News and Events
Distressed Retail Real Estate, Investment and Management
RCS President and CEO Ivan Friedman talks to Shopping Center Business about portfolio optimization.
Apr 8, 2010 Shopping Center Business Randy Shearin
Many people Shopping Center Business interviewed were quick to admit that the number of distressed properties hitting the market is less than they anticipated. That could be because a large number of distressed investment deals are being done through note sales and off-market transactions. What is certain, though, is that the investment market has been impacted by the availability of capital, and that has lead to a distressed market for investment sales. As well, retailers have been impacted by poor consumer performance leading them to make decisions on closing stores.
According to Ivan Friedman, president and CEO of RCS Real Estate Advisors, retailers only close doors when the operation of the store becomes unbearable. That generally happens, he says, when the cost of operations outweigh what the retailer is paying in rent.
“In most strip centers, the tenant has the right to go dark, meaning the retailer can close and stop operating,” says Friedman. “Sometimes that makes more sense — if they can’t buyout the lease — to close up and leave the store dark. It costs them less. They will actually save money by doing that and paying the rent.”
For more from Ivan Friedman, download a pdf of the article below and read page 2 side bar, "Optimizing a Portfolio."