San Francisco, California – The NNN Lease properties updates for the day starts with the world class Fairmont Hotel. A consortium of investors led by an affiliate of Oaktree Capital Management L.P., as well as individual investor Michael Rosenfeld and his Woodridge Capital Partners LLC went through with the purchase. These Commercial Real estate Investors paid $200 million to purchase the iconic Fairmont San Francisco hotel. The property was acquired from a joint venture of Maritz, Wolff & Co. and Kingdom Holding, which has owned the location since 1998. Kingdom will be retaining its interest in the hotel. Those of us who have stayed at the Fairmont will be satisfied to hear that Fairmont Hotels & Resorts, based in Toronto, will continue day-to-day management.
San Francisco Commercial Real Estate Investments
The hotel was opened in 1907 after being damaged in the 1906 San Francisco earthquake. It served as a base for myriad meetings and conventions throughout its history, including a 1945 summit that served as the basis for the creation of the United Nations. In 2002, the Fairmont was placed on the National Register of Historic Places.
The hospitality industry is looking to gain steam in 2012. A May 2012 report by CBRE Group Inc. noted that, for full-service hotels, room revenue multipliers increased “fairly dramatically” from 3.42 to 4.46 between 2009 and 2011. The re-emergence of hotel REITs as active buyers, the resurgence of hotel lending, and a continued lack of supply growth fuel this sector of commercial real estate. While occupancy increases drove RevPAR growth over the last 18 months, gains have shifted to ADR and as this trend continues hotel profits will increase rapidly, resulting in strong profit growth for owners and increased opportunities to sell assets.”
California Properties and Luxury Hotel Market
The Fairmont features 591 rooms and more than 55,000 square feet of conference space. The Fairmont San Francisco hotel has a rich history, elegance and beauty which make it a one-of-a-kind property. This type of Commercial Real Estate whether NNN or not cannot be replicated today. .
Ascena Retail Group to Acquire Charming Shoppes for $890 Million
In what can only be described as a plus-size deal, Ascena Retail Group Inc. and Charming Shoppes Inc. have entered into a definitive agreement under which Ascena will acquire Charming Shoppes, the companies jointly announced Wednesday. The cash transaction, described by the parties as involving a “highly compelling strategic fit,” is valued at about $890 million.
Ascena will make a cash tender offer of $7.35 per share for all outstanding shares of Charming Shoppes common stock, which represents a 25 percent premium to the closing market price of Charming Shoppes common stock on May 1. The offer is expected to begin within 10 business days, and subject to the usual conditions and approvals, the acquisition is expected to close in the second quarter.
Retail Properties and Distressed Commercial Real Estate
BofA Merrill Lynch is acting as financial advisor and Proskauer Rose L.L.P. as legal advisors for Ascena. Barclays is acting as financial advisor and Drinker Biddle & Reath L.L.P. and Schulte Roth & Zabel L.L.P. as legal advisors to Charming Shoppes.
Founded in 1940, Charming Shoppes, of Bensalem, Pa., specializes in women’s plus-size apparel through its Lane Bryant, Catherines and Fashion Bug chains, totaling 1,832 retail stores nationwide. In addition to store-branded e-commerce websites, the company also operates Figi’s, a direct-marketing business. For its part, Ascena focuses on value-priced apparel for women and tween girls through more than 2,500 stores in the United States, Puerto Rico and Canada: Dressbarn (836 stores), Maurices (810 stores) and Justice (920 stores).
Slow Economy and Distressed Commercial Properties
It isn’t just the overall economy that’s been putting the squeeze on Charming Shoppes, there are other factors. More specifically, the company made some less-than-optimal site decisions before the recession, putting, for example, substantial numbers of Fashion Bug and Lane Bryant stores into power centers, which have since been plagued by “go-dark anchors.”
Distressed Real Estate in Florida and Beyond
With Mervyn’s 2008 bankruptcy, Circuit City’s 2009 liquidation and the bankruptcy last year of Borders, it has been difficult years for NNN retail power centers. Although power centers are a cheaper option than malls, sales were too low at many Charming Shoppes stores as anchor locations went vacant and power center traffic dropped. The company’s mall stores, especially Lane Bryant, seem to be doing better with recent reports.
