CONTENTS

April 2007

• FEATURES
• A place in history
• Can retail centers and historic areas thrive together? By Joel Groover
• Brimming with success
• U.S. malls are struggling to find space for new concepts. By Curt Hazlett
• REITs for hire
• Retail REITs are capitalizing on management skills through partnerships with institutional investors. By Steve McLinden
• Tesco’s growing pains
• Critics complain about Tesco’s growing dominance, but that same growth is helping keep prices low, the U.K. hypermarket counters. By Curt Hazlett
• No smoking, por favor
• Mall landlords and tenants are weighing the impact as Latin America’s governments increasingly restrict smoking in public places. By María Bird Picó
• Brazil bound
• Global investors find big returns in Brazil’s property market. By María Bird Picó
• Mexico’s great leap forward
• Mexico’s expanding economy makes it ripe for retail development of epic proportions, local experts say. By Edmund Mander




• DEPARTMENTS
• Center Stage
• Explore the world’s third-largest mall



• The Common Area
• Inside the Simon-Mills deal and more



• Retailing Today - Profiles of promising tenants
• Fruit of the vine
• Retailers have started capitalizing on Americans’ increased fondness for fine wines.
• Bean counter
• Outdoorsy L.L. Bean has launched a major rollout of new stores.
• Juiced up
• Booster Juice, the Canadian smoothie chain, is hoping its cult status at home will carry over to the U.S.
• Tailoring Lord & Taylor
• The new owners are trying some new growth tactics at the oldest U.S. department store.
• Special delivery
• Blue Tulip is making a name for itself in the $7.5 billion stationery-and-gifts sector.
• Short story
• Small-format bookstores are falling by the wayside as big-box chains become the norm.
• City chic
• Ashley Stewart is serving the special apparel needs of overweight urban women.
• To the Hilti
• A tool retailer’s unusual model helps it compete with larger hardware chains.
• Maverick merchandise
• Designer Jared Gold has founded the eccentric Black Chandelier chain in Utah.
• Fit stop
• Anytime Fitness offers a no-frills gym for people who are more interested in exercise than in extras.
• In brief
• The Container Store puts up a for-sale sign, Liz Claiborne brings Mexx back home, and other retailer news



• On the Ground
• Warsaw readies for ICSC Europe



• ICSC News
• A sneak peak at Spring Convention



• News Makers
• Jon Ratner sees green



• The Bottom Line
• Tax issues vex property owners

MANY SNAPPY RETURNS

Its smooth sailing for real estate investors in Palm Beach, Fla., where shopping centers are projected to post annualized gross revenue growth of 4.5 percent between now and 2011. Real estate research firm Reis says the U.S. average will be 3.4 percent over the period, which includes last year. By comparison, Las Vegas and Sacramento, Calif., are each expected to rise about 4.1 percent. Investment advisory firm Marcus & Millichap predicts that a great number of area centers will turn up for sale in coming years, as some property owners may have achieved return thresholds faster than expected because of the robust market.

THIS AIN’T THE ’80S

The real estate sector’s current liquidity rush is spurring the lowest underwriting standards since the late 1980s, lenders said at the Mortgage Bankers Association’s annual meeting in February. The major difference this time, though, is that the debt is leveraging existing assets instead of building new ones, said Michael M. Gerdes, vice president and senior credit officer at Moody’s Investors Service. But the free ride of cap-rate compression is about to end, he warned. “Appreciation will most likely need to be earned the old-fashioned way, by boosting income,” he said. Moody’s is also concerned about the blurring boundaries between debt and equity underwriting. “In the past, debt was underwritten on income in place, while equity value was derived by projecting into the future,” he said. “Recently, securitized lenders have been lending on upside in future cash flows. Absent appropriate loan structuring, any stress on a property financed to a future stabilized value could cause the Love Boat to sink like the Titanic.”