FL. After the closures are complete, the company will operate six stores.

PetsMart, Inc. (602-944-7070) plans to close nine stores and relocate 25 others in the coming two years. In addition, the company plans to eliminate its Discovery Center children's education kiosks in its stores and use the space to stock more merchandise. The stores to be closed are mainly units acquired from other companies.

United Artists Entertainment Co. (303-792-8255) recently closed its six-screen theater at Northridge Shopping Center in Milwaukee, WI. The company had operated the theater for 25 years and closed it after its lease expired and a new one could not be negotiated.

Wal*Mart Stores, Inc. (501-273-4000) recently closed its traditional store in Bradenton, FL because it opened a 207,000 sq.ft. Supercenter nearby.

 

Lead Sheet

J. Harris, Inc.

dba J. Harris

Shirley Harris

116 East Hunteland Drive

Austin, TX 78752-3797

512-454-6885, Fax 454-9056

Apparel

The 15-unit chain operates locations in AR, LA, TN and TX. The stores, selling women's apparel at better price-points, occupy spaces of 1,500 sq.ft. to 2,000 sq.ft. in regional malls and specialty centers. Preferred co-tenants include Ann Taylor and Victoria Secret. Plans call for two openings in the coming 18 months. Expansion will take place in AZ. Leases running 10 years are typical and the company cites Cache as competition.

Name Brands, Inc.

dba NBC Name Brand Clothing

Jim Breece

4705 South Memorial Drive

Tulsa, OK 74145-6904

918-665-1629, Fax 664-2808

Apparel

The 35-unit chain operates locations in AR, KS, MO, NE and OK. The women's apparel stores occupy spaces of 5,000 sq.ft. to 15,000 sq.ft. in freestanding facilities and strip centers. Plans call for three openings in the coming 18 months. Expansion will take place in AR and MO. Preferred demographics include a population of 40,000 within five miles earning $40,000 as the average income. Leases running three to five years are typical and the company, which prefers a vanilla shell, cites T.J. Maxx and Marshalls as competition.

Sunbeam Corp.

dba Sunbeam Factory Outlets

Resa Rees

208 Brushy Meadows Drive

Greer, SC 29650

864-879-8780, Fax 879-8781

Appliances

The 12-unit chain operates locations in CA, IL, KS, MN, NY, NC, OH, PA, SC, TN and TX. The stores, selling kitchen appliances, barbecue items, personal care, health care and professional care items, occupy spaces of 4,300 sq.ft. in outlet centers. Plans call for eight openings during 1997. Expansion will take place in AZ, GA, MS and PA.

McGillen's, Inc.

dba Craft Depot

Ron Lewis

1904 Drew Street

Clearwater, FL 34625

813-442-9918, Fax 447-7720

Arts & Crafts

The six-unit chain operates locations in FL. The stores, selling arts, crafts and hobby supplies, occupy spaces of 12,000 sq.ft. to 20,000 sq.ft. in power and strip centers. Growth opportunities are sought in the existing market.

Monro Muffler

Joe Pacera

120 Haddon Avenue

Haddonfield, NJ 08033

609-216-9199, Fax 216-9313

Automotive

The 340-unit chain operates locations CT, DE, GA, IN, MA, MD, ME, NC, NH, NJ, NY, OH, PA, RI, SC, VA, VT and WV. The automotive service centers, which offer all under car care services, occupy spaces of 4,500 sq.ft. in freestanding facilities. Plans call for 60 openings in the coming 18 months. Expansion will take place in the existing markets.

Turkey Hill Minit Markets

William Weisser

257 Centerville Road

Lancaster, PA 17603-4059

717-299-8908, Fax 299-0519

Convenience Store

The 223-unit chain operates locations in PA. The convenience stores, which also sell gasoline, occupy spaces of 3,100 sq.ft. in freestanding facilities. Plans call for 15 openings in the coming 18 months. Expansion will take place in the existing market. Preferred demographics include a population of 4,000 within one-half mile earning $30,000 as the average income. Leases running 30 years are typical and the company cites Sheetz and Wawa as competition.

Federated Department Stores

dba Goldsmith's

Gary Nay

7 West 7th Street

Cincinnati, OH 45202

513-579-7905, Fax 579-7185

Department Store

The six-unit chain operates locations in TN. The department stores occupy spaces of 132,000 sq.ft. to 340,000 sq.ft. in regional malls. Growth opportunities are sought in the existing market.

Medmax, Inc.

dba Medmax

Kevin Browett

27777 Franklin, Suite 1548

Southfield, MI 48034

810-948-1300

Drug Store

The five-unit chain operates locations in MI and PA. The healthcare superstores/pharmacies, occupy spaces of 15,000 sq.ft. to 18,000 sq.ft. in freestanding facilities and strip centers. Preferred co-tenants include Borders, Home Depot, PetsMart, Staples and Target. Plans call for as many as 18 openings annually. Expansion will take place in FL, IL, IN OH and the Pittsburgh, PA market. Leases running 10 years are typical.

Hoyt's Cinema Corp.

dba Hoyt's Cinema

Paul Beck

1 Exeter Plaza

Boston, MA 02116

617-267-2700, Fax 375-0039

Entertainment

The 120-unit chain operates locations in CT, MA, MD, ME, MI, NH, NJ, NY, OH, RI, VA and VT. The movie theaters occupy spaces of 30,000 sq.ft. to 70,000 sq.ft. in freestanding facilities and regional malls. Plans call for 12 openings in the coming 18 months. Expansion will take place in CT, IL, ME, MD, MA, NH, NY, OH, PA, VT and Washington, D.C. Leases running 15 years are typical. The company plans to add 200 screens during 1998 and 185 screens during 1999. The company will also consider acquiring existing theaters with 10 to 20 screens.

Leisure Entertainment Corp.

dba Laser Quest

Randy Iaboni

12 MacPherson Avenue, #4

Toronto, ON M5R 1W8

416-925-7767

Entertainment

The 50-unit chain operates locations in NC, KY, MI, TN, VA, UT, WA, OK, OH, CO, TX, CA, AZ, KS, IL, NY, PA, NE, WI and Canada. The concept, featuring laser-tag games, occupies spaces of 7,500 sq.ft. to 10,000 sq.ft. in freestanding facilities and strip centers. Preferred co-tenants include multiplex movie theaters, other recreational facilities and regional malls. Plans call for 20 openings in the coming 12 months. Expansion will take place nationwide. Preferred demographics include a population of 250,000 within seven miles earning $40,000 as the median income. Leases running 10 years are typical.

Breadeaux Pisa, Inc.

dba Breadeaux French Style Pisa

John Jarrett

Frederick Avenue at 23rd Street

St. Joseph, MO 64506

816-364-1088, Fax 364-3739

Food

The 83-unit chain operates locations in AR, IL, IN, IA, KS, MI, MN, MO, NE, WI and British Columbia, Canada. The pizza restaurants occupy spaces of 2,200 sq.ft. in freestanding facilities, specialty and strip centers. Plans call for as many as 30 openings in the coming 18 months. Expansion will take place in MI, IN, MN and WI. Preferred demographics include a population of 4,000 within two miles earning $30,000 as the average income. Leases running five years are typical and the company, which is franchising, cites Pizza Hut as competition.

Nathan's Famous, Inc.

dba Nathan's Famous Hot Dogs

Carl Paley

1400 Old Country Road #1

Westbury, NY 11590-5119

516-338-8500, Fax 338-7220

Food

The 242-unit chain operates locations in AZ, CA, CT, DE, FL, GA, HI, IL, MD, MA, MN, NV, NH, NJ, NY, NC, PA, VA, Washington, D.C. and Puerto Rico. The fast food restaurants, specializing in hot dogs, occupy spaces of 150 sq.ft. to 3,000 sq.ft. in regional malls, outlet and power centers. Plans call for 75 openings in the coming 18 months. Expansion will take place in the Eastern, Southeastern, Southern and Western regions. Preferred demographics include a population of 40,000 within two miles earning $50,000 as the average income. Leases running 10 years are typical and the company is franchising.

Kuester's, Inc.

dba Kuester's

Charles Kuester

620 Diamond Avenue

Evansville, IN 47711-3791

812-422-3293, Fax 428-8590

Hardware

The eight-unit chain operates locations in KY and IN. The hardware stores occupy spaces of 20,000 sq.ft. to 63,000 sq.ft. in regional malls. Growth opportunities are sought in the existing markets.

Edward's Carpets

Mr. Maltzman

1000 North Lindbergh

St. Louis, MO 63132

314-993-0808, Fax 993-5719

Home Improvement

The six-unit chain operates locations in MO. The stores, selling carpeting, occupy spaces of 3,500 sq.ft. to 7,000 sq.ft. in freestanding facilities and strip centers. Plans call for one opening in the coming 18 months. Expansion will take place in the existing market.

Fashions of India

dba Glitters

Harry Mahtani

3 Millcreek Mall

Secaucus, NJ 07094

201-348-2217, Fax 348-5573

Jewelry

The company operates one unit in NY. The jewelry store occupies a 1,200 sq.ft. space in a regional mall. Plans call for as many as three openings in the coming 18 months. Expansion will take place in NJ and NY.

Sunglass Hut International

dba Eyex

Chuck Mineo

255 Alhambra Circle/Penthouse

Miami, FL 33134

800-767-0990, Fax 305-461-6283

Optical

The 24-unit chain operates locations nationwide. The stores, selling eyeglasses, occupy spaces of 150 sq.ft. to 1,500 sq.ft. in downtown store fronts, regional malls and specialty centers. Preferred anchors include The Gap, Eddie Bauer, bookstores, theaters and restaurants. Growth opportunities are sought worldwide. Leases running 10 years are typical.

U.S. Factory Outlets, Inc.

dba U.S. Factory Outlets

Frederic Raiff

Seven Penn Plaza

New York, NY 10001

212-563-3650, Fax 967-9872

Outlet

The 24-unit chain operates locations nationwide. The stores, selling general merchandise at closeout prices, occupy spaces of 36,000 sq.ft. to 52,000 sq.ft. in regional malls, outlet, power and strip centers. Plans call for six openings during 1997 and eight openings during 1998. Expansion will take place nationwide, with the exception of WA.

S. Freedman & Sons, Inc.

dba Party Mart

Barry Perlis, Jeff Glaser

3322 Pennsy Drive

Landover, MD 20785

301-322-5000, Fax 772-7653

Party Supplies

The four-unit chain operates locations in MD. The stores, selling party supplies and gifts, occupy spaces of 7,000 sq.ft. to 10,000 sq.ft. in freestanding facilities, power and strip centers. Growth opportunities are sought in the Mid-Atlantic region.

The Brown Group

dba Famous Footwear,

Factory Brand Shoe, Supermarket of Shoes

Jeff Fink

7010 Mineral Point Road

Madison, WI 53717-1701

608-829-3668, Fax 827-3353

Shoes

The 803-unit chain operates locations nationwide. The family shoe stores occupy spaces of 5,500 sq.ft. to 6,000 sq.ft. in regional malls, outlet, power and strip centers. Plans call for as many as 55 openings in the coming 18 months. Expansion will take place nationwide.

Gemmel Pharmacy Group, Inc.

dba Gemmel Pharmacy

Bill Oberhauser

143 North Euclid Avenue

Ontario, CA 91762

909-984-7132, Fax 983-8469

Specialty

The 14-unit chain operates locations in CA. The stores, selling uniforms and stationery items, occupy spaces of 1,500 sq.ft. to 10,000 sq.ft. in downtown store fronts, freestanding facilities, specialty and strip centers. Growth opportunities are sought in the existing market.

Mahler & Company

dba Riley Golf Stores

Gary Mahler

PO Box 1379

Beverly Hills, CA 90213

310-288-0055, Fax 288-0065

Sporting Goods

The six-unit chain operates locations in CA and VA. The stores, offering golf apparel, accessories and virtual reality golf simulators, occupy spaces of 1,800 sq.ft. to 2,600 sq.ft. in freestanding facilities and end caps of strip centers. Growth opportunities are sought in Los Angeles, Orange and San Diego counties in CA.

K-VA-T Food Stores, Inc.

dba Food City, Valu Food,

Super Dollar Supermarket

Louis Scudere

201 Trigg Street

Abingdon, VA 24210

540-628-5503, Fax 628-6493

Supermarket

The 66-unit chain operates locations in KY, TN and VA. The supermarkets occupy spaces of 35,000 sq.ft. in strip centers. Growth opportunities are sought in the existing markets.

O'Malia Food Markets, Inc.

dba O'Malia Food Markets

Daniel O'Malia

867 West Carmel Drive

Carmel, IN 46032-5804

317-573-8088, Fax 573-8089

Supermarket

The seven-unit chain operates locations in IN. The supermarkets occupy spaces of 30,000 sq.ft. in specialty and strip centers. Preferred co-tenants include drug stores, video stores, dry cleaners and hardware stores. Plans call for one opening in the coming year. Expansion will take place in the existing market.

 

Mergers & Acquisitions

Woolworth Corporation (212-553-7017) recently agreed to purchase 27 Koenig Sporting Goods stores for $10 million in cash. Woolworth plans to convert the stores to its Champs Sport concept and the agreement allows Woolworth to enter markets where the company does not have a presence including Cleveland/Akron, OH, Pittsburgh, PA and Buffalo, NY.

Grow Biz International, Inc. (612-520-8500) recently completed the acquisition of 40 stores and franchising rights in GA, KY, MD, OH and PA from Video Game Exchange.

Eateries, Inc. (405-755-3607) recently reached an agreement in principle to acquire 17 Mexican restaurants from Famous Restaurants, Inc. for $10 million. The acquisition includes the chains of Garcia's Mexican Restaurants, Casa Lupita Mexican Restaurants and Carlos Murphy's Restaurants. Eateries currently operates the Garfield's and Pepperoni Grill restaurant chains.

 

Lease Signings

Western Investment Real Estate Trust (916-791-0600) leased 8,000 sq.ft. to Sierra Athletic Club at Caughlin Ranch Shopping Center in Elko, NV; 4,000 sq.ft. to Fashion Mart at Park Place Shopping Center in Vallejo, CA; 3,150 sq.ft. to Family Fashion at Heritage Place Shopping Center in Tulare, CA; 2,100 sq.ft. to 99 Cent Plus Discount Store at Eastridge Plaza Shopping Center in Porterville, CA and 1,200 sq.ft. to State Farm Insurance at Elverta Crossing Shopping Center in Antelope, CA.

United Commercial Realty (214-526-6262, e-mail ucr@onramp.net) leased 4,185 sq.ft. to Corner Bakery at Preston Park Highlands in Plano, TX; 4,490 sq.ft. to Naturade in Dallas, TX and 26,628 sq.ft. to Big Lots in Arlington, TX.

Mid-America Real Estate Corp. (630-954-7300) leased 5,400 sq.ft. to Video Update, 1,800 sq.ft. to Signature Cleaners and 1,200 sq.ft. to Great Clips at Bricher Shops in Geneva, IL.

The Goldstein Group (201-703-9700) leased the former Kinney Shoe/Footlocker building on Route 28 in Middlesex, NJ to The Southland Corporation for a 7-11 convenience store and Silver Hanger Dry Cleaners.

Sigma National, Inc. (804-320-6100) leased 53,000 sq.ft. to HomePlace at Brookhollow Shopping Center in Richmond, VA and 23,500 sq.ft. to OfficeMax at Marketplace Shopping Center in Christiansburg, VA.

The Sansone Group (314-727-6664) leased 8,400 sq.ft. to Dress Barn at Dierbergs Clocktower Place in West Florissant, MO.

Equity Investment Group, L.L.C. (404-364-2984) leased 3,000 sq.ft. to Dollar Stores at Olympia Corners in Olympia Fields, IL; 2,276 sq.ft. to KY Check Exchange at Hillcrest Square Shopping Center in Cincinnati, OH; 4,000 sq.ft. Cici's Pizza at Towne Square North in Owensboro, KY; 4,000 sq.ft. to Main Moon China Buffet at Kmart Plaza in Cedar Rapids, IA and 1,227 sq.ft. to The Sun Room at Festival Centre in North Charleston, SC.

 

Space Place

Illinois

Decatur- A 4,830 sq.ft. space is available for lease. In Hoffman Estates- A 60,000 sq.ft. space is available for lease. In Mundelein- An 8,400 sq.ft. space is available for lease.

For details, contact Lee Cherney or Rob James of Kin Properties, Inc. at (800-833-4162), Fax (914-683-8088).

Mount Vernon- A 25,000 sq.ft. space is available for lease at Big Lots Plaza.

For details, contact Joseph Baranowski of Developers Realty, Inc. at (860-233-6221), Fax (232-2227).

Naperville- Hobson West Plaza is anchored by Eagle Food Store and Ace Hardware. The 99,950 sq.ft. project has space available for lease.

For details, contact Acadia Management at (800-227-5570).

Niles- A freestanding 12,000 sq.ft. building, which is divisible, is available for lease. The site is located near Value City.

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

Indiana

Evansville- Evansville Shopping Center is anchored by Buehler Buy-Low. The 117,100 sq.ft. project has space available for lease. In Seymour- West Towne Plaza is anchored by Rite Aid Drugs. The 60,000 sq.ft. project has a 22,021 sq.ft. anchor position, which is divisible, available for lease.

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

Indianapolis- An 8,000 sq.ft. space is available for lease. In Merrillville- A 4,800 sq.ft. space is available for lease.

For details, contact Lee Cherney or Rob James of Kin Properties, Inc. at (800-833-4162), Fax (914-683-8088).

Indianapolis- North Eastwood Shopping Center is anchored by Kroger Supermarket. The 185,000 sq.ft. project has space available for lease. In Merrillville- Merrillville Plaza is anchored by JC Penney, Toys 'R Us, Kids 'R Us, TJ Maxx, OfficeMax and Pier 1 Imports. The 215,000 sq.ft. project has space available for lease.

For details, contact Acadia Management at (800-227-5570).

Madison- A 7,500 sq.ft. space is available for lease at Big Lots Plaza. In Seymour- A 25,000 sq.ft. space is available for lease at Big Lots Plaza. In Vincennes- A 33,880 sq.ft. space is available for lease at Big Lots Plaza. In Warsaw- A 25,000 sq.ft. space is available for lease at Big Lots Plaza.

For details, contact Joseph Baranowski of Developers Realty, Inc. at (860-233-6221), Fax (232-2227).

Michigan

Benton Harbor- An 8,400 sq.ft. space is available for lease. In Flint- A 4,795 sq.ft. space is available for lease. In Utica- A 5,100 sq.ft. space is available for lease.

For details, contact Lee Cherney or Rob James of Kin Properties, Inc. at (800-833-4162), Fax (914-683-8088).

Bloomfield Hills- Bloomfield Town Square is anchored by Kmart, OfficeMax, Old Navy, TJ Maxx and Burlington Coat Factory. The 229,000 sq.ft. project has space available for lease.

For details, contact Acadia Management at (800-227-5570).

Detroit- Tower Center is anchored by Ashley Stuart, Petrie and One Price Clothing. The 225,000 sq.ft. project has space available for lease. In Port Huron- Fort Gratiot Center is anchored by Builders Square and Best Buy. The 250,000 sq.ft. project has an outlot available for lease. In Saginaw- Landmark Plaza is anchored by Home Depot and Sam's Club. The 180,000 sq.ft. project has outlots available for lease. In Woodhaven- Woodhaven Commons is anchored by Target, Kroger and Sears Hardware. The 200,000 sq.ft. project has space available for lease in a phase II expansion area.

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

East Lansing- Majestic Plaza I has spaces from 9,000 sq.ft. to 100,000 sq.ft. available for lease. In Warren- Majestic Plaza II is anchored by Dunham's Sporting Goods, Frank's Nursery, Drug Emporium and Jo-Ann Fabrics. The project has spaces from 5,764 sq.ft. up to 8,407 sq.ft. available for lease, with the potential to build an additional 10,620 sq.ft. In Wyoming- Value City Shopping Center is anchored by Family Fair Supermarket and Value City. The project offers build-to-suit opportunities in a proposed 20,000 sq.ft. expansion area.

For more information, contact Bob Huhem or Stuart Fagen of Majestic Property Affiliates, Inc. at (516-466-3100).

Ohio

Beavercreek- Three spaces running 50,000 sq.ft. each are available for lease. The sites, which are divisible, have 200 to 250 feet of frontage on North Fairfield Road. The sites are located near PetsMart, Dick's Sporting Goods, Toys 'R Us and Fairfield Commons Mall.

For details, contact Gerry Severson of Continental Properties Company, Inc. at (414-502-5500).

Cincinnati- Hillcrest Shopping Center is anchored by Kroger and Walgreen's. The 152,218 sq.ft. project has spaces of 2,276 sq.ft., 3,250 sq.ft., 5,250 sq.ft., 6,000 sq.ft. and 64,101 sq.ft. available for lease. Demographics include a five-mile population of 315,916 earning $50,204 as the average household income. In Eastlake- The Vineyards Shopping Center is anchored by Finast Foods, Wal*Mart, Drug Mart, D.I.Y. and Just Closeouts. The 144,820 sq.ft. project has spaces of 963 sq.ft., 1,100 sq.ft., 2,000 sq.ft., 2,200 sq.ft., 4,800 sq.ft., 7,500 sq.ft. and 8,000 sq.ft. available for lease. Demographics include a five-mile population of 121,294 earning $43,114 as the average household income. In Van Wert- Summit Shopping Center is anchored by Quality Farm and Fleet, Stage and Dave's Market. The 148,291 sq.ft. project has spaces of 3,000 sq.ft. and 5,700 sq.ft. available for lease. Demographics include a five-mile population of 14,379 earning $31,286 as the average household income.

For details, contact John Orr (Hillcrest SC) of Equity Investment Group at (404-364-2984) or Russ Hire (The Vineyards SC and Summit SC) of Equity Investment Group at (219-426-4704).

Wisconsin

Madison- A 10,000 sq.ft. space is available for lease. In Manitowoc- An 8,400 sq.ft. space is available for lease.

For details, contact Lee Cherney or Rob James of Kin Properties, Inc. at (800-833-4162), Fax (914-683-8088).

Neenah- Fox Point Plaza is anchored by Pick 'N Save Supermarket. The 176,000 sq.ft. project has space available for lease.

For details, contact Acadia Management at (800-227-5570).

 

Financial News

Ames Department Stores, Inc. (860-257-2598) reported that its second quarter net income increased $7.4 million from $4.5 million during the second quarter last year. Net income for the quarter nearly doubled to $11.2 million from $6 million and net sales increased 0.9% to $503.6 million from $499.1 million last year. Comparable store sales increased 0.3% for the quarter. The company currently operates 296 stores in 14 Northeastern states.

Ross Stores, Inc. (510-505-4400) reported that its second quarter sales increased 21% to $491 million from $406 million during the second quarter last year. Comparable store sales for the quarter increased 12%. The company currently operates 318 off-price apparel stores nationwide.

Wal*Mart Stores, Inc. (501-273-4000) employees at its Merrill Wal*Mart in Merrill, WI recently rejected, by a 54-27 vote, to unionize. The workers were deciding whether or not to join the United Steelworkers union, which includes retail workers. The Merrill store was the first Wal*Mart in the nation to attempt to unionize. In other news, the company reported that its second quarter sales increased 11% to $28.386 billion. Net income for the quarter increased 13% to $795 million from $706 million. By division, Wal*Mart stores, including Supercenters, had an operating profit of $1.517 billion, up 19% from $1.271 billion; Sam's Division had an operating profit of $224 million, up 10% from $203 million; and the International Division posted an operating profit of $27 million, compared to a loss of $10 million during the second quarter last year. Overall, the company operates 1,935 Wal*Mart stores, 383 Supercenters, 441 Sam's Clubs, 137 Canadian Wal*Mart units, 156 Mexican units, 11 Puerto Rico stores, six Argentina units, six Brazilian units, two China stores and two Indonesian Supercenters.

The May Department Stores Company (314-342-6300) reported that its second quarter net earnings increased to $116 million from $110 million during the second quarter last year. Sales for its second quarter increased 10% to $2.67 billion from $2.42 billion with comparable store sales up 4.7% for the quarter. During the quarter, the company opened two Foley's stores; three Lord & Taylor stores and one Strawbridge's store. An additional two Lord & Taylor stores, one Strawbridge's and two Filene's stores are planned for the remainder of the year. The company currently operates 366 department stores in 30 states.

Claire's Stores, Inc. (954-433-3900) reported that its second quarter net income increased 33% to $10.482 million from $7.892 million during the second quarter last year. Second quarter sales increased 16% to $116.5 million from $100.72 million. Comparable store sales increased seven percent. The company currently operates more than 1,600 stores in 49 states, the Caribbean, Canada, Japan, England, Scotland, Wales and Northern Ireland.

Dollar General Corporation (502-237-5444) reported that its second quarter net income increased 22.1% to $26.716 million from $21.885 million during the second quarter last year. Total sales for the quarter increased 20.7% to $596.82 million from $494.389 million last year. Comparable store sales increased 6.4%. During the quarter, the company opened 148 stores and currently operates 3,004 stores in 24 states.

BJ's Wholesale Club, Inc. (508-651-6063) reported that net income for its second quarter increased 17.9% to $15 million from $12.7 million last year. Net sales for the quarter increased 7.5% to $774 million from $720 million and comparable store sales increased 1.5%. The company currently operates 83 membership wholesale clubs in 12 states.

One Price Clothing Stores, Inc. (864-433-8888) reported that its second quarter sales fell two percent to $86.1 million from $87.4 million during the second quarter last year. Comparable store sales also decreased two percent for the quarter. The company currently operates 652 stores.

CompUSA, Inc. (972-982-4000) reported that net sales for its fiscal year increased 22% to $4.61 billion. Net income increased 57% to $93.9 million and comparable store sales for the year were up 5.9%. The company currently operates 133 computer stores in 61 metropolitan markets.

For more information, contact Al Powers, The Fruitful Yield National Food & Vitamin Stores, 550 Mitchell Road, Glendale Heights, IL 60139-2581; 630-545-9098, Fax 545-9075.