Tag: retail real estate

Sears: Auto Centers Reveal Big Picture Problems For Company

by Randybaconin Real EstateLeave a Comment on Sears: Auto Centers Reveal Big Picture Problems For Company

Sears: Auto Centers Reveal Big Picture Problems For Company

Summary

Sears Auto Centers aren’t being sold to a 3rd party.

Seritage has the right to recapture 100% of the Sears Auto Centers.

The Sears Auto Center real estate doesn’t appear to be moving.

We decided to write an article on Sears Auto Centers because we believe it exemplifies one of the major flaws in the long thesis on Sears (NASDAQ:SHLD). Sears Auto Center represents a tiny portion of Sears’ overall revenue, but the flaw we will discuss permeates a large portion of the investment valuation for Sears. It also demonstrates when reasoning can go bad.

What is the flaw? We believe that many investors have artificially inflated the value of Sears by valuing the real estate of Sears independent of the underlying retail business. Because Sears continues to lose money the net asset valuation calculations used by investors fail to account for these ongoing losses, and thus their calculations might be artificially high. Also, some have suggested that combined with the real estate, that the businesses owned by Sears have hidden values in of themselves that can be monetized outside of Sears (for example, KCD brands). Hence, they get the value of the real estate plus the value assigned to the different operating businesses. We believe that this represents a form of double dipping. Either you value the operating businesses or you value the real estate with no operating businesses. And the experience with Sears Auto Centers offers one example of why this might be important.

The Market Cap Myth

First we wanted to take a brief moment to address one issue. We hope that this helps educate the average investor on how to think about property valuations, as it offers a cautionary tale. Also, we think it demonstrates how investors need to be skeptical in their reliance on other people’s work (including ours). In the Fairholme presentation on Sears, Fairholme offered the attached slide.

View entire article at Seeking Alpha.com

To discuss commercial mortgage financing needs contact Liberty Realty Capital.

Mall Owners Find Silver Lining in Retailer Busts

by Randybaconin Real EstateLeave a Comment on Mall Owners Find Silver Lining in Retailer Busts

A spate of retailer bankruptcies this year has left owners of malls and shopping centers scrambling to fill empty stores. But some landlords smell opportunity.

The vast majority of these type of properties are occupied and spare space is in short supply in many parts of the country, according to experts and landlord data. That is boosting the confidence of landlords who believe they can find new tenants and charge them higher rents.

RadioShack was the largest retailer by assets with publicly traded stocks or bonds to file for bankruptcy since 2010. A former Radio Shack store in the Bronx, New York
 Photo: Michael Nagle/Bloomberg News

After grocery chain A&P, filed for bankruptcy in July, for example, Brixmor Property Group Inc. said it bought back three leases in a bankruptcy auction under which the grocer, formally known as Great Atlantic & Pacific Tea Co., was paying an average of $6.59 a square foot. The firm, which owns shopping centers in 38 states, will be able to charge new tenants $20 to $30 a square foot, says Michael Carroll, chief executive.

See entire article in the Wall Street Journal.

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To discuss commercial mortgage financing needs contact Liberty.

After Leading CMBS Out of Recession, Retail Loans Slower To Refinance

by Randybaconin Real EstateLeave a Comment on After Leading CMBS Out of Recession, Retail Loans Slower To Refinance

For all of their success in leading a resurgence of CMBS financing following the Great Recession, retail properties face a tougher rode ahead in the short term.

Approximately $50 billion of retail-backed CMBS loans are scheduled to mature through 2016. Collateral backed by retail properties accounts for the largest portion of that, its also accounts for the largest proportion of loans defaulting at their 2015 maturities, according to Fitch Ratings.

For loans with original maturities in 2015, retail comprises the majority of the currently delinquent loans ($555.2 million) followed by office ($469 million). Other property types have far lower levels of deliquent loans, including hotel ($162.9 million), mixed use ($161.9 million), multifamily ($44.6 million), industrial ($12.4 million), and self-storage ($6.5 million).

Read the entire article at www.Costar.com.

Find out more about Liberty at our Youtube page.

To discuss commercial mortgage financing needs contact Liberty Realty Capital Group.

The Cost of Operating a National Shopping Center

by Randybaconin Real EstateLeave a Comment on The Cost of Operating a National Shopping Center
The Cost of Operating a National Shopping Center (Chart of the Week)
The Institute of Real Estate Management (IREM), an international community of real estate managers, collected the national median income for open shopping centers based on average actual occupancy (AAO). The findings range from $15.28/SF to $25.45/SF. The Northeast and Mid-Atlantic regions reported the highest income/SF for open centers. The individual expense categories represent open shopping centers by proportion of total operating cost based on AAO. Insurance and taxes accounted for 45% of total operating costs; services consumed 14.2%; maintenance and repair and utilities accounted for 8% and 8.7%, respectively.
Click here to download the full report.

Read more at: https://www.bisnow.com/national/news/retail/the-cost-of-operating-a-national-shopping-center-chart-of-the-week-51121?rt=title?utm_source=CopyShare&utm_medium=Browser

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Macy’s and Other Retailers Are Pressured to Sell the Land Beneath Them

by Randybaconin Real EstateLeave a Comment on Macy’s and Other Retailers Are Pressured to Sell the Land Beneath Them

Retailers are coming under renewed pressure to cash in on their real estate as property values soar. But the approach has a mixed track record and poses risks at a time when chains are rapidly retooling their stores to support online operations.

Macy’s Inc. is the latest to wrestle with the option. The department-store chain is facing pressure from activist investor Starboard Value LP to spin off its property, a move the fund, which hasn’t disclosed the size of its Macy’s investment, thinks could boost shares in Macy’s by more than 70%. The retailer has said it is evaluating spinoffs and other property moves.

Read entire Wall Street Journal article here.