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Issue Number 9
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The Dealmakers Issue Number 9 for the week of March 12, 1999. My Way by Ted Kraus In the last "My Way," I mentioned the death of a personal friend and explained this was not a common practice for "us" to report. Unfortunately, I have to break our "rule" again and comment on the passing of Fred Margosian, one of the kindest people I’ve ever met. (Ann refers to him as the sweetest person she knows, I just hate using sweet to describe a guy, it must be me). I always enjoyed our chats/bull sessions together and will miss being his company. Besides being a great person, Fred was one of the movie theaters’ real experts and pioneers. Geoff Levy, one of his closest friends and partner said, "we had him a year longer than we thought," so I guess that’s the positive view of losing someone you’ve become close with. But the best quote I can take from Geoff is, "no one ever disconnected themselves from Fred, once they met him, they stayed in touch forever." Now that’s a true compliment. I’m told that Geoff gave an outstanding eulogy for Fred, it truly came from the heart. There’s a lot of people who will miss him immensely, I’m one of ‘em. Unfortunately, I’m now entering an age group where the loss of other great people will become more common. Anyway, going on with less depressing opinions... I was talking to a friend who is regional mall oriented and he was complaining about business. I asked why, since the economy can’t be any better. He responded that in most of the malls he’s involved with, traffic has been dropping for the last few years (but the malls’ sales psf has been remaining constant). Since he’s a periphial user, not a real draw, he lives off traffic and it’s not there, consequently his business is hurting. In some cases, traffic is off 25% over the past three to four years. I repeated this to another friend who’s power center driven and he agreed with the assessment. He mentioned the Internet and an economy with virtually no unemployment as the culprits. With a full employment, retailers who just pay a shade more than minimum wage only can attract the dredge of the employment population, therefore the shopping experience is detrimental for the shopper. If you’re going to be treated rudely by a "salesperson," why not shop elsewhere? Or maybe even no where. Talking of dropping traffic, every time I speak to someone involved in the outlet industry I get the feeling I’m talking to someone ready to take "the pipe." Lot’s of developers are trying to bail out or at least minimize the exposure of being an outlet developer. Konover Property Trust, which before its merger/acquisition was an outlet developer, sold its Factory Stores of America Outlet Centers in Carrollton, KY. The developer’s public statement for the sale was they sell off properties with limited growth potential; well if that’s true, I think they may be selling off all of their outlet centers. In the same vein, Benderson Development bought the Sarasota Outlet Center and will probably turn it into a "big box" center. So, another outlet center "bites the dust." Changing demographics and shopping habits have limited the time the consumer has or is willing to spend shopping, which is why entertainment projects have become so popular (developers have a need to develop, they don’t care what, just let ‘em build). Add to this the fact that outlet centers rarely offer value and most conventional retailers treat their customers poorly and you have a market in decline, at least for the moment. Shopping used to be fun, it’s now a chore. Many developers and retailers think by creating a Disney wonderland, the "excitement" will come back, but they keep forgetting the fundamentals of consumer satisfaction and value. Even the new concepts in entertainment are struggling to survive. Disney, who should be in a great position to take advantage of this new "wave of retailing," came out with Disney Quest and is already repositioning the concept because it’s not making it; many theme restaurants such as Planet Hollywood, are failing and the movie theater industry is beginning to rethink their expansion plans. Now, don’t get me wrong, what I just said doesn’t mean the world is coming to an end, malls are doomed and entertainment centers have to fail, it means we’re living through the most exhausting, thrilling and threatening times in retail real estate history. Ann and I received a call late one night at the office from a developer building a 400,000 sq.ft. entertainment center. He wanted to know if there were any entertainment center experts we could recommend. I responded before Ann and said, "There aren’t any and anyone who says he is either is a liar or a fool. The industry is being created as we speak." Ann added that while she wasn’t around then, the entertainment industry appears to be in the same position as regional mall development was 25 to 30 years ago, with everyone shooting from the hip. I agree. Think about it, while it hasn’t become common yet, it isn’t uncommon for malls to be demalled or totally demolished, outlet centers are being converted to other uses and there are more 80% vacant retail projects today than ever before, even with the economy expanding. The whole fiber of our society is changing and while developers and retailers are aware of this change, they don’t know how to handle it (nor do they understand the changes, yet, but I have confidence they will, some day). Will people be shopping Wal*Mart and Home Depot in 10 years, I’d bet yes. Is the Internet a "threat" to them, yes. Will the consumer shop outlet centers in 10 years; probably not. I’m willing to bet there will be less true outlet centers in 10 years than we have today. I think the future is a combination of outlet, entertainment and conventional retailing housed in the same complex; with the majority of retailers having a Web site for the consumer to shop. It’s only logical for the conventional retailer to be their own competition on-line. Convenience centers will still be around, probably in similar shape as they are today, less affected by changes than anyone else. While there will be on-line shopping for the supermarket, there will always be a need for the local "real" stores such as dry cleaners, liquor stores, pizza, etc. On a different note, it’s getting to be that time of year again when all thoughts begin to turn towards Vegas and while its still two months off, I’m willing to bet on another record year for attendance. The crowds will be bigger, more enthusiastic and more confused than ever. The reason for confusion is because of the convention center’s expansion. There’s going to be more exhibitors than in the past and many of the exhibitors will be in new locations, so plan on needing more time than you did last year, not only to visit with all the new exhibitors, but to find some of the old ones who relocated. I highly suggest you confirm your hotel and travel arrangements now. I’d also recommend you add a day to your schedule, it should be a great show. Last thought (at least for now)... I’ve spoken to three retailers today and all bragged how they were cutting their loses and will break even next year; the turnaround (if there is one) took anywhere from three to five years. When I was young and taking Business 101 in college, I was taught that making a profit was how you judged success. Today it seems that success is measured by how much you lose; god has the world changed in 30 years. Retailers Seeking Sites in California Pearl Artist & Craft operates 21 locations in CA, FL, GA, IL,
MD, MA, NJ, NY, TX and VA. The stores, selling arts and crafts at discounted price-points,
occupy spaces of 20,000 sq.ft. in downtown store fronts, freestanding facilities, power
and strip centers. Plans call for three openings in the coming 18 months. Expansion will
take place in major metropolitan areas in AZ, CA, CO, FL or IL. Leases running 10 years
are typical. Emporium, Inc. trades as Emporium at 30 locations in CA, ID,
OR and WA. The junior department stores, selling family apparel, cosmetics, domestics and
shoes, occupy spaces of 40,000 sq.ft. to 50,000 sq.ft. in regional malls. Plans call for
three openings in the coming 18 months. Expansion will take place within the existing
markets. One Hour Martinizing Dry Clean operates 817 locations nationwide.
The dry cleaning stores occupy spaces of 1,400 sq.ft. to 2,500 sq.ft. in freestanding
facilities, power, specialty and strip centers. Plans call for as many as 35 openings in
the coming 18 months. Expansion will take place in CA, CO, FL, MD, MO, NV, NJ, OH, PA and
TX. Preferred demographics include a population of 15,000 within two miles earning $55,000
as the average income. Leases running five to ten years are typical and the company is
franchising. C.R. Jewelers operates 16 locations in AZ, CA, FL, MI, NV, NC, PA,
TX and VA. The fine jewelry stores occupy spaces of 1,500 sq.ft. in outlet centers.
Preferred co-tenants include Ann Taylor, Donna Karen and Polo. Plans call
for the opening of four units in the coming 18 months. Expansion will take place in CA;
Atlanta, GA and Las Vegas, NV. Preferred demographics include a population of one million
within 10 miles earning $50,000 as the average income. Leases running 10 years are
typical. The company prefers to locate its stores in outlet centers having GLAs of at
least one million sq.ft. BJ’s Kountry Kitchen, Inc. trades as BJ’s Kountry
Kitchen at six locations in CA. The restaurants occupy spaces of 2,800 sq.ft. to 3,600
sq.ft. in freestanding facilities, outlet and strip centers. Plans call for one opening in
the coming 18 months. Expansion will take place in the existing market. Leases running 10
years, with two options of five years each, are typical and the company is franchising. Retailers Expanding into Indiana Eagle Food Centers, Inc. trades as Eagle Food Center at 90+
locations in IL, IN and IA. The supermarkets occupy spaces of 48,000 sq.ft. to 65,000
sq.ft. in freestanding facilities, power and strip centers. Growth opportunities are
sought in the existing markets. Preferred demographics include a population of 50,000
within five miles earning $45,000 as the average income. Leases running 20 years, with
options, are typical. Harris Chernin, Inc. trades as Chernin’s Shoe Outlet at
six locations in IL and IN. The shoe stores occupy spaces of 10,000 sq.ft. in freestanding
facilities, outlet and strip centers. Plans call for two openings in the coming 18 months.
Expansion will take place in the existing markets. Dominick’s Finer Foods, Inc. trades as Dominick’s
Finer Foods at 110 locations in IL and IN. The supermarkets occupy spaces of 85,000
sq.ft. to 130,000 sq.ft. in freestanding facilities, power and strip centers. Plans call
for as many as 13 openings annually. Expansion will take place in the existing markets. The Picture People operates 204 locations in AZ, CA, CT, DE, IL,
IN, IA, MD, MA, NH, NJ, NY, OH, OR, PA, VA, WA and WI. The portrait studios occupy spaces
of 1,500 sq.ft. to 2,000 sq.ft. in regional malls. Plans call for 12 openings in the
coming 18 months. Expansion will take place within the existing markets. Huse Food Group, Inc. does business as Arby’s at 17
locations throughout IN. The fast food restaurants occupy freestanding facilities running
3,000 sq.ft. on one acre of land. Preferred anchors include supermarkets and retail uses.
Plans call for three openings in the coming 18 months. Expansion will take place in IL and
IN. Preferred demographics include a population of 25,000 within two miles earning $35,000
as the average income. Leases running 10 years, with options, are typical. New Construction NewMark Merrill Companies recently broke ground on a 50,254 sq.ft. Food
4 Less supermarket located on four acres at the southwest corner of Fries Avenue and
Anaheim Street in Wilmington, CA. The ground breaking is the first step in the
construction of the $6.1 million development. The store is expected to open during August. Grubb & Ellis is the leasing agent of the proposed Ontario
Home Center in Ontario, CA. The 123,000 sq.ft. project, which is located off I-10 at
the Millikan Off-Ramp and across from Ontario Mills, will consist of four anchor
stores ranging from 12,000 sq.ft. to 35,000 sq.ft.; a separate 26,000 sq.ft. retail
building and two pad sites. Demographics include a five-mile population of 300,897 earning
$40,366 as the median household income. A mid-2000 opening is planned. Landmark Development plans to break ground this month on Southridge
Plaza in Dyersville, IA. The 90,000 sq.ft. project will be anchored by a 35,000 sq.ft.
Pamida discount department store and a 23,000 sq.ft. Fareway Foods store.
Approximately 26,000 sq.ft. remains available for lease. Demographics include a five-mile
population of 5,723 earning $16,102 as the average income. An August opening is planned.
The company also plans to break ground this month on Southland Plaza in Cedar
Rapids, IA. Space at the 18,000 sq.ft. project is available for lease. Demographics
include a 10-mile population of 79,495 earning $46,005 as the average income. The site is
located near a Wal*Mart Supercenter, Target, Menards and Westdale Regional Mall.
An August opening is planned. CT Realty Corp. and Avalon Realty Advisors LLC recently
entered into a joint venture partnership, CTA/Wrigley LLC, to develop a 47,790
sq.ft. portion of Wrigley Market Place in Long Beach, CA. The project marks CT
Realty’s first participation in a retail development project in the Long Beach area.
Wrigley Market Place, a new 131,220 sq.ft. retail center located within the city’s
central redevelopment area at the intersection of Long Beach Boulevard and Willow Street,
is being co-developed by CTA/Wrigley LLC, American Stores Properties, Inc. (ASPI),
the Long Beach Redevelopment Agency (RDA), and the Metropolitan Transit
Authority (MTA). ASPI will own and operate the center’s two anchor stores, a
65,600 sq.ft. Lucky supermarket and a 16,850 sq.ft. Sav-On drug store.
CTA/Wrigley will own and operate the balance of the site which encompasses 5.94 acres of
the project’s overall 13 acres. CTA/Wrigley LLC plan to develop and lease one 28,466
sq.ft. multi-tenant building; two freestanding buildings, sized at 3,300 sq.ft. and 3,830
sq.ft.; one 6,000 sq.ft. sit-down restaurant and two 3,000 sq.ft. fast food pad sites. The
estimated development cost is $6 million and construction financing is being provided by Fremont
Investment and Loan. Jim Cofer Properties Inc. plans to break ground during August on Lindale
Crossing in Cedar Rapids, IA. The site, located at the intersection of First Avenue
and Collins Road NE, is currently occupied by Confetti’s, which recently
closed and Jubilee Lanes. Plans call for the development of a 52,000 sq.ft. strip
center which will be anchored by a 27,000 sq.ft. Office Depot. Negotiations with
national and local retailers are underway for the balance of the space. PDM, Inc. plans to break ground during Spring on Pepperwood
Village Shopping Center, located at the corner of 156th Street and West Dodge Road in
Omaha, NE. The 150,000 sq.ft. project will be anchored by a 68,000 sq.ft. Baker’s
Supermarket along with retail and service oriented specialty shops, restaurants, banks
and office space. The architectural design of the shopping center will reflect an English
Tudor Village, with the intent of complementing the surrounding residential neighborhoods.
City planners have dubbed the 21-acre development the "Gateway Development to the
City" because of the design and location on the city’s main thoroughfare. The
Baker’s store will feature a pharmacy, a one-hour photo shop, full-service floral
shop, fresh seafood department, service meat counter, gourmet coffee shop and a
full-service bank. It will be the company’s 14th store in the greater Omaha market
and its 22nd location overall. The project is expected to open during Spring 2000. Leasing
brokerage services will be provided by The Lerner Company. PDM owns and manages
seven other major shopping centers in the Omaha area including Spring Valley, Baker
Square, Eagle Run, Plaza North, Deerfield Place, Baker Place and Vinton Square. Who’s Opening & Where Ralph’s Grocery Company (310-884-2875) is developing a 50,254 sq.ft. Food 4 Less supermarket at the intersection of Fries Avenue and Anaheim Street in Wilmington, CA. An August 1999 opening is planned. The company recently opened a 58,000 sq.ft. Ralph’s Marketplace at Long Beach Towne Square in Long Beach, CA. In addition to groceries, the store carries small appliances, gardening supplies, office supplies, portable stereo systems and pet supplies. There is also a full-service pharmacy, and a 22-minute photo lab. Costco Companies Inc. (425-313-6360), which opened stores in Schaumburg and Oak Brook, IL last year, plans to open stores on Chicago’s North Side and in Northbrook this year. Recently, the company acquired an office building from Commonwealth Edison Co. and plans to convert it into its warehouse format. Terms of the Northbrook deal were not released. The company remains interested in acquiring additional sites in the Chicago market. Safeway (925-467-3000) recently signed a contract to purchase the former Ortega Middle School in Alamosa, CO for $805,000. Safeway plans to develop a supermarket on the site. However, no building can occur until a lawsuit filed by residents of the area against Safeway, the school district, the city council and the city of Alamosa is resolved. In the suit, the residents are challenging the change in use of the property. If the court rules in favor of the sale, the district will have 60 days to turn the site over to Safeway. School board members said that the lawsuit is costing taxpayers since proceeds from the sale could be used in a refinancing of the bonds on the new high school. Lowered interest rates would amount to a $700,000 saving to taxpayers over the next 16 years if the bonds could be refinanced and the district could use $600,000 from the sale to reduce the payment time in the bonds. Best Buy Co., Inc. (612-995-7049) plans to open six stores in the San Francisco, CA market during Summer. The stores, which will average 45,000 sq.ft., will be located at Solano Mall in Fairfield; Breuners Pleasant Hill Shopping Center in Pleasant Hill; near Hilltop Mall in Pinole; on Industrial Road in San Carlos; at McCarthy Ranch Marketplace in Milpitas and at Hacienda Crossings Shopping Center in Dublin. The stores are among the 40 new locations the company plans to open nationwide this year. Ron Jon Surf Shop (407-799-8880) is planning to open a store at Festival Bay in Orlando, FL. It will be the company’s fifth store. The store, which averages 22,000 sq.ft., will be part of a project that will be anchored by a 162,000 sq.ft. Bass Pro Shops Outdoor World and a 20-screen Cinemark USA theater. Cache, Inc. (212-840-4242) plans to open 150 stores in the coming five years, which will nearly double its store count. The specialty women’s apparel retailer currently operates 172 Cache stores and 12 Lillie Rubin stores. The breakdown of openings is 100 Lillie Rubin units and 50 Cache stores. Starbucks (206-447-7954) plans to open a Starbucks Cafe with a drive-thru window on North University Drive in Sunrise, FL during July. Lowe’s Cos., Inc. (336-658-4223) plans to develop a 165,000 sq.ft. home improvement store at Long Beach Towne Center in Long Beach, CA. The store is one of three the company plans to open before the end of the year in Southern CA. The other two will be located in Rancho Cucamonga and Temecula. Last year, the company said it plans to spend $1.5 billion to open more than 100 new stores in AZ, CA and NV in the coming three to four years. The Wet Seal, Inc. (714-583-9029) opened 86 stores, closed 21 and remodeled 29 during fiscal 1998 to end its fiscal year with 454 stores in 42 states. During fiscal 1999, the company plans to open 105 stores of which 80 locations were purchased from Britches. More than 80 of the new stores will be open by the end of the first quarter of its fiscal year. Of its 454 stores, 420 are Wet Seal and Contempo Casuals stores which cater to the junior customer, 10 are Limbo Lounge stores, a unisex concept and 24 are Arden B. stores which focus on a young, contemporay woman. Aldi’s (630-879-8100) plans to develop a grocery store at the intersection of Illinois 159 and Illinois 161 in Swansea, IL. Demolition of six homes being cleared for the supermarket has begun and the store is expected to open during late Summer. The Medicine Shoppe pharmacy’s current building was purchased for $157,500 and will become a parking lot for the pharmacy’s new location adjacent to the supermarket. Hooters (770-951-2040) is looking to open a restaurant in West Valley City, UT through its exclusive franchisee Fine Feathered Friends, LLC. The unit would be the second Hooter location in the state, with other located in Midvale which opened last May. Buyers & Sellers Grubb & Ellis has the listing to sell a 17,986 sq.ft. parcel of
land fronting West Sixth Street in Los Angeles, CA. The site is ideal for a fast food
restaurant or retail use and is located across from a supermarket/drug store anchored
shopping center that is under construction. Demographics include a one-mile population of
101,098 earning $21,669 as the median household income. The asking price is $1.1 million.
The site can also be ground leased for $8,000 NNN monthly. Pomeroy Investment Corporation is in the market to acquire strip
centers having GLAs of at least 75,000 sq.ft. Preferred projects should be in B quality
locations or better and have a suburban population of at least 250,000 throughout the
Midwestern, Southeastern and Western regions. No deferred maintenance preferred and
projects should be occupied by at least 40% credit tenants. The company will consider
single user, strip centers and enclosed shopping malls. The company will also consider
turnaround deals in select markets. The company’s preferred deal size is $10 million
to $40 million, but will also consider deals as low as $2 million and portfolios over $100
million. Currently, the company has over $400 million in real estate assets in 10 states. Fuller and Company is in the market to acquire single tenant
retail, service and/or fast food properties in the Western region. Preferred properties
should have NNN leases with at least five years remaining on the term, be well-located and
have regional or better credit ratings. Preferred deal sizes range from $1 million to $3
million per property. Lee & Associates represents a client in the market to acquire
small neighborhood shopping centers in the Orange County, CA market. Premier Brokerage has the listing to sell six Kmart anchored
shopping centers located in small Midwestern towns. The total portfolio of over $36
million can be purchased separately. Most have 15 to 18 years left on Kmart primary term.
The asking price is based on an 8.75% cap rate. Inland Retail Real Estate Trust, Inc. is opening registration for
its Southeastern retail REIT and is in the market to acquire grocery-anchored centers
located in FL, GA, NC and SC. The company’s Midwest retail REIT has acquired nearly
$1 billion in Midwestern retail centers and has cash available through dividend
reinvestment for additional purchases. The company is in the market to acquire anchored or
shadow anchored retail centers in IL, IN, IA, KY, OH, MI, MO, MN, WI and northern TN
(within 400 miles of Chicago, IL). Large and small centers and single tenant properties
will all be considered. The Sikes Group represents a buyer in the market to acquire
freestanding, single-tenant retail real estate nationwide. The buyer currently owns more
than 970 properties in 45 states and will go as small as a Jiffy Lube (2,000 sq.ft.) to as
large as a Best Buy (50,000 sq.ft.). Preferred properties should have cap rates starting
at around 10% and have leases with rental increases during the term. Preferred lease terms
should be at least 15 years, but deals with 10-year lease terms will be considered. Black-Foxe Development Company is in the market to acquire new
retail developments and rehabilitation sites. Reliable Properties is in the market to acquire retail properties
having GLAs between 10,000 sq.ft. and 350,000 sq.ft. in Southern CA. Preferred properties
should have major vacancies or be in need of retenanting, rehab, value added, expansion or
complete rebuilding. Existing financing or cash deals are possible. Grubb & Ellis has the listing to sell The Westside Center in
Los Angles, CA. The 28,954 sq.ft. project is anchored by The Good Guys!, Men’s
Wearhouse and Frame ‘N Lens. The site, which is located at the intersection of West
Pico Boulevard and Westwood Boulevard, is located across from The Westside Pavilion, a
regional mall anchored by Nordstrom and Robinson-May. The asking price is $9.4 million. Flocke & Avoyer has the listing to sell a 24,378 sq.ft. pad
site and a 13,338 sq.ft. pad site located at the northeast corner of San Marcos Boulevard
and Knoll in San Marcos, CA. The asking price of the 24,378 sq.ft. site is $250,000. CB Richard Ellis has the listing to sell a 12.6 acre parcel of land
fronting North Ventu Park Road in Thousand Oaks, CA. Marcus & Millichap has the listing to sell 10 acres of land
located at the southwest corner of Tehachapi Boulevard and Mountain View in Tehachapi, CA.
The site is located across from a Kmart shopping center and in close proximity to an
Albertson’s shopping center. The asking price is $1.2 million. The company has the
listing to sell a 21,000 sq.ft. strip center in Pomona, CA. The project is located in
"antique row" and is 100% occupied. The asking price is $500,000. The company
has the listing to sell Chief Auto Parts Center in Los Angeles, CA. The 12,832 sq.ft.
project has an asking price of $2.5 million. The company has the listing to sell State
Plaza Shopping Center in Huntington Park, CA. The 13,500 sq.ft. project is 100% occupied
and has an asking price of $1.375 million. The company has the listing to sell R&R
Whittier Discount Market in East Los Angeles, CA. The 15,000 sq.ft. single tenant facility
has an asking price of $685,000. The company has the listing to sell a 7,320 sq.ft. strip
center in Carson, CA. The project is 100% leased by local tenants. The asking price is $1
million and assumable financing is available. The company has the listing to sell Alvarado
Shopping Center in Los Angeles, CA. The 8,850 sq.ft. project is occupied by local tenants
and has two spaces available for lease. The asking price is $1.55 million and assumable
financing is available. The company has the listing to sell Plaza at Imperial in
Inglewood, CA. The 9,086 sq.ft. project has four vacancies in the seven bay building. The
asking price is $795,000. The company also has the listing to sell a 5,250 sq.ft. Chief
Auto Parts store in Los Angeles, CA. The tenant has a 10-year lease and is responsible for
taxes, insurance, maintenance and utilities. Landlord is responsible for roof and
structure. The asking price is $1.215 million and assumable financing is available. ComNet Realty, Inc. brokered the sale of a 6,196 sq.ft.
freestanding Mattress Giant store in Blaine, MN. The buyers were local investors and the
purchase price was $1.198 million. The Shopco Group, L.P. recently completed its acquisition of
Chicago Ridge Mall, an 836,000 sq.ft. four department store enclosed mall in Chicago, IL.
The purchase marks the company’s fourth mall acquisition since October 1997. The size
of the four centers acquired exceeds 4.2 million sq.ft., with an aggregate purchase price
of approximately $250 million. The purchase of Chicago Ridge is part of the company’s
strategy of acquiring well located retail centers in major metropolitan areas, which are
either underperforming or where the company believes it can otherwise add value. The
Chicago Ridge purchase follows the acquisition of Eastland Center, a 1.364 million sq.ft.
enclosed mall in suburban Detroit, MI. The other centers acquired by the company since
October 1997 are Eastpoint Mall, an 860,000 sq.ft. four anchor enclosed mall in Baltimore,
MD and Ridgmar Mall, a 1.3 million sq.ft. five anchor enclosed mall in Fort Worth, TX. Childs Realty Group represented Inland Real Estate Acquisitions,
Inc. in its acquisition of Woodland Commons Shopping Center in Buffalo Grove, IL. The
seller was First Union Real Estate Investments, represented by Granite Partners, and the
sale price was in excess of $22 million, which is the largest volume transaction handled
by Childs Realty Group since its inception. The 180,000 sq.ft. project is anchored by
Dominick’s Finer Foods and is 100% leased by more than 40 tenants including
Blockbuster Video, Dee’s Hallmark, MotoPhoto and Wendy’s. Shopping Center Management Becoming More Sophisticated by Alan Alexander, SCSM, CPM Over the past several years we have seen the consolidation of both anchor tenants and major developer/owners of shopping center. Just prior to this we saw the major influence of the institutional investors on the management practices in the shopping center field. In recent years we have seen a flurry of shopping center purchases, some at CAP rates that question the sophistication of the analysis behind them. While we have done a good job of getting over the last major recession, competition is still very keen and the successful shopping center operators are increasingly more sophisticated in their approach to the fundamentals of our business. One would expect to see the most sophisticated management on the regional and super regional level, but there is the need for this in depth management at all levels of shopping centers. Three major areas come to mind: Market Information: Our markets are changing rapidly and we must be fully aware of those changes and make every effort to see that our tenant mix is the best it can possibly be to meet the needs of this market. Smaller centers must be positioned properly in their market in order to maximize the tenant sales and therefore the rents and lease terms for the shopping center owner. We must be aware of the aging population in our trade area and the demands that this creates in our centers. The aging population is now demanding selection and service and is less concerned with the price. Even when shopping for price, the older customer today demands a higher level of ambiance in the shopping center. We are seeing major changes in the ethnic mix in the trade areas of our centers. In the Los Angeles, CA area the Hispanic population represents 25% of the market and is growing. Any shopping center that chooses to ignore this population is going to miss out on a tremendous amount of sales. Tenant Mix: Along with our changing markets we are finding that we have to change our tenant mix to meet that market. We are best served when our tenant mix reflects the needs of our buying public. Starbucks is a great example of recognizing and/or creating a need in the mind of the public and packaging it in such a way as to make it a very popular, and profitable, concept. It is not necessary to pay $2.50 for a cup of coffee, but Starbucks has created an atmosphere and upscale product line that has appealed to the more affluent customer. It is no longer enough to have a store selling women’s wear, but we must be aware of who our customer really is and what brands they are buying. With that information we make sure that our center has the specific goods to satisfy those needs. We went through a period of time, especially in our smaller shopping centers that we put little emphasis on getting the merchants on percentage rents. That era has passed as we need those sales figures to help analyze our shopping center, even if it doesn’t mean any percentage rental income. Tenant sales are much more carefully analyzed than at any time in the past. We all fully understand that our success depends on the success of our merchants in the long run. We carefully analyze each individual tenant’s sales, we look at specific categories of merchandise, we analyze the sales in specific wings of the shopping center, in shops facing in a given direction and in shops of specific sizes. We carefully analyze the make up of our customer base and compare that to the shops they frequent in the mall and come up with an index to see how that category is doing relative to the whole. If a portion of the population represents, say 19.5% of our customer base, but the sales in that area represent only 15% of our sales, we want to see why. Maybe we are marketing to the wrong population or, maybe we are not doing a very good job of marketing to that specific customer group. Management Reporting: The paper work of management has become extremely sophisticated. Budgets in our better managed shopping centers have been a staple for years. However, in recent years the annual budget has become a full blown management plan rather than a three to five page budget of the major income and expenses of our shopping center. The budgeting process now starts with a market survey, an analysis of the competition, a look at the local infrastructure and a study of the economic conditions in the market place. We have separate schedules on leasing, tenant improvements, capital items, security, marketing, common area expenses, tax management, insurance allocations, management costs and separate schedules for various items of extraordinary income items. This budget is then compared to the previous year’s budget and actual figures are analyzed to be sure that the projections appear to be reasonable given the market conditions. Once this is all accomplished, the monthly management reports track every aspect of the shopping center operation. It is not enough for the manager to report the figures, but must provide a carefully thought out analysis with a narrative to the owners telling them what it all means and how it will impact upcoming issues in the shopping center. The process today is very pro active rather than reacting to what has been. Other reports will include leasing activity. Part of the leasing report will contain a listing of all lease expirations by month and year to see if there are any opportunities for major changes or the possibility that a group of merchants may have similar expirations and wind up causing a renewal problem for the center owners. Additionally, the owners want to know the status of leasing for vacant units. Once a prospective deal is introduced it will be tracked until the lease is signed or the deal is lost. The sophisticated manager of shopping centers of all sizes is more fully informed today that at any time in the past. It is not enough to keep the center clean and the rent collected. We must be fully aware of all of the elements that contribute to a successful shopping center and be anticipating those areas where we can make a difference with the proper decisions that will allow us to maximize our position within those market parameters. This author has heard managers indicate that the monthly management reports are not much good for planning because they are after the fact. Nothing could be further from the truth. The well constructed management report provides the information as to what has been so one can properly plan for what is to be. These reports are as important to the successful shopping center as is the market survey and the well planned tenant mix. There is not doubt that management, as well as all of the other phases of shopping center operations has become much more sophisticated. While it is very important today in our competitive market, it will become critical with the next slow down in the economy where the competition will still be fierce, but the manager will also be facing poor economic times which we have been fortunate in not seeing in many years. Alan Alexander is a Senior Vice President of Woodmont Real Estate Services, Inc., 1050 Ralston Avenue, Belmont, CA 94002; 650-341-7737, Fax 341-7757. To the Editor: Just a quick note to introduce myself to you as I will be the new real estate director at Chico’s as of March 1, 1999. We deeply appreciate the exposure in your last issue but would caution you a bit about the number of new stores we will do this year. The number that was printed was 40 new stores and the official word is that we will grow stores about 15% from 162 locations. That would be 24 stores. It is not to say that someone did not give you the 40 number, just to say that the official number for now is about 24. There is great excitement here at Chico’s as we led the country last year in comp sales with our store average exceeding 30%! The clothing line is much improved and a lot of new management talent is now in place. We hope you will share our optimism. Please call on me if there is any way that I can be of help to you. James P. West Real Estate Professionals Making The News California Cafe Restaurant Corporation (415-924-6600) announces that Hazem Ouf has joined the company as its president and chief executive officer. Additionally, Robert Freeman, the company’s current president, has been promoted to chairman of the board of directors, turning over the day-to-day operating responsibilities to Ouf. As chairman, Freeman will focus on the company’s strategic direction, concept development, growth and position in the industry. A privately-owned company, California Cafe Restaurant Corp. operates 26 full service, upscale restaurants primarily under the California Cafe and Napa Valley Grille names. Additionally, the company operates Alcatraz Brewing Company, Blackhawk Grille, Horizons and Cafe Del Rey. Strouds, Inc. (626-912-2866) announces that its founder and chairman of the board Wilfred C. Stroud, Jr., recently retired. He will retain a position on the board of directors with the title Founder & Chairman Emeritus, and the company’s president and chief executive officer, Charles Chinni, will assume the position of chairman of the board. Stroud established Strouds, Inc., the third-largest specialty linen retailer in the nation, in 1979 after a 23-year career with The Broadway Department stores. Using personal savings and money borrowed from friends, he built the Southern CA-based company from one 4,400 sq.ft. store into a chain of 65 stores, with 1997 sales of more than $220 million. In 1994, Stroud took the company public, listing its shares on the Nasdaq National Market. Currently, the company operates 65 stores in five states. Ross Stores, Inc. (510-505-4400) announces that Megan Jamieson has joined the company as senior vice president, strategic planning. Jamieson will be located in the company’s New York buying offices and will report directly to the vice chairman and chief executive officer, Michael Balmuth. Before joining Ross, Jamieson served as director of strategy for Sears, Roebuck & Co.’s full-line store division. Her background includes over 15 years of retail or strategic planning experience. Ross Stores currently operates 349 off-price apparel stores in 17 states. Grubb & Ellis (847-753-9010) announces that Dean Elliott has been named vice president in the retail services group at its Chicago, IL office. Elliott will concentrate on the representation of owners and tenants in the downtown marketplace. Elliott has been in the retail real estate business for over 30 years, including the past 17 years with CB Richard Ellis. He has been involved with notable urban projects such as Sears Tower, the State of Illinois Center, and the Marshall Field furniture stores in Schaumbrug and Oak Brook. Venator Group, Inc. (212-553-7017) announces that Bruce Hartman has been named senior vice president and chief financial officer. Hartman, formerly the company’s vice president of corporate shared services since 1998, and prior to that its controller since 1996, replaces Reid Johnson, who has resigned. Prior to joining the company as vice president and controller in 1996, Hartman spent 10 years with May Department Stores Co., and most recently was the chief financial officer of Filene’s from 1994 until October 1996. Hartman was also chief financial officer at Famous Barr between 1993 and 1994, and controller at Robinson’s division from 1990 to 1993. He began his career with Haskins and Sells in Boston, MA in 1975. Lechters, Inc. (973-481-1100) announces the election of James Shea, acting president since January, as president. Prior to becoming acting president, Shea was senior vice president-marketing and merchandising since December 1994. Before joining the company in November 1994, Shea served as senior vice president, general merchandise manager, homestore with Kaufmann’s, a division of the May Department Stores Company, from 1990 to November 1994. From 1985 through 1990 he was employed by Lechmere as vice president and general merchandise manager. Shea was also vice president of marketing and merchandising for Eddie Bauer and spent 12 years with Dayton Department Stores in various merchandising positions. The Walking Company (818-709-2200) announces that Dan Finkelstein has joined the company as chief executive officer. Finkelstein will be responsible for daily operations and directing future company growth. The company currently operates 60 stores and is planning to open 25 stores this year. Tenants Settle Suit Eleven local tenants at Town Center Plaza in Leawood, KS recently settled a lawsuit with the owners. The tenants, Kansas Sampler, Blue Chip Cookies, The Coffee Beanery, Han Shin Japanese Steak House, The Learning Tree, The Leather Furniture Co., Mazzarese Fine Jewelers, Natural Way, Rocky Mountain Chocolate Factory, Swim Quik and M. Taylor, filed the suit last March complaining that their taxes and fees were nearly triple what they had been told they would be. The lawsuit said the tenants were told by center representatives when they signed leases that their annual tax bills would be $1.50 to $3 psf of leased space. Their 1997 tax bills ended up being three times that amount. The tenants’ 1998 tax payments were $7 and $8 psf, even after Town Center Plaza, which opened in 1996, got its 1997 valuation reduced to $53.5 million from $60.4 million. That was expected to reduce the center’s tax bill by about $200,000. The tenants’ suit said that it was not explained that Jacobson’s, the center’s anchor, would pay less tax per square foot than the center’s specialty stores. Typically, anchor stores get rent and often CAM reduction discounts because they draw customers for shopping centers. However, they usually make contributions to CAM and pay their pro rata share of taxes. The tenants, which were never trying to break their leases, wanted their monthly costs reduced to be in line with what they had been told. Terms of the settlement were not disclosed. Lead Sheet Gucci Accessories The 30-unit chain operates locations nationwide. The stores, selling leather goods, shoes and apparel, occupy spaces of 3,000 sq.ft. to 6,000 sq.ft. in downtown store fronts and regional malls. Preferred co-tenants include other luxury retailers and only very high-end locations will be considered. Plans call for at least three openings in the coming 18 months. Expansion will take place in FL, MD, MA and NY. Hit or Miss Apparel The 238-unit chain operates locations nationwide. The women’s apparel stores occupy spaces of 5,000 sq.ft. to 6,000 sq.ft. in downtown store fronts, power and strip centers. Preferred anchors include supermarkets. Growth opportunities are sought in CT, DE, IL, MD, MA, MI, NJ, NY, OH, PA, RI, VA and WV. Hub Distributing, Inc. Apparel The 216-unit chain operates locations in AZ, CA, CO, ID, IL, NV, NM, OK, OR, TX, UT and WA. The stores, selling casual apparel for young men and women, occupy spaces of 5,500 sq.ft. in regional malls. Preferred anchors include department stores. Plans call for 35 openings in the coming 18 months. Expansion will take place in the Chicago, IL; Portland, OR and Seattle, WA markets. Preferred demographics include a population of 300,000 within 10 miles earning $35,000 as the average income. Leases running seven years are typical and the company cites Mr. Rags and Pacific Sunwear as competition. Rag Shops, Inc. Arts/Crafts/Fabrics The 69-unit chain operates locations in CT, FL, NJ, NY and PA. The stores, selling crafts and fabrics, occupy spaces of 15,000 sq.ft. in power and strip centers. Preferred co-tenants include T.J. Maxx, Wal*Mart and supermarkets. Plans call for 10 openings in the coming 18 months. Expansion will take place in the existing markets. Preferred demographics include a population of 150,000 within five miles earning $50,000 as the average income. Leases running five years, with options, are typical and the company cites Jo Ann’s and Michaels as competition. Genuine Parts Company Automotive The 5,800-unit chain operates locations nationwide. The stores, selling auto parts and accessories, occupy spaces of 5,000 sq.ft. to 8,000 sq.ft. in freestanding facilities. Preferred co-tenants include Home Depot and other do-it-yourself retailers. Plans call for 60 openings in the coming 18 months. Expansion will take place nationwide. Leases running five years are typical and the company cites AutoZone, Advance Auto, Checker, Kragen, Pep Boys and Schuck as competition. HH Gregg, Inc. Electronics The 26-unit chain operates locations in KY, IN, OH and TN. The stores, selling consumer electronics and appliances, occupy spaces of 25,000 sq.ft. to 35,000 sq.ft. in freestanding facilities and power centers. Preferred co-tenants include office supply stores and competition. Plans call for the opening of four units in the coming 18 months. Expansion will take place in KY, OH and TN. Preferred demographics include a population of 100,000 within eight miles earning $40,000 as the average income. A&W Restaurants, Inc. Food The 900-unit chain operates locations nationwide. The fast food restaurants occupy spaces of 800 sq.ft. in food courts of entertainment centers and regional malls. Plans call for the opening of 30 company-owned units in the coming 18 months. Expansion will take place nationwide. Leases running 10 years are typical and the company, which prefers a vanilla shell, is franchising. Friendly’s, Inc. Food The 700-unit chain operates locations in CT, DE, FL, ME, MD, MA, NH, NJ, NY, OH, PA, RI, SC, VT and VA. The family restaurants occupy spaces of 4,500 sq.ft. in freestanding facilities. Preferred anchors include department stores and supermarkets. Plans call for 50 openings in the coming 18 months. Expansion will take place along the Eastern Seaboard. Preferred demographics include a population of 20,000 within three miles earning $45,000 as the average income. Leases running 20 years are typical and the company, which is franchising, cites Cracker Barrel and Perkins as competition. Hungry Howie’s Pizza & Subs Food The 400-unit chain operates locations in 17 states. The pizza restaurants occupy spaces of 1,200 sq.ft. in freestanding facilities and strip centers. Preferred anchors include Kmart, Wal*Mart and supermarkets. Plans call for 60 openings in the coming 18 months. Expansion will take place nationwide. Preferred demographics include a population of 10,000 within five miles earning $25,000 as the average income. Leases running five years, with options, are typical and the company, which is franchising, cites Domino’s, Little Caesar’s and Papa John’s as competition. Subway Real Estate Corp. Food The 13,500+-unit chain operates locations nationwide. The sandwich restaurants occupy spaces of 300 sq.ft. to 1,800 sq.ft. in a variety of real estate settings. Plans call for 1,200 openings in the coming 18 months. Expansion will take place nationwide. The company is franchising. Easy Rental Home Furnishings The 11-unit chain operates locations in FL and GA. The stores, offering home furnishings and appliances on a rent-to-own basis, occupy spaces of 4,000 sq.ft. to 6,000 sq.ft. in downtown store fronts, freestanding facilities, regional malls and strip centers. Preferred anchors include Kmart, T.J. Maxx, Wal*Mart, department stores and supermarkets. Plans call for the opening of four units in the coming 18 months. Expansion will take place in the existing markets. Preferred demographics include a population of 100,000 within five miles earning $40,000 as the average income. Leases running five years, with options, are typical. The company cites Aarons Rents, HomeChoice and Rent-A-Center as competition. Mattress Discounters, Inc. Home Furnishings The 235-unit chain operates locations in CA, CO, FL, MA, MD, MI, NH, NJ, PA, VA and Washington, D.C. The stores, selling bedding, occupy spaces of 3,000 sq.ft. to 4,000 sq.ft. in freestanding facilities, power centers and regional malls. Plans call for as many as 75 openings in the coming 18 months. Expansion will take place nationwide. Preferred demographics include a population of 150,000 within five miles earning $40,000 as the average income. Leases running five years are typical. Hirshfield’s, Inc. Home Improvement The 22-unit chain operates locations in MN. The home improvement stores occupy spaces of 3,000 sq.ft. to 6,000 sq.ft. in freestanding facilities and strip centers. Plans call for two openings in the coming 18 months. Expansion will take place in IA. Preferred demographics include a population of 60,000 within five miles earning $40,000 as the average income. The company prefers a vanilla shell. U.S. Factory Outlets, Inc. Outlet Store The 27-unit chain operates locations nationwide, exclusive of AK, HI, OR and WA. The stores, which are manufacturer outlet stores for more than 250 suppliers, occupy spaces of 36,000 sq.ft. to 52,000 sq.ft. in outlet, power and strip centers. Plans call for 10 openings in the coming 18 months. Expansion will take place nationwide, exclusive of OR and WA. Preferred demographics include a population of 50,000 within five miles earning $35,000 as the average income. Leases running 10 years, with three options of five years each, are typical. Party Land Party Supplies The 200+-unit chain operates locations in 24 states. The party supply stores occupy spaces of 4,000 sq.ft. to 6,000 sq.ft. in freestanding facilities and strip centers. Preferred anchors include supermarkets. Plans call for 40 openings in the coming 18 months. Expansion will take place nationwide. Preferred demographics include a population of 100,000 within five miles earning $50,000 as the average income. Leases running 10 years are typical and the company, which is franchising, cites Party City as competition. PetsMart, Inc. Pet Supplies The 450-unit chain operates locations throughout North America. The pet supply stores occupy spaces of 19,000 sq.ft. to 30,000 sq.ft. in freestanding facilities, power and strip centers. State Line Tack stores sell equestrian supplies. Plans call for 50 openings annually. Expansion will take place throughout North America. Heel Quik, Inc. Service The 700-unit chain operates locations nationwide and in 26 countries. The stores, offering shoe repair, clothing alterations and monogramming, drycleaning, laundry drop-off and pick up and key cutting, occupy spaces of at least 1,000 sq.ft. in downtown store fronts, regional malls, power and strip centers. Preferred anchors include supermarkets. Plans call for 60 openings in the coming 18 months. Expansion will take place nationwide. Preferred demographics include a population of 30,000 within two miles earning $35,000 as the average income. Leases running five years are typical and the company is franchising. Nine West Group, Inc. Shoes The 1,110+-unit chain operates locations nationwide. The women’s shoe stores occupy spaces of 2,000 sq.ft. in downtown store fronts, regional malls, outlet and specialty centers. Plans call for 100 openings in the coming 18 months. Expansion will take place nationwide. Eastern Mountain Sports, Inc. Sporting Goods The 75-unit chain operates locations in CO, CT, DE, ME, MD, MA, MN, NH, NJ, NY, PA, VT and VA. The stores, selling outdoor sporting goods, occupy spaces of 8,000 sq.ft. in downtown store fronts, freestanding facilities, power and strip centers. Plans call for five openings in the coming 18 months. Expansion will take place in IL, MI, Washington, D.C. and the Northeastern region. Preferred demographics include a population of 500,000 within 10 miles earning $60,000 as the average income. Leases running seven years are typical. Albertson’s, Inc. Supermarket The 980-unit chain operates locations nationwide. The supermarkets occupy spaces of 45,000 sq.ft. to 65,000 sq.ft. in freestanding facilities and strip centers. Growth opportunities are sought nationwide. Fiesta Mart, Inc. Supermarket The 45-unit chain operates locations in TX. The supermarkets occupy spaces of 25,000 sq.ft. to 50,000 sq.ft. in freestanding facilities and strip centers. Plans call for six openings in the coming 18 months. Expansion will take place in the existing market. Leases running 15 years are typical. Video Galaxy, Inc. Video The 21-unit chain operates locations in CT, MA and NH. The video stores occupy spaces of 5,000 sq.ft. in freestanding facilities and strip centers. Plans call for as many as four openings in the coming 18 months. Expansion will take place in CT, ME, MA and NH. Sangsters Health Centers Vitamins The 48-unit chain operates locations throughout Canada. The stores, selling vitamins, herbs, sports supplements and natural cosmetics, occupy spaces of 600 sq.ft. to 1,000 sq.ft. in regional malls. Preferred anchors include supermarkets. Plans call for 15 openings in the coming 18 months. Expansion will take place throughout Canada. Preferred demographics include a population of 15,000 within three miles earning $30,000 as the average income. Leases running five years are typical and the company, which is franchising, cites GNC as competition. Closings Gottschalks (209-434-8000) closed the 250,000 sq.ft. Harris Department store at Carousel Mall in San Bernardino, CA that it recently acquired. The store opened in 1927 and served as Harris’ main location and headquarters. It became a clearance center last year. Mall officials have not signed a new tenant for the building, which is owned by El Corte Ingles. The store has anchored the Carousel Mall since 1972. Sam Catalano, Carousel Mall general manager, said that the space could be occupied by one or two tenants, but it will be more than a year before any businesses open. General Cinemas (617-264-8000) recently closed its Riveria Cinema, located near The Shops at Sunset Place in Coral Gables, FL. The company decided to close the theater rather than compete with a 24-screen AMC theater anchoring the The Shops at Sunset Place. General Cinemas has two remaining Miami-Dade locations: The Miracle Center and the Intracoastal 8 in North Miami Beach. LotsOff Corp. (210-805-9300) plans to close all 47 of its stores nationwide after it failed to find a merger partner or buyer which it has sought for the past year. The company was also hoping that funds from a $148.57 million court judgement against Chase Manhattan Bank and a Swiss bank would become available in time to keep the stores operating through 1999, but they were not. LotsOff stores sell a deeply discounted mix of close-out products, fluctuating by season and store. The concept is designed to appeal to bargain hunters and value-conscious shoppers. Hechinger’s/Builders Square (301-925-3006) plans to close 34 Builders Square stores, including the complete exit from the Cleveland, OH and Chicago, IL markets, by the end of July. Overall, 16 stores in IL; nine in OH; three in PA; two in OR and one each in MD, MI, NV and TX will be closed. The closings will leave the chain with 206 stores. MJDesigns (972-304-2200), which recently filed Chapter 11, plans to close 11 stores, including five units in upstate NY; four in Atlanta, GA; one store in College Station, TX and one in Arlington, TX. The company was hoping to not have to close stores, but was forced to in order to trim expenses and repay creditors. ExclusivesUnited Commercial Realty (214-526-6262) has been named the exclusive leasing agent for B A Framer in the Dallas/Fort Worth, TX metroplex. B A Framer has secured five locations in the market, with four new stores slated for 1999. The current B A Framer locations include the recently opened Oak Lawn at Wycliff in the Shops at Highland Park and Bellaire in Hulen which is expected to open soon. The largest store to date (2,000 sq.ft.) is expected to open this month at Southlake Town Square. Four other locations, including Coppell Crossing, will be part of the 1999 expansion. B A Framer’s steady growth to its current roster of 60 stores has been under the management of the Brucker family since the first store was opened in the family garage in 1969. The company is expecting to be operating 82 stores by the end of the year. Arnold J. Eisenberg has been named the exclusive leasing agent of Medina Marketplace in Medina, OH. The 70,000 sq.ft. project is anchored by Finast Supermarket. The company has also been named the exclusive leasing agent for Fox & Hound English Pub & Grill. The restaurant is seeking 12 spaces running 8,500 sq.ft. to 10,000 sq.ft. in end cap spaces of major shopping centers having upper income demographics throughout OH. Terranova Corporation (305-358-8700) has been named the leasing agent to sublease space recently acquired by Hollywood Video in Dade, Miami and Palm Beach counties in FL. Recently, Hollywood Entertainment acquired all of Video Avenue’s locations in South FL. Video Avenue stores measure approximately 10,000 sq.ft. and Hollywood Video prefers 5,000 sq.ft. locations. As a result, Terranova is subleasing the additional square footage at 15 locations. Some of these locations are freestanding and others are located in shopping centers anchored by supermarkets and/or national tenants. Kranzco Realty Trust (610-941-9292) has retained Ripco Real Estate Corp. as its exclusive leasing agent for 17 shopping centers, totaling 3.2 million sq.ft. in NJ and PA. CB Richard Ellis (419-861-1100) has been named the exclusive leasing agent for Monroe Street Market Square in Toledo, OH by Dunbar Real Estate. The 122,500 sq.ft. project, which is anchored by Food Town Plus, has a 1,440 sq.ft. space and a 20,000 sq.ft. end cap space available for lease. Mergers & Acquisitions Hit or Miss (781-344-0800) plans to sell its chain to Kombassan Holdings AS, a Turkish conglomerate that has interests in retail, packaging, construction and mining. Kombassan Holdings has long desired to enter the U.S. retail market. Horizon Pharmacies, Inc. (903-465-2397) recently acquired The Prescription Center in Dodge City, KS. Purchase terms included a combination of cash, debt, and Horizon common stock. The acquisition marks Horizon’s initial entry into KS. The acquired site is a complete, full line 5,000 sq.ft. retail pharmacy with approximately $2.2 million in annual sales in 1997. In addition to prescription drugs and services, this location offers a broad range of over-the-counter medications, healthy and beauty care, and other general merchandise. The gift department includes a complete line of Hallmark greeting cards and gifts. A china department is available and offers a bridal registry service. This pharmacy is open seven days a week. The company recently acquired Brennan Pharmacy Downtown located in Warsaw, IN. The 6,000 sq.ft. store is a complete, full-line retail pharmacy, which in addition to prescription drugs and services, also offers the sale and lease of home medical equipment. The store’s 1998 sales were approximately $4.2 million. The company also recently acquired Stroneck Eagle Drug, Inc. in Columbia Heights, MN. Its 1998 sales were approximately $3.7 million. Currently, Horizon owns and operates 49 retail pharmacies in 15 states. CEC Entertainment, Inc. (214-258-8507), franchisor of the Chuck E. Cheese’s restaurant chain, recently acquired six franchised restaurants in the Milwaukee, WI area. Terms of the cash transaction were not disclosed. CEC plans to upgrade the restaurants with improved games, rides and a better merchandise program. CEC currently operates and franchises 327 restaurants in 44 states. Sources of Financing The Mills Corporation (703-526-5000) announces that Morgan Guaranty Trust Company has provided a $112.5 million non-recourse permanent loan for ten of the company’s community centers. The new loan has a 10-year term with a fixed rate of 7.3% and replaces two loans totaling $82.5 million with a blended rate of 7.25% and loan maturities of April 1, 1999 and January 31, 2001. Capstone Realty Advisors, LLC (216-696-7700) announces an agreement with Canada Life to become the insurance agency’s exclusive OH correspondent for commercial mortgage lending. As part of this agreement, Capstone will take over management of 73 commercial real estate loans worth $311 million on properties in KY, IN and OH. These loans on retail, office, industrial and multifamily properties were previously managed by Mellon Mortgage Company. Aspen Portfolio Strategies, Inc. (970-927-3666) represents a pension fund that has a new loan program for environmentally challenged properties. Elements of the loan program include: $20 million minimum; a loan-to-value ratio maximum of 65% to 70%; terms of seven to ten years with a maximum 25-year amortization schedule; fixed rate pricing can be fixed at application with a one percent deposit and takeouts are available. The loans can be placed on grocery anchored retail centers, office and industrial properties in the top 75 markets. The fund will require that the environmental condition be characterized and that a remedial action plan be in place. The fund has an internal environmental officer who will be able to pass on the plan expeditiously. L.J. Melody & Company (713-787-1900) recently arranged fixed-rate financing of $9.5 million for Kroger at Sugarloaf in Duluth, GA. Jackson National Life Insurance provided the funding. Located on Sugarloaf Parkway, the 102,000 sq.ft. project is anchored by Kroger, Blockbuster and Buffalos. The company also recently arranged fixed-rate financing of $4.5 million for Mervyn’s Department Store in Dublin, CA. Located on Regional Street, the 85,000 sq.ft. single-story building is 100% leased to Mervyn’s. Space Place California Long Beach- Los Coyotes Shopping Center is anchored by Ralph’s and Blockbuster Video. The project has spaces of 1,062 sq.ft., 1,370 sq.ft. and 1,712 sq.ft. available for lease. Demographics include a two-mile population of 71,173 earning $56,309 as the average household income. For details, contact Tess Alvey of Alvey Commercial Real Estate at (714-730-0800), Fax (838-3396). Long Beach- Marina Shopping Center is anchored by Staples, Big 5 Sporting Goods and Blockbuster Music. The project has spaces from 2,000 sq.ft. to 17,445 sq.ft. available for lease. Demographics include a three-mile population of 232,479 earning $54,773 as the average household income. For details, contact George Prince of Prince Commercial Real Estate Services, Inc. at (562-493-8339), Fax (493-0239). Los Angeles- Beverly Plaza Shopping Center is anchored by La Jolla Patio & Mattress, L.A. Cellular Superstore, Card Club and A Kid’s Room. The project has three spaces running 716 sq.ft. each and a 3,082 sq.ft. former Relax the Back space available for lease. Demographics include a two-mile population of 146,862 earning $69,710 as the average household income. The site is located across from Beverly Center and Beverly Connection and neighboring retailers include Macy’s, Bloomingdale’s, Bed Bath & Beyond, Strouds, Good Guys, Wherehouse Records, Ralph’s Market, Blockbuster Video, Sports Chalet, Old Navy, Men’s Wearhouse and Borders Books. Also in Los Angeles- A 3,100 sq.ft. space formerly occupied by Tusk Thai Restaurant and Do It Yourself Law is available for lease. The site fronts West Pico Boulevard and has parking for six vehicles. Retailers in the area include Computer Renaissance, Jamba Juice and Starbucks. Also in Los Angeles- The Westside Center is anchored by The Good Guys and Men’s Wearhouse. The project has a 5,292 sq.ft. space, which is divisible, available for lease. The site is located across from Nordstroms. For details, contact Marc Pollock of Grubb & Ellis at (310-447-3800), Fax (478-9478). San Marcos- Vallecitos Village Shopping Center is anchored by Lucky’s Supermarket. The project has a 17,015 sq.ft. former Rite Aid space available for lease. Demographics include a three-mile population of 63,773. For details, contact Mike Puccio or David Vine of Retail Properties Group, Inc. at (619-453-9990), Fax (453-9965). Indiana Elkhart- Elkhart Market Centre is anchored by Wal*Mart, Sam’s Club, Staples and Toy Works. The 349,115 sq.ft. project has a 12,245 sq.ft. space available for lease. Demographics include a five-mile population of 74,423 earning $44,752 as the average income. The site is located near Concord Mall which is anchored by Lowe’s, Meijer and Kohl’s. For details, contact Scott Scherer of Equity Investment Group at (219-426-4704), Fax (424-3615). Rushville- Rushville Plaza is anchored by Kroger, AutoZone and Stage Stores. The 85,000 sq.ft. project has a 12,000 sq.ft. space available for lease. The site is located near Wal*Mart. For details, contact Lyle Shelor of AAMS Corp. at (800-544-8585), Fax (847-674-8157). Kansas Kansas City- A 3,121 sq.ft. freestanding space is available for lease in the central business district. Demographics include a three-mile population of 55,277 earning $25,950 as the average household income. For details, contact Robert Huhen or Jan Zaccor of Majestic Property Affiliates, Inc. at (516-466-3100), Fax (466-3132). North Dakota Fargo- An 8,100 sq.ft. freestanding former restaurant space is available for lease. The site fronts I-29 and 13th Avenue South and is located near West Acres Mall. Demographics include a five-mile population of 200,000. For details, contact Kelly Wold-Herzog of Maxim Real Estate Group at (701-280-9962), Fax (280-9970), e-mail (kelly.maxim@cwk.com). Ohio Brunswick- Laurel Square is anchored by Quality Farm & Fleet. The 180,000 sq.ft. project has spaces of 3,000 sq.ft., 4,200 sq.ft., 6,000 sq.ft., 10,000 sq.ft. and 55,000 sq.ft. available for lease. A renovation of the center was recently completed. For details, contact David Cooney of USA Management at (440-942-8770), Fax (942-1949). Cleveland Heights- Severance Town Center is anchored by Home Depot, Wal*Mart, Tops Market and Regal Theaters. The 700,000 sq.ft. project has spaces of 6,000 sq.ft., 24,000 sq.ft., 30,000 sq.ft. and 34,000 sq.ft. available for lease. Demographics include a three-mile population of 191,039 earning $50,269 as the average income. For details, contact Steve Eisenberg of Arnold J. Eisenberg at (216-831-6773), Fax (831-3869). |