Case Studies

Color Tile

Business Description: A national flooring/carpeting retailer who first filed Chapter 11, then was forced to liquidate through Chapter 7.

Summary: Prime Locations was engaged to sell 150 owned store locations, many of them old, unimproved and in locations that were no longer very good. The liquidation forced some difficult time constraints: the final 86 had to be sold within 45 days, and then closed within another 30 days. Prime Locations was able to sell all the properties within the allotted time frame and surprised the lenders and creditors with a yield that was 25% higher projected.

Testimonial: "Prime Locations did a great job on Color Tile. We had interested from a bulk buyer, but Prime Locations maximized our yield by finding individual buyers through their network. We delivered much better value than anyone expected, at least 25% higher than planned."

Jim Fogarty, Partner, Alvarez and Marsal

CompuAdd

Business Description: National reseller of computer hardware, software and peripherals.

Summary: CompuAdd announced the closure of 113 retail sites with leases that averaged five remaining years. Prime Locations was retained, prior to their bankruptcy filing, to negotiate lease terminations with the landlords. Prime Locations successfully negotiated with the majority of landlords to exit leases with an average fee of two months' rent – less than five cents on the dollar against the full lease value.

Fazoli’s

Business Description: A national fast food Italian restaurant chain, operating almost 800 franchised and owned locations in 31 states, mostly in the Midwest and mountain west states.

Summary: Prime Locations was called upon to sell more than a dozen owned properties in sale-leaseback arrangements to generate cash, repay senior creditors and forestall bankruptcy proceedings. Prime Locations was successful selling the properties quickly, which gave the client six months to effect an orderly sale of the business, instead of a distressed sale in 60 days or worse, a bankruptcy process. Prime Locations was also called upon to review lease valuations and renegotiate above-market rents.

Testimonial: “When we were first hired at Fazoli’s, the secured lenders were pressing hard for a solution. Prime Locations, through the quick sale/leaseback arrangements, freed up assets locked in the business and took the pressure off. In the end, all of the Company's debt obligations were paid off and the equity holders were able to maximize their value through an orderly process. Sales of the real estate parcels were key to making the deal work.”

Lindsey Alley, partner, Houlihan Lokey

Furr's Cafeterias

Business Description: Public chain of 106 family-style buffet restaurants in the Southwestern US with aging properties and deferred maintenance.

Summary: Furr's entered Chapter 11 bankruptcy to enable financial restructuring. Prime Locations' principals were retained to offer a complete analysis of all locations that assisted the company in determining which sites to close and which leases to reject. Seven owned properties were quickly sold for $4 million, which was higher than the liquidation analysis. The project leaders also renegotiated above-market leases, which saved ten locations slated to close.

Hook's SupeRx Drugs

Business Description: Regional drug store chain

Summary: Hooks had been trying to dispose of 50 unwanted locations, some of them for two years or more. Prime Locations earned the right to work with Hooks by starting with their ten worst locations and successfully subleasing the spaces or terminating the leases. After that, Prime Locations was engaged as Hook's exclusive provider until the sale of the company to Revco. Across the entire project, about 80% of Hook's lease liability was mitigated, dramatically improving their real estate portfolio prior to the merger.

HQ Global Workplaces

Business Description: National leader in the shared office space market, with 320 locations across the United States. HQ Global also provides executive services to its clients.

Summary: HQ Global entered Chapter 11 to facilitate a restructuring. Prime Locations principals were engaged to renegotiate a majority of the leases, with the expectation that they would have to reject many of them. With real estate as the single largest expense, the future of the company hung in the balance. The negotiations were delicate because HQ Global needed to remain on good terms with their landlords who, in effect, become business partners by offering referrals for smaller clients.

As a result of the 18 month project, HQ saved a total of $114 million on lease liability. In the end, HQ was able to remain in 90% of their target markets, a critical outcome ensuring their continued dominant position in the executive space market. Total lease obligations were reduced by 20-25%, allowing the company to successfully emerge from Chapter 11.

Testimonial: "Jim Matthews was an outstanding negotiator. He knew when to press and when to back off. His technical knowledge of the bankruptcy process gave us tremendous leverage in very difficult negotiations. They exceeded our expectations by 300%!"

Joe Wallace, VP Real Estate, HQ Global

J.C. Penney

Business Description: National department store chain.

Summary: JC Penney chose to close an underperforming location in Florida. Prime Locations negotiated the lease termination, which they achieved for less than 10% of total remaining amount due on the lease.

Jitney Jungle Stores

Business Description: Chain of 125 grocery stores in Texas, Arkansas, Alabama, Mississippi and Louisiana trading as Delchamps and Jitney Jungle.

Summary: In chapter 11 bankruptcy, Jitney Jungle engaged Prime Locations to renegotiate all store leases. Prime Locations saved the company more than $27 million in ongoing occupancy costs, enabling them to improve their leasehold positions and successfully sell leases to other operators.

McCrory Stores

Business Description: National chain of 5 & 10 discount stores.

Summary: Principals of Prime Locations assisted in the negotiation of 600 leases during McCrory's Chapter 11 proceedings. Total savings achieved were in excess of $3 million annually, enabling McCrory's to emerge from bankruptcy.

Oakwood Homes

Business Description: Oakwood is a national leader in the manufacture and sale of mobile homes.

Summary: In Chapter 11 bankruptcy, Oakwood retained Prime Locations and the CORE Network to sell 21 excess retail sites and 15 excess manufacturing facilities. The locations were Oakwood's least desirable, and many of the properties were aging. The company had already been trying to sell the properties, some of them for as long as two years. In 7 months, Prime Locations was able to sell half of the sites, raising $13 million. Many of the properties were sold above target price, and Prime Locations marketing efforts caused many properties to be sold at auction, raising existing bids on properties by almost $3 million.

Testimonial: "We found Prime Locations to be aggressive and responsive. They understand how to work the system to move excess space. I would definitely use them again!"

Lisa Poulin, Partner, CRG Partners

Revco Drug

Business Description: National drug store chain in the process of converting strip center stores to larger, free standing stores.

Summary: Revco's move to freestanding stores left them with more than 100 excess sites. Prime Locations was engaged exclusively to sublease as many sites as possible and terminate the remaining leases. Through a combination of subleasing and termination negotiations, Prime Locations was successful minimizing Revco's exposure by more than 80% of committed leasehold value for the 100 sites. The Prime Locations project dramatically improved Revco's real estate portfolio prior to their acquisition by CVS.

Rite Aid

Business Description: National drug store chain with concentration of locations in the Northeast, Mid-Atlantic and Texas.

Summary: Prime Locations was engaged to dispose of approximately 100 locations, most of them in strip centers, as Rite Aid followed a national trend by moving to free-standing stores wherever possible. Prime Locations was successful subleasing many of the properties, covering more than 80% of lease cost on average. The balance of the leases were terminated through landlord negotiations with exits costs between 10% and 25% of remaining lease liability.

Testimonial: "Prime Locations' follow-up is excellent. Not everyone in the industry is great at reporting, but their reports are excellent. We're still using their valuation template after 10 years!"

Karen Smith, Group VP Real Estate, Rite Aid

TG&Y Stores

Business Description: Discount department store chain with 726 locations, mostly across the southern United States. Stores averaged 40,000 square feet, making it difficult for them to compete with Wal-Mart.

Summary: Principals of Prime Locations disposed of more than 400 leased store sites over four years subsequent to TG&Y's acquisition by McCrory's. Prime Locations also disposed of six distribution centers with an average size of 300,000 square feet. On average, Prime Locations negotiated terminations for only 10% of the remaining liability on the leases.

TIC United

Business Description: A national trucking and transportation company based in Dallas.

Summary: TIC sought Chapter 11 bankruptcy protection to help re-organize their business. Prime Locations, working with regional broker, The Joe Foster Company, was engaged to sell twenty properties to offset losses and pay down creditors. Over 18 months, the project generated more than $8 million in cash through the sale of most of the properties. Eventually, TIC was forced into Chapter 7 liquidation, and the remaining properties were marketed and sold.

USA Investment Partners

Business Description: A holding company with 80 subsidiaries primarily involved in real estate. There were 5 separate entities in Chapter 11 proceedings, with more than 80 properties including finished condominiums, an office building, a residential construction project in progress and raw (undeveloped) land.

Summary: Working for the court-appointed trustee, Prime Locations prepared detailed property reports showing value under different sales scenarios and how best to monetize those properties in a difficult real estate environment. In a turning point for the case, Prime Locations led the sales effort for the boutique Hotel Zoso in Palm Springs, CA at auction for the target price of $25 million, enabling that filing to close in less than a year. Working with local brokers, Prime Locations also engineered the sale of four additional properties while relieving the debtor of $30MM in liabilities related to one large residential project, improving both the balance sheet and cash flow.

Testimonial: "Jim Matthews started with limited files and developed very complete reports on each property that allowed us to define appropriate strategies. I was very confident in his values and I could depend on his creative approaches and inputs to strategy."

Lisa Poulin, partner, CRG Partners and Court-appointed Trustee