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Investment sales of retail properties surges 53%

BY Katherine Boccaccio

Investment sales volume of significant retail properties totaled $5.8 billion in the first quarter of 2011, up an astounding 53% from the same period in 2010. It is important to also note that the number of properties traded increased at a slower pace – by 25% – which means that properties are trading at comparatively higher prices.

Per-square-foot pricing, at $167, is at its highest level in two years and 31% higher than the trough in second quarter 2010. Cap rates are at their lowest level since 1980 ending the quarter at 7.6%.

According to Kris Cooper, managing director for Chicago-based Jones Lang LaSalle, most of this gain is attributable to the exceptional performance of strip centers, where sales doubled in volume during the quarter. Malls and other subtypes grew a comparatively 18% year over year. The market is attracted to grocery-anchored centers given their strong performance and resiliency.

New additions to the distressed market are slowing, with just under $2 billion in properties added in the last quarter, bringing total outstanding distress levels to $25.6 billion. Distressed asset sales rose from 10% of all retail sales in 2010 to 10% in first quarter 2011.

“It is interesting to note that as a result of improving investment conditions, many lenders are now choosing to liquidate loans rather than execute loan modifications or extensions,” said Cooper. “The proportion of retail workouts resulting in liquidations has risen to 30% in the first quarter, up from 26% from last quarter.”

Not all regions are experiencing the same levels of investment sales activity, Cooper said. The West region once again led retail property sales in the first quarter, with just under $2 billion. The Southeast was second with $1.03 billion in transactions, followed by the Northeast ($0.94b), Mid-Atlantic ($0.72b), Southwest ($0.58b), and Midwest ($0.52b).

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Blockbuster promotion makes the grade

BY CSA STAFF

MCKINNEY, Texas — Blockbuster announced that it is rewarding good students with its "Good Grades, Free Rental" program. Children in kindergarten through 12th grade who earn a B average or better on their report cards can head to participating Blockbuster stores nationwide to receive a free, one-day, non-new release movie rental.

"Blockbuster wants to help show students one of life’s great lessons: hard work has its rewards," said Kevin Lewis, chief marketing officer for Blockbuster. "We believe the ‘Good Grades, Free Rental’ program gives teachers and parents another tool to provide positive reinforcement to school-age kids."

Qualifying students are eligible each grading period for one free non-new release Blockbuster movie rental in DVD format.

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Report: Two firms team up for BJ’s buyout bid

BY Marianne Wilson

New York City — Two private equity firms are teaming up to make a bid to purchase BJ’s Wholesale Club, the New York Post reported.

Leonard Green & Partners and CVC Capital Partners are reportedly set to offer $2.8 billion to purchase the club retailer, according to the Post.

Rumors that BJ’s Wholesale could be sold have been circulating for months. In March, the chain revealed in an SEC filing that it entered into a "confidentiality agreement" with Leonard Green to evaluate a possible purchase.

A company representative for BJ’s Wholesale Club said it is not commenting on potential buyout discussions.

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