News
WHITHER DISTRESS?
November 10, 2010
| Are you ready for tranche warfare? One major retail landlord says that's what may be in the cards for 2011. | |
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| We tracked down DLC Management Corp.'s Daniel Taub after he said real estate investors expected a ?wave of distressed opportunities? that never really materialized. It's because of the blend-and-extend phenomenon, with lenders putting off foreclosures to give market dynamics time to improve. But Daniel says that can't go on forever, and when the pressure mounts, tranche owners will begin to go after each other, throwing commercial properties into greater distress. ?I think it may involve tranche warfare between the A and the B [retail property lenders] in the tranche stack,? he says. Daniel's comments came during a panel discussion on the capital markets during yesterday's Southeast Conference of the ICSC at Cobb Galleria. | |
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| Daniel, right, was joined by Regency Centers' Barry Argalas, Equity One's Tom Caputo, AEW Capital Management's George Fryer, and Holliday Fenoglio Fowler's Richard Reid. Tom agreed that there's been a dearth of distressed real estate, but expects that it will take the form of discounted payoffs (or quick sales at a loss). All the distress that we thought would be there is coming back and it's DPO, he says. (His firm is already working on two.) As for the future of the tepid economic recovery, George worries about the value of the dollar combined with government debt and the recently executed QE2 program by the Fed, all of which have a potential to spike inflation: ?If we have a weakening currency combined with monetary inflation without the attendant economic growth—that's stagflation.? | |
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| Gar Herring took to the stump during ICSC's luncheon to offer glimmers of hope, including stats that say distress among retail shopping center owners is finally lessening. Gar, ICSC's southern division VP (and Dallas-based MG Herring Group prez), says the number of properties with occupancy below 80% declined for the first time in Q3 since the Great Recession began—a sign that distress is abating. And Gar says a number of retailers have announced new store growth over the next 24 months, including Dollar General with 1,200 new stores, GameStop with 1000 new stores, Burger King with 500 new locations, and Quiznos with 1,200 new eateries. Gar also suggests landlords take new routes to improve retail center traffic: adding local retailers and ?local flavor,?shorter leases, and increasing the number of restaurants in the tenant ratio: ?The more food you have, the more people come there more often.? | |
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| We caught Position Property Group's Ryan Eastman doing his conqueror pose at ICSC's ?Meet the Retailers? program. Ryan handles real estate for Genghis Grill, a Dallas-based, Asian-themed restaurant chain that is just now entering the Atlanta market. It opened its first metro location near the Mall of Georgia. But Ryan says the owners of Genghis see metro Atlanta as ?another Dallas-Fort Worth for us,? where they have 19 locations. In the next year, Ryan is seeking up to 15 new metro Atlanta locations, and is already on track to open Genghis restaurants in Central Perimeter at 1165 Perimeter Center West and in Brookwood Square in Buckhead. Beyond Atlanta, the restaurant is seeking nearly a dozen locations in Orlando and more in South Florida, like the Miami area. |
