JLL Acquires Huntley, Mullaney, Spargo & Sullivan
- Feb 29, 2016
Chicago—Not that it needs to, but JLL has made another notable move in the expansion of its retail brokerage business. The commercial real estate services firm recently acquired Huntley, Mullaney, Spargo & Sullivan Inc., a national retail lease and debt restructuring firm.
Real estate lease restructuring, lease terminations, debt restructuring, Chapter 11 planning and execution—HMS does it all, with a team of former CEOs, CFOs and Board members at its core. The dollar signs attached to the Sacramento-based firm’s activities tell the story of its success; it has restructured in excess of $12 billion in lease and debt liabilities across the country since its founding in 1993. Its clients include retail, office and industrial users, but it’s the firm’s work with retail chains that has become its calling card.
“Retailers increasingly rely on experts to reinvigorate their real estate portfolios through restructuring. HMS creates value for retailers by reducing financial pressure on their portfolios and by helping profitable businesses improve returns on their assets,” Walter Wahlfeldt, executive vice president of JLL’s Retail Corporate Services, said in a prepared statement.
HMS was the right firm at the right time. JLL, the largest third-party retail property manager in the U.S., is an indisputable leader in the retail sector but instead of resting on its laurels, the firm is expanding its service offerings. It’s a growth plan that was ignited by a few factors in the market, including internet shopping. “There are retailers that are adapting well to the growing challenge of on-line shopping and there are others that are losing market share. Retailers with flat or declining revenues need to do everything they can to reduce operating costs, including debt service and occupancy expenses to maintain margins,” Wahlfeldt told Commercial Property Executive.
Another contributing factor is retail space availability and increasing rents. Wahlfeldt points out that retail occupancies have generally recovered from the economic downturn and development has been slow to pick up, resulting in rising rents. Consequently, retailers are feeling the pressure with lease renewals that will likely present them with unaffordable increases and, potentially, requirements to invest capital to spruce-up their stores.
Finally, retailer consolidation is also a factor that spurred JLL to expansion. “Following an acquisition or merger, retailers often need to reduce their combined portfolio to reduce redundant locations,” Wahlfeldt said, citing pharmacy, office supplies, auto parts chains as examples. “Additionally, we should see further consolidation in grocery as traditional large-format grocery stores see increased competition from smaller-format specialty grocery. We are either going to see large grocers acquiring some of these new players, or store closures as trade areas get over saturated.”
Bringing HMS into the family was just one of JLL’s recent actions designed to increase its ability to further accommodate its retail clients’ needs. Last year, the firm acquired Wilson Retail Group, a Los Angeles-based retail brokerage and capital markets firm, and San Francisco-based retail property management firm Shelter Bay Retail Group. But JLL’s recent retail roundup has not been limited to the States. In January of this year, JLL acquired ACREST, one of Germany’s top retail real estate asset management businesses.
Image courtesy of JLL