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Thread: Toy’s 'R' Us sites in New York City beware of future development.

  1. #1

    Default Toy’s 'R' Us sites in New York City beware of future development

    Right now this is purely speculation but Vornado is part of a group that just purchased Toys R Us, similarly Vornado was part of a group that had purchased Alexander’s. I would not be surprised to see Vornado take control of prime New York City sites and develop them. In my mind among the likeliest candidates is the one storey Toy’s ‘R’ Us in Times Square.


    TOYS 'R' KKR'S AT $5.8B


    An investor group that includes Kohlberg Kravis Roberts & Co., Bain Capital and Vornado Realty Trust has clinched a deal to snap up Toys 'R' Us for as nearly $5.8 billion, The Post has learned.

    The KKR-led consortium edged out a rival group led by Cerberus Capital Management, sources close to the process said. As of last night, terms of the deal were still being finalized, and sources warned that talks could still break down.

    But if talks remain on track, a deal could be announced as early as today.

    At yesterday's board meeting, Toys 'R' Us executives evaluated buyout proposals from the KKR-led group and from the Cerberus team, which also includes Goldman Sachs Group and Kimco Realty Corp.

    However, sources familiar with the situation said that the KKR team was given an opportunity to top its rival's bids after the offers were presented to the board earlier that day.

    A Toys 'R' Us official declined to comment. The sale of Wayne, N.J.- based Toys 'R' Us, a once mighty giant that lost its footing in the face of stiff competition from discount chains, marks an important shift in retailing.

    In 1993, Toys 'R' Us commanded a 22 percent share of the toy market, while Wal-Mart's share languished in the mid-teens. Today, those numbers are reversed.

    In recognition of its current difficulties, Toys 'R' Us said in August that it would consider selling its global toys business, part of a plan to create a standalone company for its faster growing Babies 'R' Us division.

    Potential suitors, however, were more interested in buying the entire company. Toys 'R' Us ultimately indicated that it would consider an outright sale, after one bidder submitted an offer for the whole company last week.

    The new owners of Toys 'R' Us will face the challenge of slimming down the troubled toy division, which includes 1,136 stores in the United States and Europe, just one of several steps intended to make it more competitive with rivals.

    While the fate of John Eyler, the chairman, president and chief executive of Toys 'R' Us remains unclear, observers said they expected him to resign from the company.

    Richard Markee, who was recently appointed president of Babies 'R' Us, and John Barbour, the president of the Toys 'R' Us division, are expected to remain in their posts.

    Toys 'R' Us closed at $24.77, up 68 cents.

  2. #2
    Forum Veteran
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    Jan 2002
    West Harlem


    Interesting how the name of the company is Cerberus...

  3. #3
    Banned Member
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    Dec 2002
    Park Slope, Brooklyn, NY


    Two prime NYC locations: Union Square & Times Square.

    But, I'm pretty sure neither building is owned by Toys R Us.

  4. #4


    It looks like my hunch has some validity:

    New York Daily News:

    New game for Toys 'R' Us
    Thursday, March 17th, 2005

    A trio of big-time investors is buying Toys "R" Us for $6.6 billion - and one of them is a whiz at turning money-losing stores into lucrative real-estate sites.

    Steven Roth's Vornado Realty Trust will be one-third owner of the struggling toy company, in a deal announced yesterday. Roth made it big by redeveloping property from failing retailers like Two Guys and Alexander's.

    He and his partners will radically reduce the size of ailing Toys "R" Us - and make remaining stores profitable through redesigns and a change of product mix, retail and real estate analysts predicted.

    They believe Toys "R" Us can - and will - be saved.

    "There is room in the U.S. for a specialty toy retailer - and a smaller, stripped-down, revitalized Toys "R" Us can be the chain that will make it," said analyst Bill Sims of Citigroup Smith Barney.

    Roth's publicly traded real estate firm will be equal partners with the world's largest buyout firm, Kohlberg Kravis Roberts, and Bain Capital Partners, a private investment firm founded by current Massachusetts governor Mitt Romney.

    The deal should be finalized by July. Once the new owners are in charge, expect about 200 money-losing stores to be closed nationwide, said Howard Davidowitz, chairman of retail consulting and investment banking firm Davidowitz & Associates.

    There are currently 681 Toys "R" Us stores in the U.S.

    The toy chain can make big bucks by selling shuttered sites if it owns the properties. And because many of its leases are below market rates, it can profit by selling those leases, or carving up and subleasing each locale to two or three retailers.

    Roth knows exactly how to make money at this game. "You've probably got the best guy in the world to deal with this," said Davidowitz, who has worked with the real estate mogul in the past.

    To generate cash, the new owners will spin off high-performing Babies "R" Us in an initial public offering, and sell overseas Toys "R" Us divisions, Davidowitz predicted. There are 601 Toys "R" Us stores in other countries.

    In the city - which has more than a dozen stores - the flagship in Times Square would likely remain open because it's a tourist attraction. But some stores are in such hot locations that the new owners will be tempted to close them and make money with their real estate, said Michael Friedman of In-Line Realty.

    These include Baychester Avenue and Bruckner Expressway sites in the Bronx, Bay Parkway and Flatbush Avenue locations in Brooklyn and a Whitestone Expressway site in Queens.

    The stores that stay open need a new mix of toys - with an emphasis on exclusive brands and upscale plush toys to draw people into the stores, said retail analyst Walter Loeb. They must also do better at stocking trendy must-have toys, and must sell basics like Barbie and Fisher-Price so shoppers won't go to competitor Wal-Mart to get them.

    And the stores need to be revamped to improve the shopping experience, said Citigroup analyst Sims.

    "Bring back the fun - so kids want to stick around and play and explore," he said.

  5. #5
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    Garden City, LI


    Quote Originally Posted by Stern

    These include Baychester Avenue and Bruckner Expressway sites in the Bronx, Bay Parkway and Flatbush Avenue locations in Brooklyn and a Whitestone Expressway site in Queens.
    Makes sense. Not sure what they own, but I don't think they own the Whitestone Expressway one. Plus, it's a store at the base of a mulitplex. They already closed the Kids R Us, which was the other retail tenant.

  6. #6
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    Jan 2002
    West Harlem


    The one in Caesar's Bay (Bay Pkwy) will probably close first, or just make their entire space Babies (half is now). K-Mart died next door and was replaced by Kohl's.

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