Category: Retail

More US Retail Stores Opening Than Closing This Year: Survey

Retailers nationwide plan to open more stores than they are closing this year, according to a survey from RetailSphere.

More than half of retailers surveyed by RetailSphere intend to expand their businesses and more are looking for spaces with a smaller footprint, under 2,500 square feet. Grocery, fast-casual, and value stores are leading the charge with more than half of companies in all three sectors saying they’ll expand this year.

“Some companies are opening a handful of stores; others are expanding by hundreds,” the survey read. “Grocery, convenience and fast-casual and value dominate the list of national and regional retailers that are growing.”

Discount stores are expected to expand the most, with Family Dollar opening 500 stores in 2021 and Dollar Tree opening 700, according to the survey.

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Retailers trade Fifth Ave. for Worth Ave. as Palm Beach scene thrives with Americans heading South

Retailers, restaurants, and other business owners are opening up around Palm Beach, Florida, eyeing tax and lifestyle perks, as more people look to call South Florida home during the Covid pandemic and beyond.

WEST PALM BEACH, Fla. — Retailers, restaurants and other business owners want to be where the people are. And people are moving to South Florida in droves.

Some are taking a temporary retreat during the Covid pandemic, away from the cold weather up North. Others are making a longer-term change, and businesses are following by committing to decadeslong leases.

At Rosemary Square, an outdoor shopping mall situated close to downtown West Palm Beach, a West Elm furniture store and Urban Outfitters are slated to open in the coming months. They’ll be joined by a slew of new eateries, including a recently opened, local fast-casual taco shop, health-driven chain True Food Kitchen and the hip plant-based restaurant Planta.

Lucid Motors, an electric car company known as a Tesla competitor, opened its second South Florida location last month at Rosemary Square, which is operated by New York-based developer Related Cos. It joined Lululemon, Anthropologie, Yeti, Tommy Bahama, Sur la Table, RH and more than a dozen other retailers that, on most weekends, are filled with visitors. After shopping some grab a smoothie from Pura Vida, another recent addition to the complex, and listen to live music on a central grass lawn.

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Shoppers head to malls in final runup to Christmas. But Covid hot spots threaten last-minute boost

Shopper traffic to stores on the final Saturday before Christmas dropped 40.9% from a year ago, according to RetailNext.

The need for procrastinating shoppers to get gifts under the tree in time for Christmas was more compelling this year than snagging Black Friday doorbusters.

The number of shoppers who turned up at stores on the final Saturday before Christmas — known as “Super Saturday” in the retail industry — fell from a year ago. But the declines weren’t as steep as those seen on the Friday after Thanksgiving.

In fact, shoppers across the Northeast may have found parking spots at malls hard to come by on Saturday, as snow started to melt from a massive storm that barreled along the East Coast earlier in the week. Lines formed outside stores observing capacity restrictions, and some found shelves bare in categories like board games and toys. These familiar holiday scenes were likely a welcomed sight for retailers, amid signs that an economic recovery that began in the summer has been faltering with Covid-19 cases continuing to surge.

RetailNext, which provides cameras, software and analytics to retailers, said the number of shoppers fell 40.9% compared with the last Saturday before Christmas in 2019. By comparison, traffic was down 48% on Black Friday this year from a year ago, RetailNext said.

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The 10 biggest retail bankruptcies of 2020

This year, Neiman Marcus and J.C. Penney joined the ranks of some of the biggest retail bankruptcies on record, including Sears, Toys R Us and Circuit City.

More than three dozen retailers, including the nation’s oldest department store chain, filed for bankruptcy this year, marking an 11-year high.

Pre-pandemic, several of these retailers were already teetering on the brink of survival. But the Covid health crisis pummeled the industry. Lockdown orders put in place in March to slow the spread of the virus turned into prolonged store closures for many businesses that didn’t sell essential items like groceries. Retailers that started 2020 already in a tough spot were hit harder. Liquidity was strained and sales went into a freefall.

“The magnitude of bankruptcies has been larger this year compared to previous years,” said David Berliner, chief of BDO’s business restructuring and turnaround practice. “You’re noticing national brands and other prominent franchises, that had hundreds of stores, now being liquidated or going through a restructure to salvage what they can.”

About 60% of the retailers that had filed for bankruptcy in 2020 through August listed more than $100 million in assets, compared with 50% of filings during the same period in 2019 and 36% in 2018, Berliner said.

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Ruby Tuesday receives court approval for bankruptcy sale

Ruby Tuesday’s parent company, RTI Holdings, has until Dec. 10 to enter a stalking-horse agreement and until Jan. 14 to submit a bid.

Ruby Tuesday received approval on Friday from the U.S. Bankruptcy Court for the District of Del. to begin a sale process of the company nearly two months after the Maryville, Tenn. casual-dining restaurant chain filed for bankruptcy on Oct. 7.

Ruby Tuesday’s parent company, RTI Holdings, has until Dec. 10 to enter a stalking-horse agreement and until Jan. 14 to submit a bid. An auction will be held no later than Jan. 19, after which RTI Holdings will submit a confirmation order and approve of the sale. The court will then hold a hearing to approve the winning bid on Jan. 22.

RTI Holdings’ bankruptcy filing was approved after the company made some last-minute changes requested by major landlords, including Brookfield Properties Retail Inc., Regency Centers Corp. and Tanger Factory Outlet Centers Inc., which all initially had objections to the sales process.

Secured lenders Goldman Sachs and TCW — which are both owed approximately $40 million by RTI Holdings — are providing financing to Ruby Tuesday throughout the bankruptcy process. The company’s debts are estimated at $56.1 million, according to the bankruptcy filings.

NRD Capital — affiliate of RTI Holdings — acquired Ruby Tuesday in 2017 and is one of the candidates expected to come forward as a potential bidder in the sale.

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Apartment Investors Mull Opportunities in Distressed Malls

Developers have proposed to redevelop more than a hundred malls into mixed-used properties with apartments.

Apartment dealmakers may find an opportunity to build new apartments around the shells of under-performing or empty regional malls. Hundreds of troubled shopping malls may be seized by lenders over the next year, experts say.

“In the current market with the pandemic, the number of properties considering this kind of redevelopment has multiplied three or four-fold,” says Brian McAuliffe, president of CBRE Capital Markets and leader of the firm’s multifamily sales business, working in the firms Chicago office.

Regional malls, class-B and class-C shopping centers in deep trouble

The pandemic has put tremendous pressure on many shopping malls. Hundreds have lost many of their largest, most important retail tenants as department store chains like J.C. Penney and Lord & Taylor declared bankruptcy and others scale back in the chaos caused by the coronavirus.

The vast majority of class-B and class-C malls have lost at least one anchor tenant, according to research from Green Street Advisors. That adds up to several hundred properties that have lost a significant part of their income.

Trepp has identified more than 100 properties that owners may soon surrender to lenders, more than a quarter of those are regional malls.

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Growing Number of Landlords Are Offering Restaurants Percentage-Only Rent

That might still not be enough to save many smaller operators.

A recent survey by the NYC Hospitality Alliance helps illustrate the dire straits of America’s restaurants.

The survey found that 87 percent of New York City’s restaurants, bars and nightlife venues couldn’t pay their full rent in August. The culprit, of course, is pandemic restrictions imposed on these businesses.

Further complicating the situation, 60 percent of the businesses surveyed said their landlords hadn’t waived any of their rent in response to the coronavirus pandemic. But in New York City and across the country, a number of landlords are offering concessions for restaurants and other hospitality businesses in the form of percentage-only rent.

Some restaurant landlords are temporarily switching from fixed-rate rents to rents based only on a share of the tenant’s gross sales or revenue, in an effort to help these businesses survive, says Ken Lamy, founder, president and CEO of The Lamy Group, a Mandeville, La.-based financial management consulting firm. Landlords are then leaving the door open to revisiting the rent structure at a later date, perhaps 12 to 18 months down the road, he notes.

“Rent is a function of revenue, and with restaurant revenue getting decimated in certain types of trade areas, one way to protect the financial stability of a restaurant—and provide a cushion before we recover from COVID-19—is to structure a percentage-only rent deal and fix the restaurant’s rental expense with an acceptable percentage of gross sales,” says Jason Kastner, managing director of the national advisory group at Washington, D.C.-based Dochter & Alexander Retail Advisors, which represents restaurant and retail tenants.

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Turning a dead mall into a warehouse will slash its value as much as 90%, Barclays predicts

Turning dead malls into fulfillment centers, apartment complexes, schools or medical offices could mean massive writeoffs in property values, according to a new Barclays report.

In the coming years, hundreds of America’s roughly 1,100 malls are expected to shut, as retail, restaurant and movie theater closures pile up, and more people favor shopping on the internet over heading to the store.

Property owners are going to be tasked with giving dead malls a new life. But the future prospects — fulfillment centers, apartment complexes, schools or medical offices — could mean massive writeoffs in property values, according to a new Barclays report.

Turning a shuttered mall into an e-commerce warehouse or a residential complex could reduce the value of the property anywhere from 60% to 90%, Ryan Preclaw, a research analyst at Barclays, told CNBC’s “Worldwide Exchange” Thursday morning.

While the land that malls sit on may offer better recovery values if it is used for a mixed-use development, he said, historically that has only happened for about 15% of former malls.

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Retailers have started paying rent again but are still fighting with their landlords

Less than a third of retail companies paid at least 75% of June rent, according to a study by the National Retail Federation and the investment bank PJ Solomon.

Month by month, retailers are starting to pay more rent as states lift shutdown orders and consumers become more comfortable venturing out to shop during the coronavirus pandemic. But negotiations, sometimes heated, continue between tenants and landlords.

In some cities and popular shopping districts, commercial rents are still sky high. Tensions keep brewing, as mall and shopping center owners grapple with retailers looking to close stores permanently, downsize or try to rewrite contracts in their favor. And the pressures are likely to roll into 2021, with the start of the year typically drawing a fresh wave of retail store closures as companies reevaluate their brick-and-mortar footprints after the holidays.

Less than a third of companies paid at least 75% of June rent, according to a study released Thursday by the National Retail Federation and the investment bank PJ Solomon. By July, the number of rent payers had almost doubled to 65%, it said. The study polled 48 C-level executives at retailers with at least 10 stores and more than $100 million in sales in 2019, from July 15 to July 28.

The survey also found that 73% of retailers that missed payments are planning to pay back at least half of the rent owed since a nationwide shutdown began in March. More than half of respondents said they were able to get some sort of rent relief from their landlords, with deferrals into late 2020 or 2021 being the most likely concession.

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Mall owners Simon, Brookfield set to rescue JC Penney from bankruptcy in $800 million deal

U.S. mall owners Simon and Brookfield are close to finalizing an $800 million deal to rescue J.C. Penney from bankruptcy.

U.S. mall owners Simon Property Group and Brookfield Property Partners are close to finalizing an $800 million deal to rescue the embattled department store chain J.C. Penney from bankruptcy, avoiding a total liquidation and saving about 70,000 jobs and 650 stores, Joshua Sussberg of the law firm Kirkland & Ellis said Wednesday.

Simon and Brookfield will pay roughly $300 million in cash and assume $500 million in debt, Sussberg said during a court hearing.

Wells Fargo has also agreed to give Penney $2 billion in revolving credit once the transaction is completed, leaving the retailer with $1 billion in cash, he said. Penney plans to seek approval from the bankruptcy judge for this rescue deal early next month.

Meantime, the hedge funds and private equity firms that have financed Penney’s bankruptcy are set to take ownership of some stores and the retailer’s distribution centers, in exchange for forgiving some of Penney’s $5 billion debt load. Penney’s lenders, led by H/2 Capital Partners, are going to own those assets in two different real estate investment trusts, or REITs, Sussberg said.

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