Dan Palmier, CEO of UC Funds
GlobeSt.com is providing wall-to-wall coverage of ICSC's RECon show in Las Vegas May 19-22. Subscribe to the Retail Ticket for pre-event articles, live video interviews on site and post-conference analysis.
LAS VEGAS—From a financing perspective, the retail sector continues to be challenged, but there are good gems too. That is according to Dan Palmier, CEO of UC Funds, who chatted with GlobeSt.com about all things retail, surrounding ICSC RECon.
According to Palmier, e-commerce is the prime agent in making lenders very wart of most projects. “From a lender perspective, we see particular challenges to deals getting done….Lease roll over, expiring leases with no backfill identified, downward pressure on retailers credit, lack of transparency on retail sales figures, and ultimately challenged, long term permanent loan take-out.”
All of those issues, he says, can have significant impact on leverage levels, pricing, and whether or not a deal is going to get done.
But, he says there are opportunities out there. “Opportunistic lenders are seeing increased flow of opportunities since they require a creative and entrepreneurial lens.”
When asked about hot retail markets, Palmier says he looks at opportunities on a case by case basis rather than a market. “The tenant mix, strategic plans for maintenance or repositioning, the leverage level, and the strength of the sponsorship is very important,” he says. “We need to underwrite a cogent story for success; a mix of the right tenants-typically today a cross between food, restaurants, entertainment and services.”
He tells GlobeSt.com that his firm typically plans on some turnover and roll, variety or blend of tenant types is more and more important, today. “Having e-commerce store fronts and a healthy integration of new 'anchoring' retail like urgent cares or WeWorks are also a plus. If the sponsor/owner has bought the retail center right and is nimble, we will structure a financing to get the deal done.”
Talking more about the rise of e-commerce, Palmier explains that he is seeing opportunities for investors to buy in this sector as never before at attractive prices and significant yield on cost. “Yes, e-commerce is a real risk and operators need to understand it, and have skills and local market savvy to be nimble, to respond, and to be creative problem solvers,” he says. “When you buy right in a market, you give yourself ample room for unforeseen turnover and financial woe.”
Keep checking back for more in the coming week for wall-to-wall coverage surrounding the Las Vegas ICSC RECon show and overall trends in the retail market. Take a look below at stories you might have missed.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
