Ames liquidationwill affect REITs
Aug 14, 2002 12:00 PM, — staff & wire reports
Besieged regional discount chain Ames announced today it plans to liquidate and close all of its remaining 327 stores within the next 10 weeks. Competition from savvy discounters such as Kohl’s proved to be more than the 44-year-old retailer could handle. The closings will have the most impact in the states of New York and Pennsylvania, where Ames will shut down 85 and 67 stores respectively.
Two retail REITs that are particularly impacted by the announcement are Glimcher Realty Trust and Kimco Realty Corp. When Ames filed for bankruptcy protection in August 2001, Glimcher had a total of 13 leases with Ames totaling $3.4 million in annual rent payments. By June 2002, Ames had rejected 11 of those 13 leases. Now, according to Prudential Securities analyst James Sullivan, Glimcher will lose another $500,000 in annual rent when Ames terminates its last two leases with the Columbus, Ohio-based REIT.
New Hyde Park, N.Y.-based Kimco announced today it would not feel negative repercussions from its extensive exposure to Ames. Kimco currently leases eight sites directly to Ames totaling 639,091 sq. ft. at an average rent of $2.84 per sq. ft. Kimco says rents at three of these locations are supported by guarantees from an anonymous national retailer and will remain current. Base rents from the six sites without guarantees represents approximately $1.5 million of Kimco’s annual rental revenue, less than 0.4% of the company’s total base rental revenue.
In addition to the Ames leases, Kimco is tied to the failed retailer by a 50% participation in joint ventures that have provided debtor-in-possession financing of $54 million for a planned sale-leaseback transaction with Ames. Kimco says it is confident it will fully recover the loan and the $20 million it paid in deposits as the matter is a priority in Ames’ bankruptcy proceedings.
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