Mall owner Pennsylvania Real Estate  Investment Trust is ready to embark on a $15 million redevelopment of the aging Moorestown Mall in tiny Moorestown, N.J., after finally gaining a key component that it coveted for years: booze. Two ballot initiatives championed by PREIT won approval from Moorestown voters Nov. 8 to exclude the one million square-foot mall from the town’s 100-year-old ban on liquor sales.

PREIT now intends to pay the town $4 million for four liquor licenses, which it will use to open four fine-dining restaurants as part of the planned redevelopment.

PREIT, owner of 38 U.S. malls, failed in a 2007 attempt to woo sleepy Moorestown into going wet. This time, PREIT crafted two ballot questions: the first asking voters to allow alcohol sales in Moorestown, and the second asking them to restrict those sales to the mall. The first won 60% of votes cast; The second, 57%. PREIT spent roughly $300,000 on the campaign.

“We conducted ourselves like a candidate running for office,” says Joseph Coradino, president of PREIT’s mall-management division. “We hired a polling company, a strategist, PR group and a local law firm. I was speaking in front of the Rotary, the Moorestown Business Association and doing town-hall calls with 7,000 people on the line.

” Moorestown Mall, built in 1963, has a 30% vacancy rate. The redevelopment plans also call for replacing the mall’s four-screen theater with a 12-screener.

PREIT intends to open the restaurants in late 2012 and the theater in 2013.

—Kris Hudson

http://online.wsj.com/article/SB10001424052970203710704577054644201166880.html

http://www.netsourceadvisors.com/index.php?option=com_content&view=article&id=111:latest-blog&catid=38:frontpage-articles&Itemid=170

WOONSOCKET, R.I. (AP) — CVS Caremark Corp.’s third-quarter earnings climbed 7 percent, as a long-term contract and acquisition boosted the pharmacy network claims it processed.

The Woonsocket, R.I., drugstore operator on Thursday also raised the low end of its full-year profit forecast, saying the Caremark pharmacy benefits business performed better than it expected during the quarter.

Shares of CVS Caremark rose $1.25, or 3.5 percent, to $37.02 in morning trading.

CVS Caremark reported net income of $868 million, or 65 cents per share, in the three months that ended Sept. 30. That compares with $809 million, or 59 cents per share, a year ago.

Adjusted earnings, which exclude amortization tied to acquisitions, were 70 cents per share, above analyst expectations for 67 cents, according to FactSet.

Revenue grew 12 percent to $26.67 billion. Analysts expected $26.76 billion.

CVS Caremark runs the second-largest chain of drugstores in the U.S., afterWalgreen Co. CVS had 7,304 stores at the end of the quarter, up from 7,152 a year ago. Its Caremark business is one of the largest pharmacy benefits managers, which handle drug benefits for health plan members and sponsors.

Revenue from its pharmacy services business, which includes Caremark, climbed 26 percent because of a long-term contract with health insurer Aetna Inc. and the acquisition of Universal American Corp.’s Medicare prescription drug business. Pharmacy network claims processed during the quarter rose 40 percent to 179.2 million.

Caremark profits have slumped in the last few years because of lost contracts, but CVS said it still expects profits will grow in 2012.

Pharmacy benefits managers are paid to reduce costs for health plan sponsors and members. CVS Caremark handles hundreds of millions of prescriptions ever year and uses its size to negotiate lower prices with manufacturers. During the third quarter its two largest competitors, Medco Health Solutions Inc. and Express Scripts Inc., agreed to combine. If regulators approve that deal, the resulting company would be about twice the size of Caremark.

Caremark is winning new business. On Jan. 1, CVS began administering Aetna’s retail pharmacy network and managing purchasing and prescription filling for Aetna’s mail-order and specialty pharmacy businesses. The 12-year contract is still ramping up, but it is expected to bring CVS Caremark $8.2 billion in revenue in 2011.

CVS also expanded its Medicare Part D business by acquiring the Universal American unit at the end of April for $1.25 billion, and it said that deal will bring $5.5 billion in additional revenue in 2012.

At the end of the quarter, CVS sold its TheraCom consulting business to AmerisourceBergen Corp. for $250 million. That deal closed Tuesday.

Total revenue from drugstores rose 4 percent to $14.69 billion. Revenue at stores open at least a year, a key measurement of retailer health, grew 2.3 percent. CVS said its business is not being affected by the dispute between Walgreen and Express Scripts, which may stop doing business together at the end of the year. However CVS said that if Walgreen stops participating in Express Scripts networks, it will be in position to benefit.

The company now expects 2011 adjusted earnings of $2.77 to $2.81 per share, compared with its previous forecast of $2.75 to $2.81 per share. Analysts had expected $2.76

LAS VEGAS-Starbucks Coffee Co. Chairman, President and CEO Howard Schultz told a crowd of a few thousand retail executives here Tuesday that when the time came for his firm to shut down hundreds of stores and revamp the business in 2008, he did so because he realized the chain had lost sight of its customer service ideals.

Schultz, speaking at the Tuesday’s ICSC RECon luncheon at the Las Vegas Convention Center, said he authorized a $32.5 million mandatory store manager meeting to convey that managers of the top coffee chain should “take personally the expectations of every customer. “We had managers that were seeing 1,000 customers a day, but somehow we had grown so much that we had convinced ourselves that any bad experience by one customer didn’t matter. But in reality, this matters more than anything else,” he said.

His comments on customer care come at the beginning of expected new growth in the industry, where many retailers plan to start opening new stores again in 2012, after about three years of holding off and finding efficiencies. Starbucks is one of these stores, jumping up again with an annual plan to open 500 new locations by October 2011.

Schultz said that there are three changes to consumer behavior that are about to surface, that every retailer should know before finalizing growth plans. He said customers need ways to find deals because of the troubled economy. Also, social media and other technological changes such as mobile shopping should not be ignored. “The traditional methods of marketing, advertising and public relations have changed forever,” he said. “These social tools, which include more than just Facebook and Twitter, should be used to build relationships, not to try to just sell more product.”

He also extolled the virtue of being a strong community partner – because the community is sure going to need it. Many states are near bankruptcy, and public services and jobs are on the chopping block. Companies that do the right thing for their local communities and provide assistance during troubled economic times will be rewarded with loyal customers, Schultz said.

The coffee chain leader spoke as this year’s RECon event started to wind down, with most sessions over for the more than 30,000 attendees. The expo halls will still be open, but wrapping up, on Wednesday.

Many attendees tell GlobeSt.com that they are pumped up from the positivity from this year’s ICSC show. Walter Wahlfeldt, managing director for corporate retail solutions for Chicago-based Jones Lang LaSalle, says struggling markets are starting to stabilize, and new concepts are popping up. “We’ve seen companies looking to outsource their growth requirements, as efficiencies were completed throughout the retail industry,” he says.

Guy Ponticiello, also a managing director with JLL, tells GlobeSt.com that capital markets have returned, as investors are now looking to enter what they consider a bottomed-out market. These investors include San Francisco-based Mesirow Financial, which is investing $300 million in net lease concepts, he says.

Howard Paster, president of St. Paul, MN-based Paster Enterprises, tells GlobeSt.com that he’s starting to see national retailers looking for spaces. “Rents are still compressed, and it’s still tough for some centers to find tenants, but there’s a feeling that things are getting better,” Paster says.

Source: www.globest.com By Robert Carr

Trenton China Pottery, or what is commonly referred to as “TCP,” sold its Philadelphia property at 2nd and Arch streets in Old City.

A group of undisclosed local investors bought it for $1.4 million and plans to convert the nine buildings that comprise the structure totaling 55,000 square feet. The properties run from 127-37 Arch St. to 101-107 N. 2nd St. The plan is to have residential units on the top floors and retail on the bottom, street-level floor.

TCP, which sells restaurant equipment, put the property on the market eight years ago. The company started in 1927 and had operated out of the Old City building ever since. It is located on Memphis Street in the Port Richmond section of Philadelphia and operates under a new name: Trenton China. Mallin Panchelli Nadel had the listing and sold it in conjunction with Coldwell Banker …

Brandywine Realty Trust reported a tad more than 1 million square feet in leasing activity for the first quarter. That figure includes signed leases, deals that have commenced and those that will go into effect later this year. Some of the transactions in Pennsylvania include First Niagara Bank with 63,096 square feet at 401 Plymouth Road in Plymouth Meeting; Thomas Publishing in 31,976 square feet at One Progress Drive in Horsham; Urdang Capital Management in 22,661 square feet at 630 Plymouth Meeting Executive Campus in Plymouth Meeting; and Triumph Group taking 19,177 square feet at 400 Berwyn Park in Berwyn.

In Center City, Brandywine just lists two deals: Pepper Hamilton renewing 17,085 square feet at Two Logan and Hunter Roberts Constructing re-upping on 11,163 square feet at Three Logan. No word yet on Janney Montgomery Scott taking some floors over at Three Logan. Bradywine saw some activity in South Jersey. The biggest listed was Verizon renewing for 44,078 square feet at 15000 Midlantic Drive in Mount Laurel, N.J. … The Community College of Philadelphia completed a $31 million newly expanded and greened Northeast Regional Center, a 120,000-square-foot project at 12901 Townsend Road in Northeast Philadelphia …

An undisclosed buyer bought the Pearl Pressman Properties around 900 N. 5th St. in Philadelphia for $1.05 million. The properties included a two-story, 31,188-square-foot building and a single-story 9,560-square-foot building. Seamark Associates bought the properties as an investment. Colliers International arranged the transaction … Philadelphia Aids Thrift, a group that raises research money, leased 10,500 square feet of the Kroungold’s Furniture building at 710-718 S. 5th St. in Philadelphia. The furniture store will continue to occupy the remainder off the space. Colliers handled the lease.

http://www.youtube.com/watch?v=oPECFc5ZZ5M

News from Net Lease
Conference and S & P Commercial Real Estate in NYC last week.

Role of Non-traded REITs in Net Lease Sector; Inflation;
Debt Rates were all hot topics.

It was clear, both statistically and anecdotally, that the
emergence of non-traded REITs is now confirmed since they effectively control
50 % of the net lease market acquisitions.

So if you have been a Buyer, like many of our client base,
and have been getting out bid in the last 6 quarters, there is good
reason……these REITs see real estate differently than the traditional savvy
investor. 

Like many investors, today, they are seeking “yield” and now
Net lease properties, as an  asset class,
are really coming into their own since they can afford:

• Stable,
  predictable income streams;
• A partial
  hedge against inflation (subject to lease structure);
• Depreciation
  as a tax benefit;
• Appreciation
  and residual value  (if you don’t
  over pay in the 1^st place)

That last point is a
major current issue when you are, effectively, competing with these REITs in an
almost “Auction Environment” in recent months for product.

Cap rate is one comparative reference point; but we think a
hard look at the risk-adjusted return is critical.  Your ability to secure acceptable debt ratios
and rates, combined with addressing the re-financing risk, as we perceive it,
is paramount.  Less so, in the review of these REITs who are fee-based operations.  We utilize a 62,000+ NNN national data base +
our network of net lease practitioners and owners to identify “Best-of-Breed”
NNN assets that match client-specific criteria for:

• Tenant
  Credit for secure income streams;
• Remaining
  lease term and scheduled increases to address inflation fears;
• Debt
  and re-financing risk;
• Location;
  location; location……not all Walgreens are the same;

All of theses issues need attention; not merely a cap rate
debate.

Call us to produce results for you that match your
investment objectives.

Net Lease: Recap and Forecast
Net leased properties are among the hottest sectors of commercial real estate. With 2010 ending on a high note, all signs are pointing to a positive 2011.

Randall Shearin

Build-to-suit developers, investment funds, corporate sale-leasebacks and franchise sale-leasebacks continue to feed buyers’ appetites, says Barry Silver, principal of San Rafael, California-based The Silver Group. During the second half of 2011, and especially so in the fourth quarter as fears loomed about future tax issues, buyers came on strong, compressing cap rates on triple-net properties. In December 2010, Marcus & Millichap’s Mark Theil acquired a Walgreens under construction in Hollywood, California, on behalf of a client who paid $10.71 million for the 7,830-square-foot property, making it the highest priced per square foot deal for a single tenant net leased drugstore in 2010. That year-end sale is a good milestone for a quarter that has been good to the net lease sector.

Read Entire Article

http://image.exct.net/lib/fe99157075660d7b71/m/1/Net+Lease_Recap+and+Forecast+-+1-11+SCB.pdf

There are many lessons for investors to glean from the last 12 months of market activity.

Many end-of-the-year articles by some of the most credible net lease practitioners discussed the role of available debt sources to explain the cap rate compression in this

net lease market.

Others have highlighted the role of capital markets and net lease funds which have muscled their way into the net lease asset marketplace and driven cap rates down in 2010. Still others stated that there has been a “flight to quality”. Others talked about a “back-to-basics” dynamic. All are true in some measure.

At BRC Advisors, our client base has been terribly frustrated and has viewed recent market events as fear-based money chasing deals rather than sound investments. From our perspective a sound investment actually reflects the risk-reward metrics combined with a thorough review of:

· the inflationary implications on the horizon

· re-financing risks with short term, lower rate debt vehicles

· truly credible residual valuations

Many of our clients have sat out over the last two-and-a-half years. Having “kept their powder dry”, our buyers are back.

How can you have confidence in the market? To make a sound decision, our goal is to provide you with the most accurate and up-to-date market intelligence combined with our well-honed deal-making skills. Your confidence will be enhanced by our professional relationships, our strong work ethic, and our recognized professional integrity. That is how we add value to your investment decisions.

We have the capacity to represent buyers and sellers. When you do business with us there will be complete transparency and you will know on which side of the table we are sitting. We also provide full fee disclosure and other relevant data points. Interestingly and frequently, we find that our new clients were on ‘the other side’ of a recent transaction.

“Money (resources + market intelligence) Talks, BS (broker/salesman hyperbole) Walks!”

This has been one helluva year for real estate investors who have been seeking risk-adjusted returns in the net lease sector just this past week, we received a call from a seasoned NYC investor inquiring whether a particular investment grade asset with a shorter term lease priced at $5,274,000 or a 7.5% cap could be bought at an 8.25% cap, all cash/short due diligence/quick closing of escrow. We respectfully responded, “this would have been a real conversation/negotiation with the seller, if it was taking place in Q4 2009; not Q4 2010.”  What a difference a year can make.

While we were trained in the “everything is negotiable” market psychology and real estate practice, we submit that there needs to be a practical real-time market condition rather than battling egos or some mythologies about the NNN market pricing informed by internet listings. We have a seasoned approach combined with current market intelligence that has allowed us to outperform the market on a consistent basis for 30+ years in many major markets around the country.

Nonetheless, in the last six months, we have tendered a number of “all cash, full asking price” offers in this new 2010 world order of cap rate compression in low-mid 6 caps only to find ourselves and our clients in an auction environment.

This did not happen once or twice, but no less than twenty-four times in dealing with sellers’ reps, listing brokers, and direct deals with sellers. What a sobering reality for buyers and an unanticipated windfall for sellers.

We encountered sellers and their brokers attempting to sell NNN assets in Q3 and Q4 2010 based on the NOI of 2013 with the next rental bump included. In one case they graciously offered to provide a rental income credit of the $16,000 annual rent disparity for the three (3) years amounting to a $48,000 seller’s credit off the price.

At the very same time they were attempting to charge our investor/buyers a low 6 cap rate based on the 2013 NOI which jacked up the pricing by $320,000. “Nonsense on the face of it”, you might say. Oh no, they were sold on that basis to another retail buyer who presumably had other broker representation and able counsel.

“Absolutely nuts” from our perspective!

So, now more than ever, a keen sense of the market and deal-making skills that calibrate where a deal can be secured on a range of terms in addition to the new pricing metrics discussed above, is how we add value.

Our net lease advisory practice is based in Los Angeles but national in scope and as is our client base.  We have spent years attempting to provide the most accurate and credible market intelligence to our prospective clients. We do not play favorites with sellers or listing brokers. Instead we present our Best-of-NNN-Breed candidates that match our investor/buyers’ client-specific criteria and objectives. While we are highly attuned to sellers’ objectives, our loyalty and fiduciary responsibility is with the investor/buyer, as we define it. We disclose all known data points and fees in a transparent manner with our investor/buyers and valued net lease brokers.

As we have for many years, we recently attended Net Lease Conference in New York. This is an annual event at which the would-be Brahmans of Net Lease Sector assemble to confer and do deals. It was noteworthy to us that many retail investors had come out of the shadows if they could secure a 7% coupon on net lease assets of varying shapes and sizes.  Current yield was king as an alternate to money market accounts and bond-type investments.  Closing deals that actually require an exit strategy were very difficult to reconcile in the current market.

We observed that a number of net lease acquisition funds that have been prominent in the acquisition arena have been financed with short term“IO debt to achieve these 7%+/- returns due to cap rate compression and accessible debt. Other debt structures at low rates have aided the cap rate compression as well.

So, where do we go from here? What will be the impact on real estate valuations and debt availability of the Fed’s QE2?  Will there be new waves of commercial foreclosures for underperforming assets in the next year? Is it safe to come out of the shadows to acquire new assets or re-balance your portfolios? Yes, but with sound and credible data to guide you.

Your ability to secure stable and predictable income streams that outperform alternate investments can in fact be achieved in the net lease sector. It requires a sober and sanguine study of real time options and competitive market conditions.  Our 60,000+ data base of net leased assets allows us to add value to our clients’ investment decisions by providing common sense, tried and true real estate investment principles.

As previously noted, we have witnessed a run up in pricing for the best-of-breed, investment grade NNN assets throughout the country by yield chasing investors who have been on the side lines all year.  Now, post-election, we can more reasonably speculate that there will be a concerted efforts on the part of the Fed and other institutions to keep rates down as we approach the exigencies of another Presidential election.  The tax law uncertainty, while not fully clarified, appears to be moving toward more clarity/certainty Tax Cuts during the pass decade, while unresponsive to asserted concerns about Federal Budget deficits, will be continued for at least the next two (2) years, if not permanently; if the new congressional majority can muscle the White House. 

So, debt rates are low; cap rate compression will continue, in our judgment based on the recent past market conditions; so having access the best NNN assets from all sources, combined with accurate market intelligence, will make the difference in your future investment decisions.

This is how we can add value.  Our proprietary 60,000+ data base allows an accurate picture of the NNN Marketplace and your active options.  Please call us to assist your review of the market BEFORE you buy or sell.