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Observations & Conversations
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Observations & Conversations Retail sales have been holding up during the Summer months. Let’s hope we have a strong back-to-school season. If Christmas shopping brings us some good tidings, perhaps all of us can stop eating out our kishkas about the news reports and focus on doing deals. Interesting times, that’s for sure. As I mentioned last month, The Dealmakers often gets calls starting out with the line “do you know anything about so and so?” Lately, more and more calls are coming in about situations involving potential buyers and lenders. Seems the finance end of the business has a few loose cannons running around mucking things up for the legitimate players. One particular lender has gotten my phone ringing frequently in the past few weeks. This lender likes to charge an up-front fee and once it collects the borrower’s ten grand, then they stop returning and taking the borrower’s calls. If I heard the problem just once, I would assume the borrower probably had a fluky deal, but I’ve been hearing the complaints repeatedly from several sources. My suggestion is don’t write a check to a lender before the loan is approved. Another call that caught my attention concerned a seller asking me about a potential buyer that had been in negotiations for months to sell a small portfolio. I’m estimating it was about a $15 million deal and the buyer is a privately-held REIT. The seller is a highly-reputable national firm, however I wasn’t familiar with the buyer’s company name and its CEO wasn’t in my database, which contains about 75,000 real estate people. So I called a few large real estate brokerage firms based in the same town as the REIT. None of them had heard of the company or the CEO. Of course, I googled and searched my usual round of “I Spy”-type web sites. De nada, zilch, zero background on the company or CEO. The only thing I could come up with was a few web sites ran by the REIT offering business services in another field and off-shore. I thought it was pretty weird that I couldn’t find any paperwork filed by the buyer, no zoning applications, nothing of public record anywhere. When I focused on the CEO, I couldn’t find a bio, press release, charitable or political donation, alumni or any type of membership. It’ll be interesting to see how this turns out. It reminds me of one of my first attempts at a deal. I had a meeting with a guy looking to open a restaurant. All of our negotiations had been over the phone and it was time for a face to face, since the tenant was looking for TI money. I must have requested a dozen times for financial statements and he finally agreed to bring them to the meeting. D-day comes and he drives up in a Silver Cloud Rolls Royce. We do the usual meet and greet, I get the statements and return to the office to check them out. Turns out, everything he had was hocked to the gills and even the Rolls was rented. Sharks like these must find a sucker at some point because they the never go extinct. Unfortunately for those of us that try to stay away from tangled webs of lies and deceit, we end up wasting time and money when a shark knocks on our door. Now, in the wisdom of middle-age, I’m much more cautious about who I do business with and if someone is reluctant to tell you who and what they are, then run as fast as you can. Retail sales have been holding up during the Summer months. Let’s hope we have a strong back-to-school season. If Christmas shopping brings us some good tidings, perhaps all of us can stop eating out our kishkas about the news reports and focus on doing deals. On the topic of retailers, Ted wrote in his column about his quest to buy a computer and that he bought it online. I’ve been on the hunt for a certain CD with Best Buy being sold out, Barnes & Noble didn’t even carry it and Amazon wasn’t shipping for a month. I ended up buying it at Target, whose store was well stocked with the new release. Go figure, for the life of me I’ll never understand how some companies can miss the mark so badly and still keep on doing business. I’m always on the look out for ways to find more retail chains for The Dealmakers to write about and for our directory of retailers, (check us out at www.TenantSearch.com ). Often, I’m the supply side for leads to TKO’s brokerage division. When we need to go after specific uses of local mom and pops, then we use a web site called Superpages.com. The web site shows you which retailers by use are in the market, how many locations and the distance from the site you’re trying to lease. Another web site that is supposed to launch a similar feature this month is Become.com. The web search engine was started in 2004 and is the only product-focused site that offers comparison shopping and research. Become.com is launching a feature listing 30,000 “Nearby Stores” with Yahoo! Maps showing each location of the retail chain, so merchants can expand their off-line and on-line presence and the shopper can locate the item at the closest store to them... I look at it as another source to find expanding retailers. Changing topics, the ICSC show last month in Boston was its usual good show with attendance up about 25% to 30%. Lots of new projects proposed for the New England market were being pitched at the show. Next year, if you’re working on projects any where in the Northeast then you should attend. Although the event is billed as New England, I’m seeing more folks from New York, New Jersey and Pennsylvania at the show. I also attended an event held by The Retail People, (www.theretailpeople.net). Its membership consists mainly of construction professionals and the people in charge of operations for retail chains (membership for retailers is free). The organization is aligned with Retail Construction Magazine. It holds monthly and bi-monthly informal networking events. I attended one in New York City and my hunch is that it drew about 300 people. The retailers were automatically entered into a raffle for cool electronic goodies and towards the end of the evening the retail winners stepped up to be introduced to the crowd and of course for a photo op. It was a good way to prove to the “house” that the girls really did show up for the party. The next few meetings are in Denver, St. Louis and Phoenix. If you’re in these markets, I suggest you check it out. My one-time experience... the booze was freely flowing, good food and the crowd was open to share ideas and compare notes. I saw a lot of competitors talking and very low key pitches for new business. Its not a networking that will bring you deals directly on the leasing/acquisition side of retail real estate, but you will hear about which retailers are opening new stores, because these are the people that are actually building them out, so they have an ear for new concepts coming out the ground, who’s not paying their bills, etc. (JD, thanks for the invite to The Retail People party.) My next soiree is at the ICSC Florida Dealmaking in Kissimmee and then in September, we’ll be at the ICSC shows in Chicago and Philadelphia. Be sure to stop by our booths and say hello.
Until next month, Ann O’Neal, Publisher |