President and CEO
RCS Real Estate Advisors
No Signs of Stopping
At the end of 2015 I commented on how the trends I was seeing indicated that 2016
could end up being as difficult for retailers as 2008. It turns out 2016 was indeed
a lot like 2008. There were numerous large bankruptcies and many retailers struggled
with misaligned occupancy costs as a result of lower sales.
Last year I commented that we had seen this movie before. With more of the same that
we saw in 2016, 2017 was looking to be very much like 2009. Well it turns out I was
off in my prediction – 2017 ended up worse than I expected. By my estimation, retail
stress was more than 20% worse in 2017 than it was in 2016.
Unless there is a
miraculous turnaround in mall-based retail sales, we expect more of the same in 2018
and for the foreseeable future thereafter.
The death of brick and mortar is
highly overrated, we feel there will always be a strong need for it. However, that
need will lessen. Most of the major retail companies we analyzed have a 15-25%
excess in their number of stores. Therefore, we expect the “retail apocalypse” to
continue for the next few years.
RCS Real Estate Advisors congratulates our client Payless ShoeSource for being among
the few to successfully complete the legal restructuring process among the many
companies that sought bankruptcy protection since the start of 2016.
Payless emerged from bankruptcy court protection after shedding more than $435
million in debt and closing approximately 673 stores.
“We have accomplished our goals of strengthening our balance sheet and restructuring
our debt load, positioning Payless to create substantial value for our stakeholders
and achieve long-term success,” CEO, Paul Jones said in a formal statement.
RCS is pleased to have operated as real estate advisor to Payless ShoeSource and to
have been a key part of their successful efforts to restructure.
We are Proud to Announce the Addition of Several
New Clients, Including:
World – The premier nutrition-driven vitamin supplements company filed
bankruptcy in order to exit real estate leases that were negotiated by its previous
owners. Vitamin World retained RCS as their real estate consultant to reduce
occupancy costs at the locations in which they plan to continue operating. Vitamin
World CEO, Michael Madden, said in a statement, “This action will empower us to move
forward as a stronger organization that can and will continue to serve our millions
of loyal customers with premium offerings via retail and online
Brio – The parent company of Bravo! Cucina Italiana and Brio Tuscan Grill
tapped RCS to help them reduce occupancy costs at restaurants across their portfolio
where there was a misalignment of these costs relative to sales.
– This well known global specialty retailer retained RCS to help them evaluate
options for their lease holdings as part of a review of their strategic
alternatives. Subsequently, RCS completed the reorganization by securing lease
terminations for 175 stores without filing Chapter 11. This was accomplished in 60
RCS Renegotiates 1,550 Leases in 4 Months…Wow!!
Hats off to the RCS team for completing the restructuring of over 1,500 leases for
our client Payless, who entered and exited bankruptcy in 4 months. This included an
analysis of the portfolio, setting goals, negotiating deals, and obtaining fully
executed documentation for this portfolio of primarily one-off landlords.
Plus, RCS is unique in our ability to have accomplished this solely with our own
full-time employees. No third-party, outsourced “consultants” were retained.
If this sounds like the kind of bandwidth that can help you, give us a call.
To find out more about how RCS Real Estate Advisors can help you unlock more of the value within
your retail real estate, contact Mitchel Friedman, Senior Vice President and Director of Business
Development and Corporate Strategy at 212.300.5373 or [email protected]