Panel Ponders Private Equity

PHOENIX-Private equity firms’ appetite for investments in retail companies is not likely to wane any time soon. However, when major chains go private, it doesn’t necessarily mean that shopping-center landlords will experience negative impacts, said speakers yesterday here at the International Council of Shopping Center’s Conference On Open-Air Centers.

“They seem to be operating in the best intent of the merchandising,” says Daniel Hurwitz, senior executive vice president and chief investment officer at Beachwood, OH-based owner Developers Diversified Realty, pointing out that his firm usually sees few negative results when a major tenant is taken private or acquired. Sometimes those chains, which might have been struggling in the public markets, perform better under private ownership, he says.

“A lot of it has to do with who is the group executing the buyout,” says Adam Ifshin, president of developer DLC Management Corp., of Tarrytown, NY. Some buyers, like the consortium that bought Michaels Stores, look to run the business as an operating company. Others want to purchase chains simply for their real estate or to use the leverage of potential store closures to get better leasing rates from landlords, he says.