Issue 27 | November 2017

Perspectives


Let's Meet in NY

Since 1981, retailers have relied on RCS to light their way through stormy markets. Our extensive expertise allows us to restructure, optimize, manage and grow our clients' real estate portfolios.

Contact us to schedule a meeting at the NY ICSC Deal Making or stop by our new Booth 2969

RCS
In This Issue

2018 Outlook

Payless Emerges from Chapter 11

RCS Announces New Clients

RCS Renegotiates 1,560 Leases in 4 Months


Ivan Friedman

Ivan Friedman
President and CEO
RCS Real Estate Advisors


2018 Outlook

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.

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Payless Logo Congratulations Payless!

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.

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RCS Announces New Clients

We are Proud to Announce the Addition of Several
New Clients, Including:

vitamin world Logo Vitamin 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 channels.”

bravo Logo Bravo 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.

bebe Logo Bebe – 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 days.

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RCS Logo BANDWIDTH: 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.

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Contact Us

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 info@rcsrealestate.com

 

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Perspectives is a quarterly newsletter for current and prospective clients.
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