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Goodbye Geoffrey

Columnist: Bill Meagher
May, 2018 Issue
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Bill Meagher
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“I don’t want to grow up, I’m a Toys R Us kid.” That, of course, is the jingle for the most well-known toy store in the country.

The ubiquitous toy retailer has finally called it quits, and will close its stores including the San Rafael outlet on West Francisco Boulevard alongside Highway 101.

The chain filed for Chapter 11 bankruptcy protection last September and in January announced plans to close 200 stores.

Brick-and-mortar retail is struggling, according to Coresight Research, which says that in 2017, 7,000 stores gave up the ghost. Many observers have pointed to the rise in online retail sales and Amazon as the likely villain in retail’s downward spiral. In the case of Toys, a choking amount of debt spelled the end for the chain.

The 70-year-old company is owned by Bain Capital Private Equity LP, Kohlberg Kravis Roberts & Co. LP and Vornado Realty Trust, with the first two investors being private equity players. Often times but not always, private equity buyouts like Toys R Us are accompanied by a load of debt that is used to buy the company. In the case of Toys R Us the company has carried $5 billion of debt from the leverage buyout.

Toys is the second old-school retailer to call it quits recently. Sears shut down as well, leaving a flagship-size hole at the Northgate Mall in San Rafael.

Job No. 1

The more things change the more they stay the same. The biggest challenge for years facing Marin businesses is how to hire and hold employees. But now the Marin Economic Commission wants to take a crack at solving the ancient riddle.

Thanks to the sky-high price of housing as well as an unemployment rate that most places would kill for (2.3 percent) it’s tough to fill open positions in Marin.

Fueled by a total of $100,000 in grants from the Workforce Alliance of the North Bay and the College of Marin, the commission wants to hire a manager to ride herd on the program, collecting data and generate white papers. The program will begin next year at COM and hopefully connect students and grads with local businesses, especially in the hospitality and technology sectors.

The commission hopes to have more than 500 Marin businesses in the program.

No vacancy of hotel sales

For the second time in four months, a hotel in Marin has been snapped up as the 230-room Embassy Suites in San Rafael was purchased in a deal for $38 million. The price tag is soft as Wells Fargo holds an $87 million loan on the property so the debt was likely assumed in the purchase.

The buyer is privately held Hospitality Ventures Management Group.  The Atlanta-based company has a portfolio of 35 hotels across the country with three in California and is focused on turning around underperforming hotels. The company has hotels in 16 different states with brands that include Hilton, Hyatt, Marriot, Starwood and IHG. The portfolio includes 10 Embassy Suites.

While the company owns hotels, it also offers management services to other companies. Earlier this year, the company sold off an Embassy Suites in Atlanta but retained the management of the property.

It’s anticipated that the new owner will do some upgrades on the hotel although San Rafael city officials believe the hotel will remain open while the work is being done.

The seller was Marin Hotel Owner LLC.

Inn Marin, the 70-room boutique hotel on Entrada Drive in Novato was sold late last year for $12 million by brothers John and Robert Marshall to the D&K Patel 2011 Trust. The deal includes Rickey’s Restaurant. The new ownership plans to reflag the property as an Ascend Hotel by Choice Hotels.

The new owners are familiar with the North Bay as they purchased the Hotel Petaluma in 2015.

Your Marin moment

Business has taken a turn at Finnegan’s Marin Restaurant and Bar and a trio of parking spaces in front of the eatery has disappeared. In their place a patio has sprung up on Novato’s main drag, Grant Avenue.

The patio is something of an experiment with the city giving up parking in an effort to generate more foot traffic for downtown, and Finnegan’s building the patio and adding a daily lunch service as well as half a dozen employees.

The process to add the patio went through all the usual city hoops and took a year to come out the other side. The city of Novato has gotten a rap in recent years for putting the “No” in Novato, making life tough on businesses. But in this case, the city deserves points for looking at a creative idea and not reacting in the easiest way—by saying no because parking is sacred.

Bill Meagher is a contributing editor at
NorthBay biz and an associate editor for The Deal and TheStreet in their San Francisco office.



 

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