Alternative Retail Real Estate Risk Analytics for Alternative Capital

RetailMAXIM.net

Benchmarking Risk and Opportunity of Structural Change in the Retail Credit and Spatial Markets

Global 400 Retail
Watch List

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Retail MAXIM

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MAX-SI Spatial
Index

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G-400 Store
Productivity
Survey

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G-400 ALERT

Latest Reports, Ratings, Productivity & Growth Indices 2016/Q3

G-400 Ratings ActionUpgrades-Downgrades 580 US & Foreign Credits & Divisions
2016/Q3 Gains-Losses in Fundamental Values of Business Model [as % of Total G-400 Watch List]

Management Fiscal Guidance 2016-17 Business Performance of G-400 Credits Independent of G-400 Ratings

G-400 Watch List Credit Quality Distribution of 580 US-Foreign Credits

G-400 Risk-Reward Matrix of Upside-Downside Potential. Fiscal Outlook 2016 for 580 US-Foreign Credits

in CONTEXT

Retail MAXIM July 2016
Issue:
20th Annual MAXIM Store Productivity Survey of 800 Retailers & Brands, 1,880 B&M Formats, 104 Subsectors
Theme: “Power of One. Formats Maximizing Productivity Potential of Multichannel Retailing.”  Part I: Just the Metrics.
Metrics:   Productivity Series I: Sales per square foot metric by chain, sector and format by average format size, annual growth.  Productivity Series II:
Average store volumes, square footage ranges of all formats comprising store portfolio legacy core, derivatives & bridge, pilots & proposed formats, base supply expansion-contraction recession-recovery-inflection point. Time Series: 2008-16 annual 
Topics: + Highest productivity led by next generation B&M formats of consumer-centric & social media-entertainment platforms + Highest functioning productive formats possess evolutionary prowess  + Rightsizing revolves around bigger not smaller format footprint + Destination retailing global-digital age dictates format size & sales volumes + Real estate rationalization tests for highest & best use determining store capacity ripe for retention as retail, conversion to online warehousing & delivery or closings   + New strategies maximizing the multichannel model as Omni-channel format lags

Retail MAXIM June 2016
Issue:
Ranking G-400 Department Store Credits for Sustainable Turnarounds and Real Reinventions
Theme: “J-Z Penny’s Turnaround Gets Jiggy. A New Riff on Department Store Drift. How to Reinvent a Middle Market Icon. 
Metrics: Operating and productivity data of restructuring & reinventing department stores under various stewardship [pre-Ron Johnson, under and post Johnson under Ellison, successful retail turnarounds.  Trajectory of dept. store G-400 Watch List Values 1998-2016  
Topics: + Reinventing the family department store model by reintroducing durable goods eliminated in 1970s + Diagramming a new higher caliber well-curated merchandising plan leveraging shopping voids of suburban middle & working class consumer  + Monetization of legacy brands unleashes inherent value & growth potential + Repurposing & rethinking function of dept. store real estate to support online warehouse & delivery models + New benchmarks & analytics testing highest & best use of B&M platform + Differentiation from the 1970s fashion category killer department store model now under siege + Reinvention of mass market model supporting America’s Great Mall Complex

Retail MAXIM May 2016
Issue:
Ranking State of Turnarounds on G-400 Watch List   
Theme: “From Reinvention to Intervention. Restructurings That Lost Their Way unlike Those on a New Path” 
Metrics: Ranking of stage of turnarounds post 2013 inflection point & industrywide transition, cycle of fundamental values G-400 WL indicating widening-narrowing economic moat, breakout of business component values assessing weak links in restructuring, management fiscal guidance and risk-reward ratings assessing upside-downside potential, G-400 Corporate Governance Ratings System [CGRS] of public and privately-held retail [private equity firms to family & cooperatives]  
Topics: + Corporate DNA of restructuring dictates highly variable outcomes & sustainability + Structural forces rewriting industry rules & derailing turnarounds + New entertainment & social media platforms as new fashionistas undermining fashion & luxury brand sectors + Supply chain obsolescence aggravated by disruptive forces of “Amazon effect” colliding with “Anna Wintour effect” + “Anna Wintour effect” collapses industry structure & forces reinvention of luxury fashion sector + Retailers targeted by private equity buyouts and IPO recycling of businesses & assets caught in a perpetual turnaround cycle  + Collapse in traditional demand & replacement cycles depresses rates of sales growth & conversion + Impact of reinvented industries spawning new competitive risk + Event risk inherent in subpar corporate governance  

Retail MAXIM April 2016
Issue: Ranking 2016 Growth Prospects of G-400 Credits & Management Guidance on Same-Store Sales
Theme: “Flying over the No-Growth Zone. Mining the Middle Market Minefield for Moat”
Metrics: Internal growth [same-store sales] cycle of 2002-2016 vs. 2016 forecast for 580 G-400 retailers, e-commerce sales growth, external growth measures [store footprint, projected closing pipeline, M&A, alternative revenues], G-400 “Growth Prospects” ratings, G-400 Management Fiscal Guidance
Topics: + Reinvention of mass market model supporting 60% of US households economically disfranchised yields new growth among innovative G-400 retailers [Positive Watch]  + Systemic subpar internal growth of 2002 recovery turns sublinear in 2010 recovery with low prospects of reversing for huge swath of G-400 retailers + “Winners Take All Economy” of past 40 years widens disparity in wealth & household income to record and curbs consumption levels by half + Unfettered capitalism commoditizes everything from labor, good produced, assets and shopping experiences yielding subpar-sublinear growth + “Supply-on-Demand” construct [shopping ‘out of need not want’ and by event] symptomatic of malfunctioning economy, adopted by working class households in 2004 crosses over to affluent cohort depressing consumption across price point spectrum  + Structural attrition in store traffic since 1980s reaches single & double-digit rates in all retail sectors, price points & shopping center channels due confluence of dislocations [economic, online, competitive] + Catalysts of 2010-14 recovery [tourist consumption to renewed store expansion] derails with relapse in global economies + Systemic low growth triggers aggravated M&A and consolidation to achieve greater scale and growth potential + Absence of internal growth signs of late stage Asset Bubble Economy at tipping point similar to 2007-08 collapse

Retail MAXIM March 2016
Issue: Assessing the Impact of Private Equity on G-400 Credits Performance 2010-2016
Theme: “Private Lives Unhinged. Disruptive Dance of Public-to-Private Capital Trumps the Digital Transition”
Metrics: Trajectory of G-400 Watch List Competitive Advantage Values by private equity-owned retailers & IPOs by private equity firms, corporate ownership diagramed by private equity vs. publicly-held credits, operating margins, growth & return on capital data
Topics: + Destructive forces of escalating “private public equity dance’ [PtP] & shareholder activism eroding economic moat and sustainable entities + Mounting loss of confidence among PE firms evidenced by 2016 sell off of equity stakes & increasing inflows of shadow capital funding distressed credits + Real estate spin-offs and REITs of trouble retailers target of private equity buyout sunder Fed ZIRP polices inducing asset bubbles + G-400 corporate governance ratings are lowest for retailers owned by private equity and taken public by same group + Sources of retail disruption rooted in private equity buyouts & recycling of companies & assets elevating risk contagion [event, competitive, leasing] + High levels of real estate obsolescence and low four-wall productivity from systemic under investing in stores & high retention of non-integral assets + Financial-centric models of private equity trump consumer centric elevating speculative growth & unstable business + Digital innovation blunts asset deflation + Recapitalization stabilizes cash flows to cover private equity hefty dividend payouts & fees

Retail MAXIM February 2016
Issue: 2016 Update of G-400 Corporate Governance Ratings System
Theme: “This is Spinal Tap. Boards as the Backbone that Make or Break a Retailer”  
Metrics: Corporate Governance Ratings System [CGRS] scoring caliber of management and Boards of Directors for each 580 G-400 WL credits, gains & losses in G-400 advantages as a function of caliber of corporate governance ratings  
Topics: + Corporate Boards are retailers’ first defense in a roiling marketplace and key to a sustainable transition & turnaround + Highest caliber, diverse & visionary G-400 Boards are also the top rated G-400 credits positing greatest gains in economic moat + Top rated G-400 Boards support consumer-centric models + Low-rated G-400 Boards support “shareholder-centric” models dictated by “tyranny of short-termism’  + Sustainable versus speculative businesses a function of ‘consumer-centric” & “shareholder-centric” models set by culture of Boards + Qualifying competitive advantage of retailer based on caliber of Board and capital allocation policies + Boards seated by hedge funds & private equity firms invite predatory buyouts & short-termism

Retail MAXIM January 2016
Issue: Ranking the Real Estate Advantage of G-400 Credits for Monetization & Liquidation Potential
Theme: “Fight Club. A Real Estate-Led Restructuring Hampered by the Exclusionary Rezoning of American”
Metrics: G-400 Business Component Values breakout rated by real estate monetization potential over past three cycles and future cycles, G-400 Real Estate Value rankings identify potential liquidation situations distribution of G-400 retailers by credit quality, market niche, price point & sector
Topics: + Rezoning of America underway by Congress, State & urban governments resetting land use policies and real estate valuations, marginalizing middle and working class shopping destinations + Monopolistic positions of REITs and high density markets and inflated rents and property values reinforced by rezoning changes type of store formats & B&M feasibility + Higher rent districts attract corporate monopolies and inflate land prices [as seen w/ Google]  + Rezoning outgrowth of unfettered capitalism commoditizes retail limiting monetization potential + Urbanization and global gateway cities embrace exclusionary zoning to redevelop shopping and eateries for the Uber-wealthy and spendthrift tourist at expense of mass market resident households + Rezoning & redistricting aggregates higher purchasing power forcing retailers to consolidate store portfolios into higher density, higher income, higher rent locations and markets + Future pipeline of turnarounds and store liquidations building as rezoning sets new location criteria marginalizing future sales potential of existing retail + Monetization potential of real estate trigger rebranding and new merchandising platforms seeking exclusionary-zoned sites to generate growth, productivity and high returns lacking in emerging marginal sites + “Superpower” predatory strategies of US and urban government fostering aggressive expansive strategies and larger footprints affordable by only a finite group of high producing retail that overtime commoditizes the shopping experience + Real estate capital markets and hedge fund rent-seeking strategies redefining retail real estate values and land use [see Seritage REIT spin off of Sears]+ Rezoning movement will dislocate the past 60 years of suburbanization, wealth and middle class, generating a pipeline of dark assets [stores to shopping centers] + Rezoning sets new higher hurdles in turnarounds for US retailers whose merchandising models and customers are concentrated outside the new epicenters fo wealth & commerce + Great American Suburban shopping Center Complex is under siege as rezoning destroys real estate values 

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