REAL ESTATE

Specialty retailer files for bankruptcy—again; looks for rent breaks

BY Marianne Wilson

A footwear chain specializing in comfort shoes has filed for Chapter 11 protection for the second time in about 10 years.

The Walking Company Holdings Inc. filed for bankruptcy in the U.S. Bankruptcy Court in Delaware. It already had agreed to the terms of a Chapter 11 plan with its key creditors.

The retailer, which operates 208 stores, said that negotiations with its major landlords are already underway which will allow the company “to rationalize its lease portfolio of mall-based stores, bringing it in line with current market rents.”

Walking Company said its controlling shareholders have committed to $10 million equity investment, and it has obtained debtor-in-possession (DIP) financing from it lender, Wells Fargo Bank, for up to $50 million. Wells Fargo will provide “exit” financing that, in addition to the company’s ongoing cash from operations, will allow The Walking Company to move forward “as a substantially stronger company.”

“This recap is the final step in transforming The Walking Company into a more vertically integrated, omnichannel retailer that can not only survive but thrive in the current retail environment,” said CEO Andrew Feshbach. “The Walking Company has been very successful in developing its ABEO brand, which we have integrated with the sale of other leading comfort footwear brands from around the world. We also have made great progress in integrating our mall-based chain with our other channels of distribution, including Internet, wholesale sales to independent comfort shoe retailers, and international expansion.”

Walking Co. cited the loss of a contract from its largest vendor, Deckers Outdoor Corp., makers of UGGs, as among the reasons for recent troubles.

“As a result of the difficult environment for store-based retailing in 2017, Walking Co. could not replace the lost UGG sales fast enough,” Feshbach said in a court declaration.

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Reimagining the American Mall: Project profiles

BY Al Urbanski

It’s the worst-kept secret in retail real estate. Consultants preach it and researchers chart it.  Customer experience is No. 1; shopping is No. 2. Eateries and entertainment brands are desired, department stores are repurposed.

A recent study from A.T. Kearney relabeled shopping centers and malls of the 21st century as customer engagement spaces. A survey of 81 leading malls by JLL found that adding new food and beverage options was top of the list of the biggest changes being made. And more than half of those properties were linking dining innovations to new entertainment concepts.

Chain Store Age spoke to three operators of those big regionals to find out how they are rethinking them and remaking them.

Below are three profiles of projects in various stages of development from Starwood, PREIT, and CBL.


 

American Mall — Fashion District Philadelphia

Fashion District Philadelphia

  • Location: 9th Street and Market Street, Philadelphia
  • Size: 838,000 sq. ft.
  • Developer and owner: Joint venture between PREIT and Macerich
  • Key tenants added in past two years: Current: Century 21 and Burlington. Key announced leases: AMC Theatres, H&M, Columbia Sportswear, Levi Strauss & Co., Wills Eye Hospital, Skechers, Francesca’s Collection, and Market Eats — an upscale, commuter-positioned food court
  • How this property has been reimagined: Situated on top of a bustling regional rail hub that transports more than 22 million people each year, the new Fashion District Philadelphia is just steps away from the Philadelphia Convention Center, Independence Hall, and Reading Terminal Market — attractions that draw 42 million people each year. Originally planned as an outlet center, it changed its name last year to better reflect the demand from a broad mix of uses.

Not a traditional mall, this outward-facing cityscape will be the region’s first metropolitan shopping destination that combines flagship brands and designer outlets with dining, entertainment and art experiences. This strategic leasing approach will help create a more curated retail experience for commuters, city residents and tourists — all in one convenient location.


 

American Mall — CoolSprings Galleria

CoolSprings Galleria

  • Location: Nashville, Tenn.
  • Size: 1,141,685 sq. ft.
  • Developer and owner: Owned in a joint venture between CBL Properties and TIAA-CREF
  • Key tenants added in the past two years: Kings Dining & Entertainment, The Cheesecake Factory, ULTA Beauty, American Girl, H&M, Connors Steak & Seafood, Kona Grill, and Rock Creek. California Pizza Kitchen will open in 2018 and will include a bar that extends into the common area.
  • How this property has been reimagined: CBL pro-actively purchased the Sears store at CoolSprings Galleria and embarked on a multi-million dollar redevelopment project. CBL transformed the former Sears building into a dining, entertainment, and experiential retail destination that includes Kings Dining & Entertainment, American Girl, Rock Creek, H&M, Kona Grill, and Connors Steak and Seafood. The redevelopment culminated with a multi-million dollar renovation of the entire property. CBL continues to evolve the tenant mix with a focus on regional boutique offerings, including Altar’d State, as well as a rotating line-up of local pop-up shops.

In late 2018, CoolSprings Galleria will welcome a new prototype California Pizza Kitchen that features a bar that extends into the common area. CBL is also evaluating the best ways to extend the customer experience in the common area by offering live music with up-and-coming Nashville singers and songwriters and through partnerships with several community organizations to host regular events.


 

American Mall — The Shops at Willow Bend

The Shops at Willow Bend

  • Location: 6121 West Park Blvd., Plano, Texas
  • Size: 1,200,000 sq. ft.
  • Developer and owner: Starwood Retail Partners
  • Key tenants added in the past two years: Plano Children’s Theatre, Evereve, Journeys, and Francesca’s. Coming in March: Crayola Experience (one of just four in the United States).
    Opening in the fall: Knife, a steakhouse by celebrity chef John Tesar, Mexican Bar Company, and Dallas favorites Terra Mediterranean and Whistle Britches. Equinox fitness center will open in late 2018.
  • How this property been reimagined: It is making the transition from beloved local mall to town core. The $125 million reimagining of The Shops at Willow Bend will include new uses designed to create a true town center atmosphere for the entire family. A long-vacant anchor is being transformed into a street of chef-driven restaurants, quick-service and other eateries to serve a variety of palates. The property also will be reoriented for greater visibility from the Dallas North Tollway. An Equinox fitness center will provide personalized training and spa services to all who live and work in the area.

Perhaps the greatest change is The Shops’ focus around children and experience. Newly opened is the Plano Children’s Theatre, the flagship location for North Texas Performing Arts, offering classes, workshops and performances for youth ages 3 to 18. Also geared toward the entire family will be the Crayola Experience, one of just four in the United States, where the young and young at heart can indulge their inner artists. A luxury cinema will be announced shortly. Future plans include a 200,000-sq.-ft. Class A office building, completing the transition of this upscale mall into a mixed-use community that will serve guests and office workers from early morning until well into the evening.

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D.Jordan says:
Mar-31-2018 06:11 pm

I just wish I could get these guys to take a look at our Charleston Town Center in West Virginia. QIC was going to purchase and let it go at the last minute. . .I believe. Our Civic Center is coming along just fine, across the street, after putting 26 million into it. Give me a call or email, and I'll be more than happy to show anyone around our City. After being in San Antonio for a week, I saw new possibilities for this City situated on two riverfronts. Duke Jordan, Berkshire Hathaway [email protected] 304 415-0607

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American Mall
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Reimagining the American Mall

BY Al Urbanski

It’s the worst-kept secret in retail real estate. Consultants preach it and researchers chart it.  Customer experience is No. 1; shopping is No. 2. Eateries and entertainment brands are desired, department stores are repurposed.

A recent study from A.T. Kearney relabeled shopping centers and malls of the 21st century as customer engagement spaces. A survey of 81 leading malls by JLL found that adding new food and beverage options was top of the list of the biggest changes being made. And more than half of those properties were linking dining innovations to new entertainment concepts.

Chain Store Age spoke to three operators of those big regionals to find out how they are rethinking them and remaking them. Jeff Zeigler, a mixed-use expert who recently joined Starwood Retail Partners as COO, is on a nationwide tour, assessing what must remain and what must be added at the 30 properties now under his guardianship. CBL Properties president and CEO Stephen Lebovitz is reconstituting department store spaces and forging ever-closer ties with local communities. Joseph Coradino, CEO of PREIT, has been zealously remaking the company’s network of market-dominant regional malls for the past five years, effecting wholesale change in the process.

At the close of 2012, PREIT malls housed a total of 83 Macy’s, J.C. Penney, and Sears stores. Now, 45 of those spaces have been reclaimed by PREIT and reconfigured with on-trend formats such as off-price, entertainment, fitness, fast-fashion, and sporting goods. Dick’s Sporting Goods and Field & Stream moved into vacated department store space at the Viewmont and Capital City Malls. Tilt took up residence in the Patrick Henry and Valley Mall properties. H&M has shown keen interest in PREIT’s vacancies, opening at three of the company’s malls — Magnolia, Wyoming Valley, and Dartmouth.

Coradino appears pleased with the part PREIT is playing in the reimagining of the American mall.

“We think our results are really proving out our thesis that it’s not about quantity, it’s about quality,” Coradino said. “Think about it — we have replaced 10 of 11 department stores and are at lease on the last one. The underperforming legacy tenants that have vacated are creating opportunities to redefine the mall environment in a more diverse and exciting way.”

PREIT tracks its progress with cold, hard numbers, not by how many chef-driven restaurants or Legolands are now doing business in Macy’s former ready-to-wear department. The number that Coradino is focused on is 500. That’s the average sales dollars per square foot figure he is aiming for portfolio-wide.

“We reported very strong same-store net operating income results in Q3 and really think our being ahead of the curve on both dispositions and anchor replacements has a benefit to us as we move into 2018,” Coradino said. “As for sales per square foot, we have made it to $475 — well on our way to our goal.”

Owner and operator of 63 enclosed malls nationwide, CBL is on a similar path as PREIT, remaking the experience at malls that have long been shopping magnets in places such as Chattanooga, Tenn., Huntsville, Ala., and Brownsville, Texas. Company chief Lebovitz grew up in the mall business founded in 1978 by his father Charles (CBL carries his initials), and he’s on record as saying that department store closings present an opportunity to developers and a new breed of retailers.

“We have done redevelopments at over 41 properties, either recently completed or underway,” Lebovitz said. “A lot of them have been taking back Sears and Macy’s and Penneys and bringing in Dick’s, Ulta, T.J. Maxx, Gold’s Gym, and The Cheesecake Factory. As part of future redevelopments we’re looking to add more destination tenants like Dave & Busters, Round 1, or Marcus Theaters.”

A former Sears store at CoolSprings Galleria in Nashville could serve as a prototype for the mega trend in mall metamorphosis. CBL purchased the department store and converted it into food-and-fun center populated by Kings Dining & Entertainment, Kona Grill, Connors Steak & Seafood, H&M, and American Girl. Coming soon at CoolSprings is a new California Pizza Kitchen format that features a bar extending into the common area.

Engaging with the local community — another prescription of retail consultants — is something CBL has long done and is now amping up. This past Christmas, CBL launched a ground-breaking  program called Santa Cares, which was in partnership with autism organizations. Malls opened their Santa centers to families with autistic children prior to regular opening hours to give the kids a chance to visit Santa in a low-sensory environment.

“Most of our malls are the only mall or the dominant mall in their market and play a significant role in the community,” Lebovitz said. “Shopping is just one piece of the experience.”

One of the big changes in the mall business last year is a change that took place at the headquarters of Starwood Retail Partners, where industry veteran Scott Wolstein handed the reins to new CEO Michael Glimcher. In short order, Glimcher hired Jeff Zeigler, who cut his teeth at Westfield, worked on Easton in Columbus, Ohio, for Steiner, and most recently developed mixed-use projects at Oliver McMillan. Zeigler made his debut with Starwood at the ICSC New York Deal Making show in December, then packed his bags and set off on a tour aimed at visiting every one of Starwood’s properties.

“What we have are 30 local developments that we are tailoring to the local communities we’re dependent on,” Zeigler said. “So what we’re doing that’s really different from what was done in the past is skewing our mix to that audience and envisioning more of a regional than a national mix of tenants.”

A perfect example of that thinking was installing the Plano Children’s Theatre at The Shops at Willow Bend in Plano, Texas. When Hudson’s Bay decided to exit the Texas market a few years ago, Willow Bend lost anchors Saks Fifth Avenue and Lord & Taylor. Starwood tore down the Saks building and put Crate & Barrel and Restoration Hardware in its place. Unique dining options are to follow in the fall when a dining district opens with Whistle Britches, Mexican Bar Company, and Knife, a steakhouse from celebrity chef John Tesar. Also in the plans is a 200,000-sq.-ft. office building.

“We don’t want to think about these as retail-only assets,” Zeigler said. “These properties need diversification of uses. More entertainment. More food and beverage. More green spaces.  Mixed-use and diversification is the order of the day.”

Zeigler is convinced that malls can take part in the live-work-play strategy driving most big, new retail projects. He is not alone. JLL’s mall study noted that 40% of top malls are adding residential space and 33% are building hotels.


Check out project profiles for Starwood, PREIT, and CBL.

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