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Company NewsMultifamilySeniors HousingTop Stories

Seniors Housing Operator HCR ManorCare to File for Bankruptcy Following $385M Rent Delinquency

by Taylor Williams

BETHESDA, MD. — HCR ManorCare, an Ohio-based seniors housing operator, will file for Chapter 11 bankruptcy protection and transfer its management operations to its landlord, Quality Care Properties (NYSE: QCP). HCR ManorCare, which currently manages about 320 seniors housing properties, is the second-largest skilled nursing operator in the country. The company’s management contracts also span the assisted living, hospice and home care sectors. The move follows HCR’s declaration of approximately $385 million in delinquent rent payments. Reuters reports that the company’s total debt is roughly $7.1 billion and that QCP will put its own management teams in place at properties previously managed by HCR. Under the terms of the agreement, HCR’s operating subsidiaries will not file for Chapter 11 bankruptcy protection. The parent company’s name and brand will also remain in place, but as a wholly owned subsidiary of QCP. QCP itself is a spin-off of healthcare REIT HCP (NYSE: HCP), which created the company specifically to remove HCR ManorCare’s 320 properties from its portfolio. QCP and HCR have been in negotiations for months regarding hundreds of millions in unpaid rent. In addition, QCP will give up its REIT designation, as it will now both own and operate its properties. “This …

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CaliforniaCompany NewsMultifamilySeniors HousingWestern

HCP Executive Chairman Mike McKee to Retire

by Nellie Day

IRVINE, CALIF. — Michael McKee, executive chairman of Irvine-based healthcare REIT HCP Inc. (NYSE: HCP), has announced he plans to retire on March 1. Following his official retirement, McKee will continue to serve on the board of directors as a consultant until HCP’s annual meeting on April 26. Dave Henry, previously the lead independent director, has been appointed to serve as non-executive chairman. McKee has served as HCP’s executive chairman since May 2016 and as a member of the board since 1989. From July to December 2016, he served as interim president and CEO, filling the gap between Lauralee Martin’s departure and Tom Herzog’s promotion. McKee has been one of the few constants for a REIT that underwent massive changes in recent years. In his 20 months as executive chairman, the company spun off its 320-property HCR ManorCare skilled nursing portfolio into a separate REIT known as Quality Care Properties Inc. (NYSE: QCP). Additionally, the executive team saw nearly constant change during this time. Herzog was re-hired to his previous position of CFO and eventually promoted to CEO following Martin’s tenure. The company was also able to woo longtime industry veterans Justin Hutchens and Kai Hsiao, before losing them both …

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Company NewsMassachusettsNortheastOffice

Powers & Co. to Merge with The Dartmouth Co.

by Amy Works

BOSTON — Lynnfield, Mass.-based Powers & Co., a boutique retail brokerage firm, is merging with The Dartmouth Co., a retail real estate advisory and brokerage firm. Focusing on the Greater Boston suburbs and Cape Cod, Mass., Powers & Co. specializes in representing retail landlords and owners throughout New England. The Dartmouth Co. specializes in tenant and landlord representation in the Northeast and throughout the United States and provides a variety of services, including dispositions, investment sales and consulting and advisory services. Additionally, the company recently created a full-service commercial retail property management division. Powers & Co.’s suburban focus will enhance Dartmouth’s depth of market and solidify its place as the area’s best-in-class retail real estate advisory and brokerage company.

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Company NewsRetailTexasTop Stories

Charming Charlie Files for Chapter 11 Bankruptcy, Plans to Close 97 Stores

by John Nelson

HOUSTON — Citing struggles stemming from the rise of e-commerce, fashion retailer Charming Charlie has filed for Chapter 11 bankruptcy protection. During the Chapter 11 process, which was filed late Monday, the Houston-based fashion retailer plans to restructure its debt while maintaining and operating a majority of its stores, as well as its online platform. The company also plans to go through with its previously announced decision to shutter 97 of its underperforming stores. Charming Charlie specializes in selling jewelry, handbags, apparel and beauty products. The company, which was launched in 2004, currently operates more than 375 stores in the United States and Canada. Charming Charlie has secured commitments from its lenders for $20 million in new-money debtor-in-possession (DIP) financing. The company also entered into a $35 million DIP asset-backed loan with its lenders. Both financing arrangements are subject to court approval and are intended to help operation costs during the Chapter 11 process. The Wall Street Journal reports the court on Wednesday approved the early use of the financing, and Charming Charlie is scheduled to return to court in January to request approval to use the balance of the loans. The Chapter 11 bankruptcy filing is part of Charming …

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ArizonaCompany NewsMultifamilyWestern

ICON Builders Merges with Multi-Family Renovation Group

by Nellie Day

SCOTTSDALE, ARIZ. — ICON Builders and Multi-Family Renovation Group (MFRG) have merged to form a new company called MFRG-ICON Construction. The new company will focus on affordable housing renovation. Justin Krueger is the owner and will act as president of the new company. Allen “Kelly” Sands will be his partner. The new firm will draw from nearly three decades of experience to push this now $100 million annual construction business to raise the standard in occupied affordable housing renovations. ICON began building and renovating affordable housing in 1992. The company specialized in the renovation of tax credit, bond and HUD projects. The combined companies have completed more than 28,000 affordable housing units and more than $1.7 billion in construction. MFRG-ICON has offices in Scottsdale and Los Angeles. The company has projects in Arizona, California, Nevada and some Eastern states.

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Company NewsNortheastPennsylvaniaRetail

Rue21 Emerges from Chapter 11 Bankruptcy

by Amy Works

WARRENDALE, PA. — Teen clothing retailer rue21 has completed its financial restructuring and emerged from the Chapter 11 bankruptcy process. The Warrendale-based company began to close approximately 400 underperforming stores in April, and filed for Chapter 11 bankruptcy on May 15. Kirkland & Ellis LLP acted as rue21’s legal advisor, Rothschild Inc. acted as investment banker and financial advisor, and Berkeley Research Group acted as restructuring advisor throughout the process.

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Company NewsNew JerseyNortheastRetailTop Stories

Toys ‘R’ Us Files for Chapter 11 Bankruptcy Protection

by Katie Sloan

WAYNE, N.J. — Toys ”R” Us Inc. filed for Chapter 11 bankruptcy protection on Monday, Sept. 18. The company’s Canadian subsidiary also plans to seek protection in parallel proceedings under the Companies’ Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice. No store closings have yet been announced in conjunction with the filing. The Wayne, N.J.-based toy retailer’s approximately 1,600 Toys ”R” Us and Babies ”R” Us locations will continue to operate through at least the holiday season. Customers may also continue to shop on the company’s newly launched web stores. “Together with our investors, our objective is to work with our debtholders and other creditors to restructure the $5 billion of long-term debt on our balance sheet, which will provide us with greater financial flexibility to invest in our business, continue to improve the customer experience in our physical stores and online, and strengthen our competitive position in an increasingly challenging and rapidly changing retail marketplace worldwide,” says Dave Brandon, chairman and CEO of Toys ”R” Us Inc. The company’s debt largely stems from a $6.6 billion buyout in 2005 led by KKR & Co. LP, Bain Capital LP and Vornado Realty Trust. Toys ”R” Us has …

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CaliforniaCompany NewsMultifamilySeniors HousingWestern

Sabra Shareholders Approve Merger with Care Capital Properties

by Nellie Day

IRVINE, CALIF. — Sabra Health Care REIT Inc. shareholders have voted to approve the company’s planned merger with Care Capital Properties, despite objections of several major shareholders. The proposed merger was announced in May. If completed, the transaction will create a healthcare REIT with a pro forma total market capitalization of roughly $7.4 billion and an equity market capitalization of roughly $4.3 billion. The all-stock transaction is scheduled to close Thursday, subject to customary closing conditions. Several shareholders vehemently opposed the merger, most notably Hudson Bay Capital, which owns 3.9 percent of Sabra shares. The company cited a report by advisory firm Institutional Shareholder Services that suggested Sabra was overpaying for CCP, and that headwinds in the skilled nursing sector would cause the CCP portfolio (which is nearly all skilled nursing) to struggle. The new REIT will be headquartered in Irvine and include a healthcare portfolio comprised of 564 investments across 43 states and Canada. Sabra’s current executive team will manage the company, which will continue to trade under the SBRA ticker symbol. The vote occurred at Sabra’s special meeting of stockholders. The company reports that holders of more than two thirds of the shares voted at the meeting in …

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Company NewsFeaturesRetailTop Stories

Amazon-Whole Foods Merger ‘Reinforces Importance of Brick-and-Mortar Presence,’ Says Marcus & Millichap

by Jeff Shaw

The recent announcement that online retail giant Amazon plans to acquire upscale grocery chain Whole Foods for $13.7 billion sent ripples through the commercial real estate industry when it was announced in June. The move signals a lot of trends and changes within the retail sector, according to a newly released report by real estate brokerage firm Marcus & Millichap. “The purchase highlights the importance of omnichannel platforms, which incorporate a blend of brick-and-mortar establishments with an online footprint to drive traffic and sales,” states the report. “In addition, grocery stores are typically retail center anchors, underscoring the importance of strip and neighborhood centers in the retail landscape.” The 11 largest grocery chains in the country all plan to expand this year, with many doing so aggressively. Discount grocer Aldi, which already has more than 1,600 locations, expects to open 900 new stores by 2022. This expansion within the grocery sector is snapping up a lot of available real estate. Combined with a low rate of new retail construction over the past seven years since the Great Recession, retail vacancy has reached a 16-year low of 5.4 percent. The flip side is that existing space is extremely constrained, and increased …

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Company NewsIllinoisMidwestRetail

Walgreens, Rite Aid Call Off Merger Agreement, Announce $5.2B Portfolio Sale

by Kristin Harlow

DEERFIELD, ILL. — The merger between Walgreens Boots Alliance Inc. (NASDAQ: WBA) and Rite Aid Corp. (NYSE: RAD) has been terminated. Instead, Walgreens will purchase 2,186 stores and three distribution centers from Rite Aid for $5.2 billion. The previous merger agreement was unveiled in October 2015. In December 2016, Fred’s Pharmacy signed an agreement with Walgreens and Rite Aid to purchase 865 stores. Both of these agreements have been terminated, and Walgreens will pay Rite Aid the $325 million termination fee. Deerfield-based Walgreens will begin acquiring stores and related assets on a phased basis over a period of approximately six months, and intends to convert acquired stores to the Walgreens brand over time. Walgreens expects synergies from the new transaction to be in excess of $400 million.

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