Insights

Stockholders approve Inland-Kite merger

BY Michael Fickes

Oak Brook, Ill. — Inland Diversified Real Estate Trust stockholders have voted overwhelmingly to approve the previously announced merger with Kite Realty Group Trust. Assuming all conditions to closing the merger have been satisfied, it is expected to close on or after July 1, 2014.

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REAL ESTATE

Levin’s mid-year survey reports optimism among retailers

BY Michael Fickes

North Plainfield, N.J.Levin Management has released its annual June survey of store mangers within its 95-property, 13 million-sq. ft. shopping center portfolio.

According to the survey, 58.2% of respondents believe that adverse weather conditions during the first months of the year had a negative impact on sales. Even so, the U.S. Census Bureau reported that total retail sales for the period of March through May 2014 rose 4.3% from the same period a year ago.

Memorial Day weekend sales were up, with 49.5% of the store managers reporting sales the same or better than last year, up from 37.5% in the 2013 survey.

Looking forward, retailers report a positive outlook for the rest of 2014. More than half — 52% — of Levin’s respondents believe that sales will improve in the coming months. This represents a significant jump over last year’s survey, in which only 34.5% anticipated improving sales. Another 16.3% anticipate that sales will remain about the same during the second half of the year.

Hiring trends among the survey respondents mirror last year. Just over 33% in the mid-year 2014 and mid-year 2013 surveys indicated that they have increased store staff since January. Nearly 28% plan to add jobs during the second half of the year.

Store expansion plans are on the rise, too. At mid-year, 30.6% of respondents indicated that their company has or will open new stores in 2014, up significantly from 23.3% in 2013.

Technology has become important to Levin’s survey respondents. A vast majority — 86.5% — indicated active use of mobile apps, social media, email, texting and other tools to attract customers. That percentage is up slightly from the 85.1% of respondents in the 2013 survey. That said, a full 68.4% said they have increased technology use over the past year.

Levin will conduct its next retail sentiment survey in the fall, prior to the holiday shopping season.

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News

Barnes & Noble to separate from Nook Media

BY CSA STAFF

The Barnes & Noble board has given the company the green light to separate its retail and Nook Media businesses to optimize shareholder value.

The company anticipates completing the separation of the businesses into two separate public companies by the end of the first quarter next year.

“In fiscal 2014 we have taken certain actions to strengthen the company, including the ongoing rationalization of the Nook business, growing the college business through new contract acquisitions and increased offerings to students and faculty, and initiatives to improve retail’s sales trends,” said CEO Michael P. Huseby. “Our fiscal 2014 results and solid financial position at year-end reflect the positive impact of those actions. We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of Nook Media and Barnes & Noble retail. We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately. We fully expect that our retail and Nook Media businesses will continue to have long-term, successful business relationships with each other after separation.”

The company has engaged Guggenheim Securities, LLC as financial advisers and Cravath, Swaine & Moore LLP as legal counsel.

The move to separate from its Nook business, which reportedly sent shares up about 9%, came as the company reported fourth-quarter results for the period ended May 3. The company narrowed its net loss to $36.7 million from $114.8 million for the prior-year quarter. Revenue increased 3.5% to $1.3 billion.

“We’re pleased with our improved financial performance in fiscal 2014, generating EBITDA of $251 million, the highest it’s been in four years, while executing on our strategic initiatives during the year,” said Huseby. “Retail improved sales trends during the second half of the year, generating annual EBITDA of $354 million. College increased revenues from higher margin textbook rentals, continued to add new school contracts and developed and soft-launched Yuzu, our digital education platform, growing EBITDA to $115 million. At Nook, we executed on our plan to sell through existing device inventory, implemented cost rationalization plans, began to pivot our strategy from device focused initiatives to a content centric approach with the signing of our partnership with Samsung, all while significantly reducing year-over-year losses.”

Looking ahead, the company expects both retail comparable bookstore sales and core comparable bookstore sales to decline in the low-single digits. College comparable store sales are also expected to decline in the low-single digits. The company expects to continue to decrease EBITDA losses in the Nook segment.

Barnes & Noble added that there can be no assurances regarding the ultimate timing of the proposed separation or that such separation will be completed. Any separation of NooK Media and Barnes & Noble retail into two separate public companies will be subject to customary regulatory approvals, securing any necessary financing, tax considerations, final approval of the Barnes & Noble board of directors and other customary matters and is dependent on numerous factors that include the macroeconomic environment, credit markets and equity markets.

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