Wednesday, June 17, 2009

Claire's Seeking $21 Million Sale Leaseback of HQ in Suburban Chicago

Crain's Chicago Real Estate Daily - June 15, 2009

Teen jewelry and accessories retailer Claire’s Stores Inc. is offering a sale/leaseback of its corporate headquarters and U.S. distribution center in Hoffman Estates.

The 527,661-square-foot building near the intersection of Interstate 90 and Barrington Road has an asking price of $21.1 million, and Claire’s would enter into a 15-year lease with annual rent of $2.1 million, according to a marketing flier by CB Richard Ellis Inc.

“We’re not in the real estate business, so we’re exploring this,” says J. Per Brodin, the company’s chief financial officer. “If we can get this done with attractive economics, it’s something we’d consider. If we can’t with economic terms that we think are attractive, we won’t do it.”

Sale/leaseback deals are gaining popularity these days as companies look to raise cash by selling real estate to cope with the recession. Mr. Brodin says the company doesn’t own any other big properties.

Real estate executives say investment firms are able to land financing for such deals because they’re seen as less risky than speculative projects or unleased buildings.

In this case, investors would be betting that Claire’s, which was taken private by Apollo Management L.P. in May 2007, will be able to survive the battered retail climate and remain at 2400 W. Central Road. The company’s chief executive, its buyers and other executives are based in the building. About 20% of the property is office, according to CB Richard Ellis' flier.

Claire’s, which has more than 3,000 stores worldwide, with most of those in U.S. malls, had revenue of $1.4 billion last year. The company reported a first-quarter loss this year of $29 million compared with a loss of $35.6 million in the year-ago period.

Marketing of the 28-acre property began last week, says Robert Brennan, a CB Richard Ellis senior vice-president who is handling the assignment. He says they’ve already gotten some interest, despite the moribund investment sales market and frozen capital markets that has made financing hard to come by.

“We think that we should have some success even though there are a lot of headwinds,” Mr. Brennan says. Sphere: Related Content

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