Weekly Retail News Recap August 14, 2010

Posted August 13, 2010 by netleased
Categories: US Economy

Weekly Retail Recap

WEEKLY RETAIL RECAP

 

  • Gap to expand e-commerce reach on global basis
    Gap said Thursday that it has upped international shipping offerings on its e-commerce site to 55 countries, including Australia, Brazil and Mexico, and by year-end will make online shopping available in up to 65 countries.
    Read More
  • Cache profit edges up in Q2
    Specialty women’s apparel retailer Cache reported Thursday that profit for the quarter ended July 3 edged up to $897,000, compared with $845,000 in the year-ago period.
    Read More
  • Arden Group’s net income slips in Q2
    Arden Group, parent of Southern California supermarket chain Gelson’s Markets, reported Wednesday that it earned $4 million in the second quarter ended July 3, compared with earnings of $4.7 million in the year-ago period.
    Read More
  • J.C. Penney headquarters is LEED Gold
    J.C. Penney Co.’s corporate headquarters in Plano, Texas, has been awarded LEED (Leadership in Energy and Environmental Design) Gold certification by the U.S. Green Building Council.
    Read More
  • GNC Q2 profit leaps 42.5%
    General Nutrition Centers reported Tuesday that net income for the second quarter ended June 30 was $25.6 million, compared with net income of $18 million for the year-ago period.
    Read More
  • Fossil Q2 profit more than triples
    Fossil said Tuesday its second-quarter profit more than tripled, smashing analysts’ expectations, as the watch and fashion-accessories retailer posted record results on big sales gains.
    Read More
  • Santa Monica Place opens
    Macerich, one of the nation’s leading owners, operators and developers of regional shopping centers, on Friday opened the new Santa Monica Place, 524,000-sq.-ft., three-level, open-air retail and dining destination that is located just two blocks from the beach.
    Read More
  • Big 5 Sporting Goods Q2 earnings flat
    Big 5 Sporting Goods Corp. reported second-quarter sales and earnings growth roughly flat with the year-ago period, as a sluggish economy and unseasonably cool weather in many of the its markets curbed shoppers’ spending.
    Read More

Tepid Private Sector Job Growth Falls Short of Government Employment Cuts.

Posted August 11, 2010 by netleased
Categories: US Economy

Marcus & Millichap - Research Brief
 
EMPLOYMENT
 
Tepid Private Sector Job Growth  Falls Short of Government Employment Cuts

  • The scheduled elimination of temporary census positions in July led to weakened employment figures for the month while private employer hiring edged upward only moderately to offset a portion of the losses. Contributing 71,000 positions, private employers exceeded their June tally, but remain below the levels required to keep pace with normal labor force expansion. Manufacturing and education/health services generated 60 percent of the jobs created this year, but growth has spread to seven of the 10 employment sectors, signaling that the foundation of the choppy recovery has broadened. With the recovery now incorporating a significant cross-section of the economy, a double-dip recession still appears unlikely although the sluggish pace of expansion will persist for the next several months.

  • Facing substantial budget shortfalls, state and local governments eliminated 48,000 positions in July. These losses, combined with an 11,000 worker reduction at the federal level and the release of 143,000 temporary census positions, generated a total downsizing of 202,000 government positions in July. These cuts overwhelmed private sector additions to generate a net loss of 131,000 workers in July. With another 180,000 temporary census positions targeted for elimination over the next two months, employment trends should soon stabilize, with private sector hiring coming close to balancing government reductions.

  • Though corporate caution has atrophied private sector job growth, manufacturing employers generated gains for the seventh straight month, adding 36,000 positions in July. Additionally, an 8 percent year-to-date rise in imports spurred the creation of 25,000 trade, transportation and utilities positions. However, while temporary positions increased in each of the last nine months and have contributed over one-quarter of the total job additions since the start of the recovery, they finally lost momentum in July with the reduction of 5,600 jobs. This trend reversal illustrates renewed corporate concern regarding the pace of the expansion. Fundamentally both the economy and corporate balance sheets are in better shape than reflected in the current sentiment.

  • Apartment demand has moved well beyond employment gains with the absorption of nearly 46,000 units in the second quarter, the strongest gains since the fourth quarter of 2000. This aggressive lease-up of apartments resulted in a 20 basis point vacancy drop to 7.8 percent, a trend that should continue through the remainder of the year as pent-up demand finally releases. Barring a systemic shock that halts job creation, an additional 65,000 units will be absorbed through the second half of the year, pressing vacancies to 7.4 percent by year-end.

  • Although consumers remain cautious, as evidenced by the elevated personal savings rate of 6.2 percent in the second quarter, private-sector job additions have helped stabilize retail centers. Following five years of slow, steady increases, vacancies flattened at 10 percent in the second quarter on positive net absorption of 6.3 million square feet. Nevertheless, asking and effective rents continued to decline, falling by 0.3 percent and 0.6 percent, respectively.

 

The information contained herein was obtained from sources deemed reliable. Every effort was made to obtain complete and accurate information; however, no representation, warranty or guarantee to the accuracy, express or implied, is made.

Weekly Retail News Recap July 30, 2010

Posted July 30, 2010 by netleased
Categories: Lowe's, NNN net leased, US Economy, Walgreens

WEEKLY RETAIL RECAP

  • Golfsmith profit dips in Q2
    Golfsmith International Holdings said Thursday that net income for the quarter ended July 3 dropped to $6.2 million, from $6.8 million a year earlier.
    Read More
  • Best Buy forms partnership to offer broadband service
    Best Buy Co. announced Thursday that its subsidiary Best Buy Connect and wireless service provider Clearwire Corp., based in Kirkland, Wash., have forged a wholesale relationship that will allow Best Buy to use Clearwire’s 4G network to offer mobile Internet service to customers under the Best Buy Connect service.
    Read More
  • Guess to open Manhattan flagship
    Guess will open its largest U.S. store to date, a two-level, 13,000-sq.-ft. flagship on Fifth Avenue in Manhattan, in December, according to Women’s Wear Daily.
    Read More
  • Brookstone loss widens in Q2
    Brookstone reported Tuesday that it recorded a loss of $12.5 million in the quarter ended July 3, compared to a loss of $10.5 million in the year earlier period.
    Read More
  • Supervalu profits plummet 40% in Q1
    Supervalu, operator of Albertsons, Jewel-Osco, Shaw’s, Save-A-Lot and Cub Foods, reported Tuesday that its first-quarter net income dropped 40%, earning $67 million in the quarter ended June 19, compared with $113 million in the year-ago period.
    Read More
  • Target takes Manhattan
    Target officially opened its first-ever store in Manhattan, a 174,000-sq.-ft. outlet at East River Plaza in East Harlem.
    Read More
  • Amazon.com Q2 profit up 45%
    Amazon.com reported that net income increased 45% to $207 million in the second quarter, compared with net income of $142 million in the year-ago period.
    Read More

Weekly Retail Recap July 23rd, 2010

Posted July 23, 2010 by netleased
Categories: CVS/Pharmacy, Lowe's, NNN net leased, Sale Leaseback, Shopping Center, US Economy, Walgreens

WEEKLY RETAIL RECAP

  • Menard wins Wisconsin Supreme Court appeal
    The Wisconsin State Supreme Court has sided with home-improvement retailer John Menard, who sought to overturn an arbitration decision in a wrongful termination case against his former general counsel.
    Read More
  • NPD: More digital games purchased in stores than online
    According to the PC Games Digital Downloads: Analyst Report, from The NPD Group, in 2009, 21.3 million PC Game full-game digital downloads were purchased online in the United States compared with 23.5 million physical units purchased at retail during the same period.
    Read More
  • Roundy’s to expand in Chicago
    Grocery retailer Roundy’s said it has plans to open between 12 and 18 stores in the Chicago area over the next five years under the Mariano’s Fresh Market banner, according to a report by Supermarket News.
    Read More
  • Sprouts offers high-efficiency HVAC, refrigeration solutions
    A new Sprouts Farmers Market that opened late June in Culver City, Calif., is projected to use 50% less refrigerant than the industry average, thanks to high-performance heating, ventilation, air conditioning and refrigeration solutions that meet the company’s sustainability objectives.
    Read More

Companies Stockpiling Cash, Protecting Balance Sheets, But Hampering Economic Recovery

Posted July 18, 2010 by netleased
Categories: US Economy

 

Nonfinancial corporations grew holdings of liquid assets 25 percent over the past two years to $1.84 trillion, the highest level on record. This trend reflects efforts by companies to protect balance sheets and reduce their reliance on credit markets for future growth. Some corporations have begun to use built-up cash for stock buybacks, but until more sidelined capital is invested in the broader economy, the recovery will remain choppy, and risks of a double dip will persist. The consumer sector, which accounts for 70 percent of GDP and typically drives expansion during the early stages of recovery cycles, will remain strapped by high unemployment, minimal income growth and tight credit markets for several quarters to come.

  • Productivity soared in recent quarters, but businesses have stretched existing resources to their limit and will soon need to hire. During the year ending in the first quarter of 2010, output per hour climbed 6 percent, the most significant increase in eight years. Compensation declined modestly during the same 12-month period, contributing to stronger corporate profit margins. Pre-tax corporate profits in the first quarter climbed to 13.7 percent of gross domestic product (GDP), up from 9.6 percent of GDP one year earlier.
  • While several indicators point toward the resumption of moderate employment growth this year, lingering corporate caution poses a significant risk to the onset of a sustainable recovery. After cutting costs and slashing payrolls to survive the recession, many companies remain hesitant to shift out of conservation mode. Based on the results of a recent survey, most corporate finance executives plan to maintain or increase cash holdings over the next six months. If this occurs, the business sector could inadvertently set into motion another self-perpetuating downturn.
  • Impact on Commercial Real Estate

  • With the recovery expected to progress at a moderate pace through the second half of 2010, office vacancy should begin to stabilize by year end at approximately 18 percent. Even if companies ramp up hiring in the near term, however, it may be several quarters before vacancy rates recede. Many markets amassed significant amounts of shadow vacancy through the recession that will need to be filled before companies increase space needs.
  • The industrial property sector stands to benefit from strengthening international trade and modestly higher retail sales. Following the drastic correction cycle of 2008 to 2009, companies need to increase inventories to meet even modest demand levels, a trend that began to unfold in the first quarter. Furthermore, the corporate sector faces significant pent-up demand for equipment after several years of conservation. As capital spending gains traction this year and commercial development remains minimal, industrial vacancy will level off. During 2010, vacancy is forecast to rise just 40 basis points to 13 percent, following a 200 basis point increase last year.

Refinancing available for loans maturing in the next 12-18 months with yield maintenance or defeasance.

Posted July 14, 2010 by netleased
Categories: Bank Watch, Financing, US Economy

Atlanta Ga- Tim Kinney the senior director of Mark One Capital just shared this information with me and I could not wait to share it with our clients.

Commercial Loans – Rates in The Low 5% Range

Rates are in the low 5% range for good quality commercial real estate with strong sponsorship.

  • Lender can forward rate lock up to 12 months in advance. No spread premium for the first 4 months. Average 7 basis points per month thereafter. This is a great option for loans maturing in the next 12-18 months with yield maintenance or defeasance.
  • Apartments – Loan-to-Value 70% – 75%, 30-year amortization, 10-year term, 5.25% rate
  • Prefer grocery anchored retail with strong sales. Loan-to-Value 70% – 75%, 30-year amortization, 10-year term, 5.25% rate. Other retail types also acceptable upon review.
  • Prefer Medical Office Buildings with a stable history. Loan-to-Value 70% – 75%, 30-year amortization, 10-year term, 5.25% rate.
  • Prefer Industrial Properties with strong tenants and a stable history. Loan-to-Value 70% – 75%%, 30-year amortization, 10-year term, 5.25% rate.
  • Prefer Owner-Occupied Properties with strong financials

Lower rates apply for lower leverage. This lender just rate locked their loan on an industrial property. 48% LTV with a 10 year term and 10 year amortization. The rate was below 4%!

If you have properties that fit the above criteria please contact me so that I can get Tim our in-house mortgage guru do a no obligation quote for you.

I am very happy to share this information with you.

Capital Markets Beginning to Loosen; CMBS, Life Insurance Companies Step Up Lending

Posted July 11, 2010 by netleased
Categories: Financing, US Economy

Capital Markets Beginning to Loosen; CMBS, Life Insurance Companies Step Up Lending

§ Constraints on commercial real estate lending eased during the first half of 2010, a trend that should continue as more lenders re-enter the securitization market and life insurance companies pursue a broader range of deals. Unlike a year ago, financing has become available for properties over $10 million, and some lenders have re-engaged higher-quality, lower-risk transactions in noncore markets. In addition to greater availability of financing across property types, price ranges and markets, lenders also have increased loan-to-values (LTVs) on new loans by an average of 5 percent from last year. Despite these positive developments, potential borrowers continue to face tight underwriting standards and stringent lender requirements compared to historical standards.

§ While commercial mortgage originations during the first quarter remained depressed relative to figures reported from 2005 to 2007, conduits and life insurance companies drove up activity 12 percent from last year. During the first half of 2010, U.S. CMBS issuance reached $2.4 billion, approaching the 2009 total of $3 billion but still just a fraction of the $197 billion annual average reported from 2005 to 2007. Even when viewed against a less frothy period, such as 2000 to 2003, activity in the first half still pales by comparison. Recent CMBS issuance included multiple-borrower deals with subordinate tranches, a far cry from the ultra-safe, single-borrower transactions completed late last year, generating optimism the sector will soon offer increased liquidity.

§ New CMBS loans price in the 6.0 percent to 6.5 percent range for five-year mortgages, with lenders targeting deals of $10 million or more. While these interest rates may be at the higher end of the spectrum, CMBS borrowers can often negotiate 30-year repayment schedules versus an average of 25 years for life insurance companies, offsetting the impact of interest rates on monthly payments. In addition, LTVs for CMBS loans can push into the low- to mid-70 percent range, versus 65 percent to 70 percent for life insurance companies, assuming the debt-service coverage ratio (DSCR) still falls between 1.25x and 1.35x.

§ Next to the CMBS sector, life insurance companies made some of the most impressive headway over the past 12 months. This sector increased commercial mortgage originations by 131 percent during the year ending in the first quarter and recently began to compete more intensely for high-quality deals. While maintaining strict underwriting standards, life insurance companies have begun to actively pursue new business in major markets, increasing their scope to include nearly all price ranges and property types. This demonstrates a strategic shift from last year, when most life insurance companies focused on rewriting maturing loans already in their portfolios. As 2010 progresses, life insurance companies will increase lending as their commercial/multifamily portfolios outperform the broader marketplace; as of first quarter, this segment boasted a delinquency rate of just 0.31 percent.

§ Despite the recent delisting of Fannie Mae and Freddie Mac from the NYSE and expectations for government-mandated changes in the quarters ahead, their multifamily lending arms should remain operational, benefiting apartment investors. New loan originations by the GSEs slipped in early 2010 and may continue at depressed levels this year, however, due to a paucity of deals within their target criteria.

§ While commercial lending will increase this year, risks to this outlook remain. High and rising delinquency rates, particularly among commercial banks and within the CMBS sector, will drag on confidence. Maturities also pose significant challenges, as declining property values have turned many owners upside down on their mortgages, making it impossible to refinance without additional equity contributions. Approximately $535 billion of commercial mortgage debt will come due between 2010 and 2011, including $110 billion of CMBS. Of the CMBS loans slated for maturity during this period, more than 14.5 percent have DSCRs of 1.0x or less.

The information contained herein was obtained from sources deemed reliable. Every effort was made to obtain complete and accurate information; however, no representation, warranty or guarantee to the accuracy, express or implied, is made. Sources: Marcus & Millichap Research Services, Marcus & Millichap Capital Corporation, Commercial Mortgage Alert, Moody’s Economy.com, Mortgage Bankers Association, Trepp. Additional contributions to this report were made by William E. Hughes, Managing Director, Marcus & Millichap Capital Corporation.

§ Constraints on commercial real estate lending eased during the first half of 2010, a trend that should continue as more lenders re-enter the securitization market and life insurance companies pursue a broader range of deals. Unlike a year ago, financing has become available for properties over $10 million, and some lenders have re-engaged higher-quality, lower-risk transactions in noncore markets. In addition to greater availability of financing across property types, price ranges and markets, lenders also have increased loan-to-values (LTVs) on new loans by an average of 5 percent from last year. Despite these positive developments, potential borrowers continue to face tight underwriting standards and stringent lender requirements compared to historical standards.

§ While commercial mortgage originations during the first quarter remained depressed relative to figures reported from 2005 to 2007, conduits and life insurance companies drove up activity 12 percent from last year. During the first half of 2010, U.S. CMBS issuance reached $2.4 billion, approaching the 2009 total of $3 billion but still just a fraction of the $197 billion annual average reported from 2005 to 2007. Even when viewed against a less frothy period, such as 2000 to 2003, activity in the first half still pales by comparison. Recent CMBS issuance included multiple-borrower deals with subordinate tranches, a far cry from the ultra-safe, single-borrower transactions completed late last year, generating optimism the sector will soon offer increased liquidity.

§ New CMBS loans price in the 6.0 percent to 6.5 percent range for five-year mortgages, with lenders targeting deals of $10 million or more. While these interest rates may be at the higher end of the spectrum, CMBS borrowers can often negotiate 30-year repayment schedules versus an average of 25 years for life insurance companies, offsetting the impact of interest rates on monthly payments. In addition, LTVs for CMBS loans can push into the low- to mid-70 percent range, versus 65 percent to 70 percent for life insurance companies, assuming the debt-service coverage ratio (DSCR) still falls between 1.25x and 1.35x.

§ Next to the CMBS sector, life insurance companies made some of the most impressive headway over the past 12 months. This sector increased commercial mortgage originations by 131 percent during the year ending in the first quarter and recently began to compete more intensely for high-quality deals. While maintaining strict underwriting standards, life insurance companies have begun to actively pursue new business in major markets, increasing their scope to include nearly all price ranges and property types. This demonstrates a strategic shift from last year, when most life insurance companies focused on rewriting maturing loans already in their portfolios. As 2010 progresses, life insurance companies will increase lending as their commercial/multifamily portfolios outperform the broader marketplace; as of first quarter, this segment boasted a delinquency rate of just 0.31 percent.

§ Despite the recent delisting of Fannie Mae and Freddie Mac from the NYSE and expectations for government-mandated changes in the quarters ahead, their multifamily lending arms should remain operational, benefiting apartment investors. New loan originations by the GSEs slipped in early 2010 and may continue at depressed levels this year, however, due to a paucity of deals within their target criteria.

§ While commercial lending will increase this year, risks to this outlook remain. High and rising delinquency rates, particularly among commercial banks and within the CMBS sector, will drag on confidence. Maturities also pose significant challenges, as declining property values have turned many owners upside down on their mortgages, making it impossible to refinance without additional equity contributions. Approximately $535 billion of commercial mortgage debt will come due between 2010 and 2011, including $110 billion of CMBS. Of the CMBS loans slated for maturity during this period, more than 14.5 percent have DSCRs of 1.0x or less.