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Joe Anto

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Industry Trends

Retail Sales Increase in November, Defying Expectations

November's retail sales in the US grew by 0.3%, defying economists' predictions of a 0.1% decline, with eight of the thirteen categories highlighted in the release showing increases from a month ago. The November report further underscores the resilience of consumer spending in the face of inflation and recession fears, with spending gains in restaurants and hobby stores. While stronger economic growth is a positive for labor markets and puts upward pressure on inflation, it also signals to markets that the Fed is unlikely to cut interest rates as quickly as market participants have priced in. Federal Reserve Chair, Jerome Powell, acknowledged the dilemma, stating that “strong growth may necessitate rate hikes.”1

Arkhouse and Brigade Capital Eye $5.8 Billion Takeover of Macy's

Arkhouse Management and Brigade Capital made a $5.8 billion buyout proposal for Macy’s of $21.00 per share, representing a 20.8% premium from its previous closing price of $17.39. Arkhouse Management, a real-estate-focused investing firm, and Brigade Capital Management, a global asset manager, hope to capitalize on the retail giant’s real estate portfolio. Macy's total real estate value is $8.5 billion, or $31.00 per share, including the storied property at Herald Square valued at $3.0 billion alone, according to J.P. Morgan analysts. If the bid is successful, the deal would be the largest transaction for Arkhouse and Brigade, who unsuccessfully bid $2.4 billion on Columbia Property Trust in 2022. Macy's has not responded to the bid.2

Economic Growth Amid Inflation and Rate Tensions

On November 29, 2023, the U.S. government reported annual Q3 GDP growth of 5.2%, beating estimates of 4.9% and eclipsing 2.1% growth in Q2. Consumer spending rose at an annualized 3.6% in Q3, lower than the 4.0% estimated, however, private investment surged to 10.5% annually, including a 6.2% increase in housing investment, despite higher mortgage rates. The largest economy in the world remained defiant as the Federal Reserve raised interest rates eleven times since March 2022 to combat inflation, increasing consumer and business borrowing costs. The rate hikes lowered inflation as consumer price increases were 3.2% in October 2023 compared to 9.1% in June 2022. Despite the positive Q3 report, the Organization for Economic Cooperation and Development forecasted economic growth of only 1.5% in 2024, as worries persist about the Fed's rate hikes on the economy and household budgets.3

Rising Consumer Confidence and Spending Resilience

Deloitte's “Consumer Signals,” a deep dive into global consumer spending behavior, reveals an improving financial well-being index, reaching 101.4 in November. The Company conducts monthly surveys of thousands of consumers worldwide to shed light on spending habits and financial health. Despite economic uncertainties, 65% of global respondents expect improved finances in the next year. The study explores splurge purchases, food frugality behaviors, and the global food frugality index, indicating changing consumer habits in response to financial stress and rising food prices. This improvement suggests a rebound in consumer spending intentions, returning to levels seen in 2021, and underscores the adaptability of consumers in a fluctuating economic environment.4

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Jim Koons Management Co Inc.
  • Asbury Automotive Group, LLC
  • $1,200.00
  • 112 fuel and convenience retail sites of MAPCO Express Inc.
  • Alimentation Couche-Tard Inc.
  • $459.00
  • Fiesta Restaurant Group, Inc.
  • Authentic Restaurant Brands
  • $388.00
  • RP/HH Park Plaza, Limited Partnership
  • Undisclosed Buyer
  • $371.00
  • VEGAS.com, LLC
  • Vivid Seats Inc.
  • $251.10
  • Courtyard by Marriott Salt Lake City Downtown/Hyatt House Salt Lake City/346-space parking garage
  • Apple Hospitality REIT, Inc.
  • $91.41
  • Substantially All Of The Assets Of Noble House Home Furnishings, LLC
  • GigaCloud Technology Inc.
  • $85.00
  • W.S. Badcock Corporation
  • Conn's, Inc.
  • $74.48
  • KMS Fisherman's Wharf LP
  • EOS Investors LLC
  • $68.51
  • Propulsion-Agnostic Business of Mobex
  • Linamar Corporation
  • $64.00

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • 146-Room Residence Inn by Marriott Seattle South/Renton
  • Apple Hospitality REIT, Inc.
  • $55.48
  • Biscayne Sea Club, Inc.
  • Macklowe Properties, Inc.
  • $47.70
  • Embassy Suites by Hilton South Jordan Salt Lake City
  • Apple Hospitality REIT, Inc. 
  • $36.75
  • The Hampton Inn & Suites
  • JMA Ventures, LLC
  • $22.50
  • Sunstyle Suites Inn located in Orlando, Florida.
  • The Siegel Group Nevada Inc.
  • $10.33
  • Comfort Suites Raleigh Durham Airport/RTP
  • The Focus Properties, Inc.
  • $9.10
  • The Lakeview, Ohio Resort Community
  • Flagship Communities Real Estate Investment Trust
  • $3.00

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • SLS Brickell Hotel
  • Kastrati Group Sh.A.
  • $55.00
  • DCE Construction, Inc.
  • Here to Serve Holding Corp.
  • $31.43
  • CardCash Exchange Inc.
  • RDE, Inc.
  • $30.97
  • Certain assets of BigShots Golf
  • Topgolf Callaway Brands Corp. 
  • $29.00
  • Home2 Suites by Hilton Cincinnati Eastgate/Tru by Hilton Easton
  • Eastgate Boulevard LLC
  • $27.30
  • The Courtyard Tampa Oldsmar and Residence Inn Tampa Oldsmar
  • KMD Hospitality Management LLC
  • $24.75
  • Bear Valley Mountain Resort, LLC
  • The Cali Pass
  • $19.50
  • Holiday Inn St. Petersburg West
  • NexGen Hotels Management Inc.
  • $18.75
  • bebe stores, inc.
  • B. Riley Financial, Inc.
  • $18.50
  • Fairfield Inn & Suites by Marriott hotel
  • Moonstar Hospitality LLC
  • $18.00

 

Source S&P Capital IQ as of 1/16/2024 and PCE Proprietary Data

PCE Transactions

Contacts

Joe Anto

Orlando Office

407-621-2141 |

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Eric Zaleski

Chicago Office

847-239-2466 |

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Kyle Wishing

Atlanta Office

404-994-4186 |

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. 1. Schafer, Josh. “November Retail Sales Surprise Wall Street.” Yahoo Finance, December 14, 2023.
  2. 2. Summerville, Abigail. “Macy's investors mount $5.8 billion buyout bid” Reuters, December 11, 2023.
  3. 3. Wiseman, Paul. “US economic growth for last quarter is revised up to a 5.2% annual rate” AP News, November 29, 2023.
  4. 4. “Consumer Signals.” Deloitte Insights, November 2023.
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