REAL ESTATE

CEO, CFO and two others resign following audit committee review

BY Melonie Messina

New York — Brixmor Property Group announced today that it has named Daniel Hurwitz, former CEO of DDR Corp. and the founder and CEO of Raider Hill Advisors as Interim CEO, effective immediately. Hurwitz will also be appointed to serve on the company's board of directors.

The company also announced that CEO Michael Carroll, president and CFO Michael Pappagallo, and chief accounting officer Steven Splain, along with an accounting employee, have resigned, effective immediately. Carroll has also stepped down from the company's board of directors.

These management changes follow the completion of an audit committee review of a Non-GAAP financial reporting measure that began after the company received information in late December 2015 through its established compliance processes. The review led the board to conclude that specific company accounting and financial reporting personnel, in certain instances, were smoothing income items, both up and down, between reporting periods in an effort to achieve consistent quarterly same property net operating income ("same property NOI") growth, an industry non-GAAP financial measure.

Brixmor believes the amounts involved were not material to non-GAAP same property NOI or the company's GAAP financial results. The company believes it will not be required to restate historical financial results and that this matter will not impact the company's compliance with the financial covenants in its debt agreements. Final determinations on these matters remain subject to the completion of the 2015 audit and the filing of the company's Form 10-K. The company believes this does not impact the financial strength or prospects of the company.

John Schreiber, chairman of the Brixmor board, stated: "The board is disappointed to have learned of the conduct and lack of appropriate management supervision uncovered as a result of the audit committee review. Once the facts were known, we moved swiftly to take remedial action. We are fortunate to be able to bring in a seasoned real estate executive of Dan Hurwitz's caliber, who can lead the company through this period and effectively manage our portfolio as we move to identify a new CEO and CFO."

Michael Berman, chairman of the Brixmor Audit Committee, stated, "While the board believes this issue does not materially impact our previously reported results, we also believe the integrity of our financial reporting is paramount. We have voluntarily reported this matter to the SEC."

The table below is based on unaudited information prepared for the Audit Committee by the independent forensic accounting firm engaged to assist with the review. It includes year over year growth percentages for same property NOI as originally reported by the company and as updated in connection with the Audit Committee's review.

The company expects to meet its previously announced guidance for 2015 FFO attributable to stockholders and non-controlling interests convertible into common stock per common share – diluted of $1.96 – $1.98. In addition, the company announced that the board has declared a quarterly cash dividend of $0.245 per common share (equivalent to $0.98 per annum) for the first quarter of 2016. This is the same quarterly cash dividend amount paid last quarter. The dividend is payable on April 15, 2016 to stockholders of record on April 5, 2016, representing an ex-dividend date of April 1, 2016.

Brixmor is rescheduling its 2015 fourth quarter earnings announcement, originally scheduled for today, February 8, 2016 and now expects to release full year 2015 fourth quarter results and 2016 guidance on Monday, February 29, 2016.

The board and its outside advisors are continuing to assess whether any further remediation is appropriate with respect to the company's internal reporting controls and procedures. The company currently expects to file its Form 10-K for the year ending December 31, 2015 within the period prescribed by applicable SEC regulations.

Prior to founding Raider Hill Advisors, LLC, Hurwitz spent five years as CEO of DDR Corp. where he led the execution of a strategic vision that resulted in the full transformation of key management positions, the complete upgrade of portfolio quality and its cash flow credit profile, the revival and stabilization of a distressed balance sheet, and establishment of market credibility from the investment community. Based on the results, Hurwitz was voted by sell-side analysts as the Best CEO in the REIT Sector in the 2013 Institutional Investor Magazine All-America Team. Hurwitz is a member of the board of directors of General Growth Properties, a member of International Council of Shopping Centers (ICSC) and a former member of the ICSC Board of Trustees Executive Committee. He also previously served as a member of the NAREIT Executive board of governors, and Governance Committee in addition to the Board of Directors of DDR Corp., CubeSmart, Sonae Sierra Brasil, SA and Boscovs Department Store, Inc. Hurwitz is a graduate of Colgate University and currently serves as chairman of the Colgate University Board of Trustees.

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REAL ESTATE

Northern Tool + Equipment to open second location in Louisiana

BY Melonie Messina

Houma, La. — X Team International announced that partners Venture Commercial Real Estate and SRSA Commercial Real Estate completed a 20,023 sq. ft. lease for Northern Tool + Equipment in Houma, Louisiana, at the Houma Power Center.

This location will be Northern Tool + Equipment’s second in Louisiana, and will join a strong tenant mix including: Old Navy, Burkes Outlet, Shoe Carnival and Pier 1 Imports.

Clay Mote, master broker for Northern Tool + Equipment and Kirsten Early of SRSA Commercial represented Northern Tool + Equipment. Austin Lavin of Corporate Realty represented the landlord, Andrew Associates, LLC.

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MARKETING/SOCIAL MEDIA

Five trends that point to a new era for retail

BY Marianne Wilson

Stores that double as classrooms, sensory-rich environments and a rental versus a buy retail model. These are three of the five trends that shopping center developer Westfield believes will shape the future of retailing.

The trends are highlighted in a new report from Westfield, "How We Shop Now: What's Next?," for which the developer interviewed 13,000 shoppers across the United States and United Kingdom along with leading industry experts and trend-spotters.

The five key trends are:

• Rental Retail: With consumers already accustomed to the 'sharing economy' by tapping into Uber for rides, and Airbnb for places to stay, there is a growing appetite for “rental retail.” The trend is particularly strong among millennials, with 35% of 25-34 years olds interested in renting.

In addition, 15% of all U.S. respondents are interested in renting from their favorite stores. And 0ne-fifth of U.S. and U.K. shoppers are willing to spend $200 or more a month on unlimited clothing rental subscriptions.

Ads to what type of goods people most want to rent, exercise equipment topped the list (17%), followed by consumer electronics (15%), furniture (11%) and cars (10%).

• Enhanced Reality Retail: The report predicts that virtual reality will become ubiquitous as shoppers increasingly want this technology to understand how products will work for them specifically.

Forty-two percent of U.S. shoppers said they would like to use new technologies, such as virtual reality headsets, to see how products will look in their home. And a third said they would be interested in using virtual assistance to “try on” clothes at home.

• Classroom Retail: Shoppers are increasingly seeing retail spaces not only as places to purchase goods, but as classrooms where they can learn new skills and build social networks. Thirty-two percent of shoppers are interested in attending a lifestyle lesson at their favorite store.

Shoppers in the U.S. want health or fitness sessions most (29%), followed by inspiring learning sessions such as creative cookery (27%), expert sessions (20%) and then clubs (17%).

Over a fifth of U.S. shoppers in New York (22%), Los Angeles (23%), San Francisco (22%) and San Diego (21%) are interested in sessions involving skills development such as music making.

• Sensory Retail: Shoppers want to overload their senses with extraordinary experiences that re-awaken all of their senses, all at once, according to the report, which is something that Westfield calls “inside-out retail.”

While all five senses were seen as enhancing the shopper experience, vision and touch came out top. But just under a third of shoppers also identified smell and sound.

• Loyalty Programs that Recognize Good Choices: According to the report, there is a growing demand for loyalty programs that not only reward customers for transactions, but also for lifestyle choices. More than a fifth (21%) of U.S. shoppers said they would like to also be rewarded for good choices, including recycling (23%), exercising (23%), spending time with family (20%) eating healthier (16%), and even charity volunteering (11%).

The youngest, 16-24 year olds, were most interested in getting rewards for non-transactional behaviors.

The report is available to download here.

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D.Girish says:
Feb-18-2016 03:09 am

Interesting read, Marianne. I
Interesting read, Marianne. I particularly liked the idea of integrating loyalty programs with lifestyle choices - what a great technique of improving on personalization. I'm sure it will work really well for products that are tied to healthcare - like sport shoes, sport wear etc. With the advent of wearable tech and its popularity among consumers, this is definitely something that brands are going to adopt extensively in near future. One of the technologies that could help with this is iBeacon technology. Particularly because of its ability to tie data together across various channels of interaction. Yet even today, many retailers struggle a lot when it comes to kickstarting their iBeacon project. We have discussed in detail about the 3 critical components of a successful beacon strategy for retailers here: http://blog.beaconstac.com/2015/05/3-critical-components-of-your-ibeacon-retail-strategy-2/

D.Girish says:
Feb-18-2016 03:09 am

Interesting read, Marianne. I particularly liked the idea of integrating loyalty programs with lifestyle choices - what a great technique of improving on personalization. I'm sure it will work really well for products that are tied to healthcare - like sport shoes, sport wear etc. With the advent of wearable tech and its popularity among consumers, this is definitely something that brands are going to adopt extensively in near future. One of the technologies that could help with this is iBeacon technology. Particularly because of its ability to tie data together across various channels of interaction. Yet even today, many retailers struggle a lot when it comes to kickstarting their iBeacon project. We have discussed in detail about the 3 critical components of a successful beacon strategy for retailers here: http://blog.beaconstac.com/2015/05/3-critical-components-of-your-ibeacon-retail-strategy-2/

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