The former Hannaford store in Matthews, North Carolina, is part of a  16-property portfolio of surplus real estate being handled by DRE in  Charlotte.

VIRGINIA BEACH, VIRGINIA:  Whether the result of excess property, retail or e-commerce competition, or the influx of town center and street retail 
development, many big boxes are forced to close their doors. Luckily, 
Divaris Real Estate is there to open up new ones. DRE, national leaders 
in the field of surplus disposition and repositioning strategies, has 
been retained to handle the lease and/or sale of 17 former Hechinger/HQ 
stores, 16 former Hannaford Bros. stores, 11 former Heafner Tire distribution facilities, and ten former Rite Aid stores in prime locations throughout 
the eastern United States.

Hechinger/HQ

Divaris Real Estate was retained to manage and dispose of 17 big box stores once owned by Hechinger Company, a Largo, Maryland-based chain of home improvement stores that underwent a Chapter 11 reorganization and closed its doors in 1999. 

"With the economy slowing, we are seeing more and more retailers cutting back on expansion plans, sitting tight, or contracting," says Sanford Cohen, DRE's COO and head of the team handling the disposition of the Hechinger properties.   "Hechinger was one of those who contracted all the way."

The former Hechinger/HQ properties, both freestanding and in-line 
stores, comprise over 1.5 million square feet of indoor and garden center space in diverse markets, including Birmingham, Alabama: Glen Burnie, Maryland; Syracuse, New York; Greensboro and Fayetteville, North Carolina; Columbus, Ohio; Philadelphia and Pittsburgh, Pennsylvania; Greenville, South Carolina; and Burke, Fredericksburg, Newport News, and Roanoke, Virginia. 

Divaris was hired by six bondholders for the former Hechinger stores to "gain control of the Hechinger properties, secure them, manage them and dispose of them in a formal, structured way to obtain the best return for the bond holders," according to Cohen. "There is a variety of ownership interests - they're not all straight fee interests - which complicates the process a bit," he says.

The buildings range from 60,000 to 90,000 square feet and have a 
market value of approximately $50 million. Of the 17, five have been sold, and four are under contract to be sold.  The buyers include Sears Roebuck, Home Depot, Roadside Development, Highland Development and an investor group that bought a facility leased to Best Buy. 

"When we inherited the properties, they were in varying degrees of occupancy," says Cohen. "They were all vacant in terms of tenancy, but some of them had fixtures, some had equipment and some were empty.  So we consolidated all of the equipment and fixtures and sold and disposed of those first."

Marketing so many properties in such diverse markets posed a challenge 
for Divaris Real Estate, who began marketing efforts in June, 2000. 
"This is a unique situation for us because we are acting as the asset 
manager for property owners that are institutions," says Cohen. In other 
words, Divaris is acting on behalf of the investor group rather than 
working for the retailer itself. "This particular portfolio has a unique set of challenges in that the properties have various forms of ownership, they are geographically dispersed, and we are not working with a single point of contact." 

In addition to traditional marketing campaigns,  the company has local agents in each of the markets.  These agents market the properties in their 
immediate areas. They also have listed the properties online and have a 
database of regular clients to whom they periodically send information on sales and leasing opportunities.  According to Cohen, the company's 
goal is to dispose of the properties the end of 2001.
 

Hannaford Bros.

Hannaford operates 112 supermarkets located throughout Maine, New 
Hampshire, Vermont, New York and Massachusetts, operating under the names of Shop 'n Save and Hannaford Food and Drug Superstores.  When the company decided to make its way to the Carolinas, it purchased the Wilson grocery store chain as part of its entry into the market, and it built a number of new stores. But when Delhaize America, Inc. bought Hannaford, the company was forced to exit Virginia and the Carolinas to gain approval from the Federal Trade Commission.  So Hannaford called on Divaris Real Estate, which had initially worked on Hannaford's entry into the Southeast region, to help with disposition.

Divaris was retained to dispose of 16 Hannaford properties in the Carolinas and four in Virginia. So far, six stores have been sold.  The closed Hannaford deals include a nine-acre site at Park Road and Woodlawn Road in Charlotte that was sold to a local developer and ten acres of land in Wilmington, North Carolina, that was sold to Hannover Realty.  Four local investors acquired a ten-acre site in Lumberton, North Carolina, a 43,000-square-foot facility at Twin Oaks Plaza (also in Lumberton), and a 35,000-square-foot building in Conway, South Carolina was purchased by Edens & Avant.

Charles Owens, vice president of retail leasing in DRE's 
Charlotte office, is marketing the Hannaford stores in North Carolina.  He worked through Divaris' corporate databank and networked with DRE's 
offices and affiliates to accomplish his goals quickly and effectively.

The Heafner Tire Group

The Heafner Tire Group, independent marketer of tires and tire-related 
products, called on Divaris Real Estate to dispose of some of its 
excess property. According to Jonathan Guion, SIOR a DRE principal and director of industrial services, "Heafner Tire is doing a tremendous amount of expansion and is more concerned about its distribution network than worrying about real estate the company  doesn't need." 

The excess real estate is 260,000 square feet in 11 buildings, mostly 
warehouses and distribution centers in the Southeast, including sites in 
Chesapeake, Virginia Beach, Richmond and Roanoke, Virginia; Knoxville, Tennessee; Pensacola and Tallahassee, Florida; Texarkana, Arkansas; Salisbury, Maryland; and Rome, Georgia.

So far, Divaris has sold a 22,500-square-foot distribution site in 
Richmond for $613,000; a 13,750-square-foot center in Pensacola, for 
$180,000; a 16,000-square-foot facility in Texarkana, for $170,000; and a 20,000-square-foot building in Chesapeake. Divaris also sold an 8,000-square-foot and a 4,740-square-foot former Merchants Tire site in Virginia Beach both of which were acquired by Heafner several years ago, to a local investor for an undisclosed amount.  Deals are pending on properties in Roanoke and Knoxville.

For Guion, marketing 11 different properties in various markets means 
covering all your bases. "You have to market the buildings locally, 
through whatever channels the local brokers would normally utilize to market buildings." 

According to Guion, this means putting up local signs, advertising in 
local trade journals, and contacting local brokers.   "On top of that, 
marketing takes on a global perspective, including using the Internet 
to work with brokers nationally," says Guion. "You've got to cover 
everything from putting signs up in front of the local buildings to getting in touch with someone in another state when you have a prospective buyer."

Guion also notes that an important factor for a company like The 
Heafner Tire Group is knowing that there is a single point of contact to 
handle the entire process. Guion had to hire five or six outside agents for properties that were located in markets beyond what Divaris would 
normally handle in-house. 

"It takes a global understanding to be able to manage 11 buildings," notes Guion. "It's important to make sure we have the right people making follow-up calls with brokers in other markets, so that when my client calls me, I can give him the status of every single building we're handling. So it's as much managing the process as it is handling the paperwork and getting the actual closing done."

Rite Aid

DRE is actively marketing ten surplus Rite Aid locations in Virginia.  Five of 
these properties are on the Southside of Hampton Roads, with four in 
Virginia Beach and one in Norfolk.   Three more surplus Rite Aid properties are being marketed in the metropolitan Richmond area.   The properties are a mix of land parcels, freestanding buildings and in-line shopping center 
space.

The Virginia Beach locations include a 0.3 acre parcel of land in the 
Hilltop section of the city, 0.2 acres in the Kempsville submarket, 
and 10,667 square feet of in-line space in the Giant Square Shopping 
Center near the central business district at Pembroke.   The former Just 
for Feet building on Lynnhaven Parkway, was a Rite Aid surplus property 
that has been leased by DRE's Anne Millar to Off Broadway Shoe 
Warehouse.   The 6,000-square-foot Norfolk store is also in-line space, located at Church Street Crossing.
 
 

Off Broadway Shoe Warehouse leases a Rite-Aid surplus property, the former Just For Feet store in Virginia Beach.

In Hampton, on the Virginia Peninsula, DRE is handling the disposition 
of two properties, a 9,600-square-foot, free-standing building located 
at 1902 West Mercury Boulevard and a 0.5 acre land parcel at the 
intersection of Big Bethel Boulevard and Yale Drive.

DRE's Richmond office has negotiated a lease for a 10,663-square-foot 
freestanding Rite Aid store, and is marketing two inline spaces, 7,680 
square feet in Richmond and 10,500 square feet located in Hopewell, 
Virginia.

Additional Assignments

DRE is also working to dispose surplus properties for Best Buy in Virginia, South Carolina and Florida, as well as Pizza Hut in Virginia.  The growing success achieved in fulfilling its assignments has resulted in many retailers taking note of its expertise and hiring DRE to minimize its exposure.