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Basch Report: Black Knight sees pandemic health care savings

August 20-26, 2020

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JACKSONVILLE

Record & Observer THE STEIN MART BANKRUPTCY

Record Observer PATH OF& NO RETURN JACKSONVILLE

Its sales slumping for years, the JacksonvilleJACKSONVILLE based retailer tried to find a buyer and launch a turnaround initiative, but the pandemic changed everything.

THE MATHIS REPORT

Record & Observer Losing money

CONTRIBUTING WRITER

2018

2019

$10.5 million

$144,000

BY MARK BASCH

$26.6 million

2016 2017

$6.2 million

Stein Mart Inc.’s net loss for the past four years.

W Record & Observer  JACKSONVILLE

ith sales dropping and the company unable to find a buyer, Jacksonvillebased Stein Mart Inc. in January 2019 launched an initiative called “POPS” - Path to Off-Price Success - to turn the business around. Stein Mart had 281 stores in 30 states as a national specialty offprice retailer offering designer and name-brand fashion apparel, home décor, accessories and shoes at discount prices. Early tests of POPS showed promise but before it could gain traction, the initiative was put on hold when the fashion retailer did find a buyer in January 2020, Kingswood Capital Management LLC. However, after the COVID-19 pandemic forced Stein Mart to close its stores in March, it had to terminate the merger agreement in April. When the stores did reopen, a resurgence of COVID-19 made it impossible to generate enough sales to keep the business viable. That left Stein Mart no alternative but to file a petition last week for Chapter 11 bankruptcy, according to a case management summary filed in U.S. Bankruptcy Court for the Middle District of Florida Jacksonville Division.

KAREN BRUNE MATHIS EDITOR



Sliding sales

The target customer Stein Mart describes its target customer as a woman who is both style conscious and value seeking. She typically is married and college educated. She may be multicultural, works at least part-time in a professional position and has above-average household income.

Comparablestore sales (sales at stores open for more than one year) also dropped for the past four years.

Sales by category Stein Mart sales by category in 2019. Category Percent Women’s apparel 49% Men’s 18% Home 10%

Year Change

Accessories 9%

2016 3.8%

Shoes 9%

2017 6.2%

Other 5%

2018 1.0% 2019 1.4%

MORE INSIDE n From its founding to its bankruptcy: Key events in the history of Stein Mart. Page 6 n Bankruptcy attorneys for Stein Mart and a creditor explain why it chose Chapter 11. Page 6

SEE STEIN MART, PAGE 6

What’s Trending: The Hub Brooklyn seeks design approval PAGE 2 The top sales of the week in commercial real estate PAGE 8 Marbut Report: Peoples-Waters ousts incumbent judge PAGE 12

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Gyms, grocers among tenants checking out Stein Mart stores Stein Mart Inc.’s six Jacksonville area stores might not stay empty for long after the bankrupt fashion chain liquidates its merchandise and closes in a few months. “Big picturewise, it’s great real estate,” said Carrie Smith, managing director of the Franklin Street real estate company. Stein Mart leases from 30,000 to 46,000 square feet of anchor box space at six properties. “They are all well-positioned,” Smith said. “We feel bad for Stein Mart, but we’ve had tenants who have expressed interest in taking those boxes if we get them back,” she said. Smith said potential tenants include gyms, supermarkets, furniture stores and soft good uses. “Burlington, TJX Companies and Hobby Lobby are all SEE MATHIS, PAGE 7

GUEST COMMENTARY

American Bar Association adopts 60 new policies Delegate Alan Pickert shares highlights. PAGE 10 VOLUME 3, NO. 12 • ONE SECTION

WHAT’S TRENDING

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JACKSONVILLE DAILY RECORD / JACKSONVILLE RECORD & OBSERVER 20, 2020 THURSDAY, AUGUST

Big news doesn’t break just on Thursday. Here’s a look at some of the top stories published over the past week online at JaxDailyRecord.com and in the Jacksonville Daily Record that you may have missed.

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THURSDAY, AUGUST 20, 2020

COVID cuts Black Knight’s medical costs

The company says the pandemic reduced employee doctor visits. It seems counterintuitive, but one major Jacksonville company says the COVID-19 pandemic has reduced its medical expenses. As Black Knight Inc. reported second-quarter earnings last week, it said medical expenses were lower than the company expected. “I think a good chunk of that is just favorable experience, which is terrific,” Chief Financial Officer Kirk Larsen said during Black Knight’s quarterly conference call with analysts. “The second part is that our employees and their families were not going to doctors and hospitals for nonessential things because of COVID,” he said. “There is the possibility we could have similar experience in the second half. But that’s not what we are planning for, because it really was just so far

Duos Technologies increases revenue Duos Technologies Group Inc. last week said secondquarter revenue rose 47% to $1.98 million, but the provider of intelligent security analytical technology had a net loss of $1.47 million, or 42 cents a share. Jacksonville-based Duos previously projected revenue to reach $20 million this year but with the pandemic delaying some contracts, it is not making predictions now. CEO Gianni Arcaini said last month he will retire Sept. 1, but will continue as chairman of the board. “We have initiated a formal search process to identify a successor with the right mix of technical acumen, business development experience and strong leadership abilities,” Arcaini said in the company’s conference call, according to a transcript posted by the company. “We have been encouraged

by the results of that process to date and are looking forward to providing more substantive updates as the process hits its conclusion in the very near future,” he said.

Pandemic cuts GEE Group revenue GEE Group Inc. on Aug. 17 said revenue for its third quarter ended June 30 dropped about 30% to $26.6 million. The Jacksonville-based staffing company said client office and factory closures during the COVID-19 pandemic reduced business. GEE Group had net income of $7.2 million in the quarter, which included a $12.3 million gain from the extinguishment of debt. CEO Derek Dewan expressed optimism that conditions are improving. “The Company has adapted to the ‘new normal.’ Business has stabilized nicely and is trending upward in an improving demand environment,” Dewan said in a news release.

ParkerVision court cases move ahead ParkerVision Inc. last week reported a second-quarter net loss of $3.6 million, or 8 cents a share. The Jacksonville-based developer of wireless technology has no products on the market and is engaged only in several court actions against

major telecommunications manufacturers, alleging they are illegally using ParkerVision’s patented technology. ParkerVision said a case in U.S. District Court in Orlando against Qualcomm Inc. and HTC Corp. is moving forward after a temporary pandemicrelated stay was lifted. “Although COVID-19 resulted in some delays in our patent infringement Parker actions, we are pleased that the temporary stay in Orlando has been lifted so that we can continue to prepare our case for trial,” CEO Jeff Parker said in a news release. The trial was rescheduled from December 2020 to May 2021.

Landstar’s stock reaches record high Landstar System Inc.’s stock reached a record high of $133.70 last week, a 17% gain from its price at the beginning of 2020. The new high came a week after Goldman Sachs analyst Jordan Alliger upgraded his rating on the Jacksonvillebased trucking company from “sell” to “neutral.” “Our upgrade is based on our belief of being past the bottom in the truck cycle and our confidence that our previously

stated views around capacity constraints and cycle tightening are coming to fruition,” Alliger said in a research report.

BAE wins $83.5M contract for work in Jacksonville

BAE Systems last week announced an $83.5 million contract from the U.S. Navy to modernize two guided-missile destroyers. The work on the USS Carney and the USS Winston S. Churchill will be done at BAE’s Jacksonville shipyard between September 2020 and July 2022. The contracts include options that could bring its final value to $211.6 million.

THE BASCH REPORT

MARK BASCH CONTRIBUTING WRITER

below trend.” Black Knight’s revenue fell by 1% in the second quarter to $293.1 Larsen million. But because operating expenses fell by 2%, helped by the lower medical costs, adjusted earnings rose by 3 cents to 52 cents a share.

CoreLogic sets date for special meeting CoreLogic Inc. scheduled a special shareholders meeting for Nov. 17 to vote on a proposal by Cannae Holdings Inc. and Senator Investment Group LP to replace nine of the 12 directors on its board. Cannae, the investment company spun off from Jacksonville-based Fidelity National Financial Inc., and Senator launched a proxy fight after CoreLogic’s board rejected an unsolicited $7 billion buyout offer for the housing market data firm. MBASCH@ JAXDAILYRECORD.COM

GRAND OPENING

Celebration

Join us as we celebrate the Grand Opening of Taylor Morrison’s beautiful new townhome community, Annie’s Walk. Be among the first to tour our new model townhomes, plus enter for a chance to win a $100 gift card and ask about our limited time Grand Opening incentives!*

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Planned Amenities: • Resort-style pool with cabana • Tot lot and small dog park

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Location:

Dates:

13122 Annie’s Walk Drive Jacksonville, Florida 32218

Saturday, Sep. 19 | Noon–6pm Sunday, Sep. 20 | Noon–6pm

*NO PURCHASE NECESSARY TO ENTER OR WIN. PURCHASE DOES NOT IMPROVE CHANCE OF WINNING. Eligible Entrants must register at the Annie’s Walk sales model as of 12pm - 6pm on 9/19/20 or 12pm - 6pm on 9/20/20 (“Promotion Period”) to be eligible to enter the drawing for a chance to win (each participant, an “Eligible Entrant”) a total of one American Express® gift card. American Express® is the registered mark of the respective owner with all rights reserved and is not a participant in or sponsor, which Prize remains subject to America Express’s® own terms and conditions for card holders. Need not be present at time of drawing in order to win. Drawing is open to U.S. Legal Residents only who are at least 21 at time of entry. Winner will be randomly selected by 9/30/20 from those who registered during the Promotion Period. If not present, Potential Winner has forty-eight hours to respond to Sponsor’s voicemail or email notice or an alternative Winner will be randomly selected from all other Eligible Entrants. Odds of winning dependent on total number of entries. Not responsible for lost, stolen or expired cards. No cash equivalent or substitutions. Taxes and purchases greater than the value of the Prize are the sole responsibility of Winner. Complete official rules available at event. All information (including, but not limited to prices, views, availability, school assignments and ratings, incentives, floor plans, site plans, features, standards and options, assessments and fees, planned amenities, programs, conceptual artists’ renderings, tax rates and community development plans) is not guaranteed and remains subject to change, or delay without notice. Square footage and dimensions are estimated and may vary in actual construction. As-Built Condition will control. Community improvements, recreational features and amenities described are based upon current development plans which are subject to change and under no obligation to be completed. Prices may not include lot premiums, upgrades and options. Photos are for illustration only and do not necessarily represent actual community. Images do not reflect a racial or ethnic preference. This is not an offering in any state where prohibited or otherwise restricted by law. Please see a Taylor Morrison Community Sales Manager, an Internet Home Consultant or visit www.taylormorrison.com for additional information. © September 2020, AVH North Florida, LLC, Avatar Properties Inc. & Taylor Morrison of Florida, Inc. CBC1254089, CRC1332128. All rights reserved.07/31/20 2385

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THURSDAY, AUGUST 20, 2020

JaxDailyRecord.com

ELECTION 2020

DEVELOPMENT TODAY

Phillips wins the GOP primary for Duval County clerk of courts

These are the largest commercial building permits by job cost issued Aug. 18 by the city of Jacksonville.

He will face attorney Jimmy Midyette in the Nov. 3 general election.

Rose Creek Condominium Association Inc., 1604 Arcadia Drive, contractor is Florida Certified Contractors LLC, stairwell replacement, $37,000.

BY MAX MARBUT ASSOCIATE EDITOR

Jody Phillips, chief operating officer in the Duval County Clerk of Courts office, won the Aug. 18 Republican primary election for clerk of courts. He received 57.7% of the vote; Scott Wilson, 31.4%; and Leon Jackson, 10.9%. Phillips will face the Democratic Party candidate,attorney Jimmy Midyette, in the Nov. 3 general election. The winner will succeed incumbent Clerk Ronnie Fussell, who is term-limited. A former Middleburg p o s t m a s t e r, Phillips had a Phillips 25-year career in the highway construction business before joining the clerk’s office after Fussell was elected in 2013. Phillips has been COO for the past three years. At a candidate forum Aug. 5 at the Southside Business Men’s Club, Phillips said that if elected, one of the challenges he expects to face is a $2.5 million shortfall in next year’s budget. That’s because the COVID-19 pandemic shutdown is reducing state revenue, the primary funding source for the state’s

DUVAL PRIMARY ELECTION WINNERS Race Winner State Representative District 13 Tracie Davis City Council District 4 Nicole Hamm County Court Judge Group 1 Scott Mitchell County Court Judge Group 6 Rhonda Peoples-Waters School Board District 1 Kelly Coker School Board District 3 Cindy Pearson School Board District 5 Warren Anthony Jones School Board District 7 Lori Hershey Neptune Beach City Council, Seat 3 Kerry Chin Representative in Congress District 4 (R) John H. Rutherford Representative in Congress District 5 (R) Gary Adler State Representative District 12 (R) Clay Yarborough Clerk of the Circuit Court (R) Jody Phillips Representative in Congress District 5 (D) Al Lawson State Representative District 12 (D) Emmanuel Blimie State Representative District 14 (D) Angie Nixon State Representative District 15 (D) Tammyette Thomas

GOVERNMENT City of Jacksonville, 7300 Gate Parkway, contractor is Acon Construction Co. Inc., foundation for new Fire Station No. 63, $60,000. HOSPITAL, INSTITUTIONAL Mayo Clinic, 4500 San Pablo Road S., contractor is The Robins & Morton Group, 1,194 square feet, MRI build-out in Mangurian Building, $1 million.

Source: Duval County Supervisor of Elections

county clerks and comptrollers. Phillips said furloughing employees would be a last resort and he would work with the staff to identify ways to reduce operating expenses while maintaining service levels. Asked if he might consider reducing his own salary to help mitigate the anticipated shortfall, Phillips said clerk’s salaries are set by the state Legislature. “I’m not going to tell you I’m cutting because I’m not. I can’t,” Phillips said. When same-sex marriage was recognized as legal in Florida in 2015, the clerk’s office stopped performing marriage ceremonies

CONDOMINIUMS

at the Duval County Courthouse. Phillips said he has no intention of restoring the service because performing ceremonies doesn’t need to happen at the clerk’s office. “There are 20,000 ministers, notaries and judges in Duval County. We’ll continue to issue marriage licenses,” he said. Phillips said his experience in the private sector and then managing the more than 300 employees in the clerk’s office make him qualified to take over the post. “I’ve done this. I’m ready to hit the ground running,” he said.

OFFICE, BANK, PROFESSIONAL Darifair Foods LLC, 13129 Flagler Center Blvd., contractor is Stellar Group Inc., new building foundation, portion of $15 million. Sprinklermatic Fire Protection Systems Inc., 540 Owen Ave., contractor is DM Planning & Design Build Services Inc., install overhead doors, $25,000. SIGNS Metro by T-Mobile, 8006 Lem Turner Road, contractor is Allen Industries of North Carolina Inc., two permits for wall signs, $4,400.

Building 100 Building 300, 10501 Cold Storage Road, contractor is Harbinger LLC, two permits for directional signs, $4,000. Danone North America Jobs. Danone.com, 2198 W. Beaver St., contractor is Taylor Sign & Design Inc., wall sign, $2,445. G Grace Life Church, 2960 Plummer Cove Road, contractor is Shark Signs of NE FL Inc., wall sign, $2,400. Shining Bright Preschool & Arts, 55 University Blvd., contractor is Shark Signs of NE FL Inc., wall sign, $2,350. Metro by T-Mobile, 3000 Moncrief Road W., contractor is Allen Industries of North Carolina Inc., wall sign, $2,200. Metro by T-Mobile, 2952 Dunn Ave., No. 3, contractor is Allen Industries of North Carolina Inc., wall sign, $2,200. Metro by T-Mobile, 11043 Crystal Springs Road, No. 24, contractor is Allen Industries of North Carolina Inc., wall sign, $2,200. STORES, MERCANTILE Bentley/Maserati/Alfa Romeo, 7137 Bonneval Road, contractor is AutoBuilders General Contracting Services Inc., 6,475 square feet, accessory building, $435,000. UTILITIES WJCT Television Station, 8675 Hogan Road, contractor is International Towers LLC, antenna replacement, $727,525. Compiled by Scott Sailer

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JaxDailyRecord.com

THURSDAY, AUGUST 20, 2020

AMENITY NOW UNDER CONSTRUCTION SCHEDULE YOUR PERSONAL LIFESTYLE TOUR TODAY Del Webb eTown is pleased to announce the ground breaking of our 5,000 SF club - The Gallery! Featuring a modern take on the traditional 55+ active adult clubhouse, this exclusive space is reserved just for residents. Schedule your visit today to tour the lifestyle house, offering a resident’s-only place in which to relax, rejuvenate, and revitalize. With 14 floorplans and 6 model homes to walk through, we believe you’ll like it here. Connect with us by phone, in-person, or by virtual appointment and see what life is all about at Del Webb eTown. DelWebb.com/Jacksonville 904-543-3959

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Stein Mart CONTINUED FROM PAGE 1

Stein Mart CEO Hunt Hawkins said in an emailed statement that the board of directors looked at all alternatives before deciding that winding down the business is the best course of action. “Please know that this was an extremely difficult decision, and is deeply disappointing for all of us at Stein Mart,” he said. The case management filing outlines how Stein Mart ended up in bankruptcy and began goingout-of-business sales at its 281 stores in 30 states. The company could be saved if a last-minute buyer emerges, but the filing acknowledges “the sale of the Company as a going concern is not a realistic possibility under present conditions.” BLAME FOR DOWNFALL

Stein Mart said in the filing its downfall was caused by the same conditions affecting other brickand-mortar retailers: declines in customers as shoppers buy more merchandise online. “The declines in store traffic have been especially pertinent for apparel and accessories retailers, such as the Company, which have also experienced lower operating margins as a result,” it said. “From 2016 through the present, the Company’s sales generally declined and the Company faced the difficult task of growing sales while significantly reducing expenses in a difficult retail environment.” With the company struggling, Stein Mart in January 2018

THURSDAY, AUGUST 20, 2020

publicly put itself up for sale, retaining investment banker PJ Solomon Securities to find a possible buyer or another source of financing. A year later, PJS informed Stein Mart’s board of directors that it was unsuccessful. “PJS reported that private equity firms were generally no longer investing in the retail sector and that with respect to strategic investors, the situation was dependent on the retailer having a compelling strategic rationale and sufficient financial flexibility,” the court filing said. “The consensus of the board and advisors was that renewing the sale process at that time would not be worth the effort.” At the same time it stopped the search for buyers, Stein Mart launched the POPS initiative. “The initiative included substantial changes in store design and layout, advertising strategy and pricing and discounting practices,” the filing said. “The Company tested the new business model in the Richmond and Detroit stores. Based on the preliminary success of the test, the Company planned to roll-out the new model to one-third of the Company stores in early 2020.” In the meantime, PJS in the spring of 2019 again began contacting potential buyers, and that led to the agreement with Kingswood in January 2020. The plan to roll out POPS was put on hold. THE PANDEMIC IMPACT

COVID-19 changed everything. “On April 16, 2020, the Merger Agreement was terminated prior to closing because the COVID-19 pandemic forced the Company to

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Stein Mart timeline 1908: Sam Stein opens the first Stein Mart store in Greenville, Mississippi. 1932: Sam’s son, Jake, becomes head of the company after his father’s death. 1977: Jake’s son, Jay, becomes CEO; Stein Mart’s second store opens in Memphis, Tennessee. 1983: Stein Mart opens its first Jacksonville store. 1984: Stein Mart’s headquarters moves from Greenville to Jacksonville.

2006: Sales peak at $1.5 billion. 2007: Linda McFarland Farthing becomes CEO after Fisher resigns. 2008: David Stovall succeeds McFarland as CEO. 2011: Jay Stein becomes CEO again after the retirement of Stovall. 2015: Stein Mart’s last profitable year, with net income of $22.6 million

1992: Stein Mart goes public with initial public offering; sales reach $278 million, with 51 stores.

2016: Dawn Robertson succeeds Stein as CEO; Robertson resigns six months later and Hunt Hawkins becomes CEO.

1995: Stein Mart opens its 100th store, sales reach $496 million.

2017: Store network peaks at 293.

2000: Stein Mart opens its 200th store, sales surpass $1 billion. 2001: Jack Williams succeeds Jay Stein as CEO.

2018: Stein Mart explores strategic alternatives as sales fall. 2020: Stein Mart files for Chapter 11 bankruptcy and begins winding down operations.

2003: Mike Fisher succeeds Williams as CEO.

close all of its stores and the Company was unable to satisfy the minimum liquidity closing condition in the merger agreement,” the filing said. Stein Mart began reopening its stores a week later and when all 281 were reopened in June, the company was seeing some optimistic sales trends. “However, during July 2020, the resurgence of COVID-19 cases in the Southeast, Texas, Arizona and California, where the majority of the Company’s stores are located, again materially, adversely impacted the Company’s revenues, liquidity, results of operations and cash flows,” the filing said.

“As a result of the second decline in customer traffic and sales resulting from the COVID-19 resurgence, the Company projects insufficient liquidity to continue operating as (a) going concern in the ordinary course of business.” The filing said Stein Mart has had discussions with Kingswood about reviving the sale. “However, a transaction presently appears unlikely given the COVID-19 resurgence.” PJS contacted other parties since the merger agreement was terminated in April. “If Kingswood or another potential buyer steps forward with an offer to buy all or part of

the Company as a going concern, the Debtors will pursue a sale to maximize value and preserve the jobs of employees, as well as a potential future tenant for landlords and a potential future customer for vendors,” the filing said. That outcome is unlikely, so Stein Mart is moving forward with plans to wind down the business. “The Company believes the immediate liquidation of the Company’s assets by a professional liquidation advisor under the supervision of the Bankruptcy Court is the best strategy to maximize value for the benefit of creditors.” MBASCH@JAXDAILYRECORD.COM

Stein Mart chose Chapter 11 to cover as much debt as possible Attorneys for the retailer and the largest creditor explain bankruptcy plan. BY MAX MARBUT ASSOCIATE EDITOR

Despite planning to close all of its 281 stores in 30 states from Florida to California, Stein Mart Inc. filed for bankruptcy protection under Chapter 11, which often is reorganization, rather than Chapter 7 liquidation. That decision was made to ensure the doomed department store chain can cover as much of its outstanding debt as possible, according to Stein Mart’s lead attorney in the bankruptcy. “Chapter 11 provides the most

efficient and cost-effective method for liquidating a large retailer in order to repay creditors,” said Gardner Davis, partner and bankruptcy specialist in the Foley & Lardner law firm’s Jacksonville office. Attorney Stephen Busey, chairman of the Smith Hulsey & Busey law firm, is representing Wells Fargo & Co., Stein Mart’s largest secured creditor. He said the reorganization format was chosen because liquidating Stein Mart is a complex process. Five liquidators are helping Stein Mart dispose of its store inventory and other assets. The Gordon Brothers consulting firm has a secured lien on Stein Mart’s intellectual property, Busey said. Busey represented the Jacksonville-based Charter Co. when it

filed for Chapter 11 in April 1984. Busey also re p re se n te d Winn-Dixie S to re s I n c. Busey when the s u p e r m a rke t chain filed for protection under Chapter 11 in February 2005. It closed more than 350 of its about 800 stores before emerging from bankruptcy in November 2006. Busey said that was the most substantial Jacksonville-based bankruptcy before Stein Mart. “Winn-Dixie was my last big case. Stein Mart pales by comparison,” Busey said. Davis and Busey agree that Stein Mart should be able to liq-

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for their clients in person when the liquidators’ contracts were approved, Busey said. He said the remainder of the proceedings and negotiations with creditors probably will be conducted by teleconference. Davis said the remote litigation required because of COVID-19 and social distancing won’t hinder Stein Mart’s liquidation. “This is an important bankruptcy for the Jacksonville community. The local bankruptcy court and the bankruptcy clerk’s office have done a wonderful job to make the process as smooth and transparent as possible.” MMARBUT@ JAXDAILYRECORD.COM (904) 356-2466

Spac e For L ease

Business & Real Estate INVESTMENTS The company is primarily a manufacturer of architectural and ornamental staircases (straight or circular), fences, screen doors and windows guards, balcony railings, metal awnings, hand rails, fire escapes, architectural decorative pediments, produced and generally limited to aluminum round and square tubing, solids rod stock and plate stock.

uidate its inventory in about 10 weeks. The going-out-of-business sales should yield about $250 million for the secured creditors, according to documents filed with the court. Busey said the largest group of unsecured creditors likely will be Stein Mart’s commercial landlords, with the stores vacating locations without meeting the full terms of lease agreements. Stein Mart filed for Chapter 11 on Aug. 12 in the U.S. Bankruptcy Court Middle District of Florida Jacksonville Division. The case was assigned to U.S. Bankruptcy Judge Jerry Funk. The first hearing for Stein Mart was held Aug. 14 at the Bryan Simpson U.S. Courthouse with Busey and Davis appearing

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JACKSONVILLE DAILY RECORD / JACKSONVILLE RECORD & OBSERVER

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Mathis

Stein Mart’s Jacksonville footprint Here’s the Jacksonville area leased space for the bankrupt retailer, which includes six stores and its headquarters building:

CONTINUED FROM PAGE 1

out looking for deals,” she said. TJX stores include TJ Maxx, HomeGoods and Marshalls. “Smaller junior anchors might be able to take advantage too, like Ulta, Five Below, and Dollar Tree, if the box can be carved up with two or three users.” Smith represents Mandarin’s Riverplace Shopping Center, one of the Northeast Florida neighborhood and community retail properties where Stein Mart leases space. She said she has had multiple conversations with the prospective tenants. “We feel pretty confident we can backfill the boxes.” Stein Mart’s strategy was to lease space in centers anchored by grocery stores or other hightraffic retailers that draw in its target shopper: College-educated women who work at least part-time in professional positions and have above-average household income. Women’s apparel accounted for 49% of Stein Mart’s sales in 2019. The rest comprised men’s clothing, home goods, accessories, shoes and other items, according to its Aug. 12 Chapter 11 bankruptcy filing. CLOSURES AN OPPORTUNITY

Smith said the retail industry has been expecting the store closures for some time before the pandemic. Stein Mart’s sales have been dropping. Net sales fell to $134 million in the 13 weeks before May 2, which was the brunt of the pandemic shutdown, from $314 million the year before.

109,000

217,142

Office space

326,142

Retail space

Total space

Northeast Florida Stein Mart stores Shopping center

Address

Square feet

Roosevelt Square

4399 Roosevelt Blvd.

South Beach Regional

3818 S.Third St.Jacksonville Beach 40,472

Riverplace Shopping Center 11111 San Jose Blvd.

36,000

Lakewood Promenade

1648 University Blvd. W.

30,000

Point Meadows

10915 Baymeadows Road, No. 16 32,000

Harbour Village

13475 Atlantic Blvd.

A global pandemic isn’t the best timing for the real estate, though. “Today you just don’t know and that would be the case for the next six- to 12 months,” Smith said. Stein Mart operates 281 stores in 30 states. It leases in at least two Florida shopping centers owned by Jacksonville-based Regency Centers Corp., including the South Beach Regional shopping center at 3818 S. Third St. in Jacksonville Beach. Eric Davidson, Regency Centers senior manager of communications, said Aug. 13 his team is talking with some retailers interested in the space. “It’s a great location and we are confident that we’ll get the right fit in there soon,” Davidson said. The center is at northwest Third Street and Butler Boulevard. Butler Boulevard is the major route in Duval County from

32,670

Interstate 95 to the Beaches. Stein Mart leases about 40,000 square feet of space in the center, whose anchors include The Home Depot, Ross Dress for Less, Bed Bath & Beyond and Trader Joe’s. Sleiman Enterprises owns two of the centers where Stein Mart leases at Winn-Dixieanchored centers – Lakewood Promenade and Point Meadows. Chief Operating Officer Michael McNaughton said Aug. 14 he had no comment. Representatives of Harbour Village in East Arlington and Roosevelt Square in West Jacksonville did not respond to questions. Christian Harden, a managing partner for the NAI Hallmark commercial real estate firm, said this isn’t the first time a big-box store has given back space. “While they might take several months to backfill, usually these spaces are demised for smaller users,” he said, referring to split-

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ting the store for multiple users. SOUTHBANK HEADQUARTERS MIGHT TAKE LONGER

Stein Mart established its headquarters in Jacksonville in 1984 in the Deerwood area, relocating from Greenville, Mississippi, and moved in 1994 to 1200 Riverplace Blvd. on the Downtown Southbank. It leases 109,000 square feet in the 10-story, almost 197,000-square-foot building. “I think the office space will be a good opportunity for a large tenant looking for marquee building naming rights, but it might take some time,” Harden said of the structure, which is known as the Stein Mart Building and carries signage of the retailer’s name. “The Southbank is a desirable neighborhood and the improvements along Riverplace Boulevard make it a very attractive opportunity,” he said of the infrastructure and landscape work and amenities added to the street in recent years. Michael Loftin and Jesse Shimp with JLL are the leasing agents for the ownership but were unable to comment. Real estate statistics show a second-quarter office vacancy rate of about 7-8% on the Downtown Southbank, lower than the Northbank and the overall area average.

LEASE TERMS PART OF THE BANKRUPTCY FILING

Stein Mart filed the Chapter 11 bankruptcy petition in the U.S. District Court Middle District of Florida Jacksonville Division. The filing said the company leases all of its retail store locations, support facilities, offices and some equipment.

Enter the Art of Real Estate

THURSDAY, AUGUST 20, 2020

Lease terms vary and generally are for 10 years with two or more five-year options. In 2019, Stein Mart paid about $99 million in rent and $37 million in common area maintenance fees, insurance and real estate taxes. Stein Mart said that after its March 18 COVID-19 shutdown, it negotiated with most of its landlords to defer rent during the closure period until after the reopening or by extending the lease period by the amount of time the stores were closed. Stores started to reopen in late April. The company said the stores will stay open until the merchandise is liquidated, expected during the fourth quarter. The stores will close on a staggered basis. Stein Mart Director of Investor Relations Linda Tasseff said the Northeast Florida leases have 10 to 20 years remaining and the company will have the right to “assume” or “reject” - keep or end - any of the leases in the bankruptcy filing. As a public company, Stein Mart traded as SMRT. “Whatever Leases SMRT rejects will be capped at 3 years and terminated by judicial order,” she said by email. That also applies to its Jacksonville office space. Tasseff did not have the lease term information about distribution centers in Georgia, Texas and California, totaling 532,000 square feet, but she said all the rules on the leases are the same during the bankruptcy process. KMATHIS@ JAXDAILYRECORD.COM @MATHISKB

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THURSDAY, AUGUST 20, 2020

JaxDailyRecord.com

Top commercial sales of the week BY SCOTT SAILER • Staff Writer

Here are the top 10 commercial real estate sales in Northeast Florida, comprising Clay, Duval and St. Johns counties. The sales were recorded Aug. 10-16.

File image

Majestic Plaza Apartments at 3737 Moncrief Road sold for $4.9 million, 18.3% less than its $6 million sales price in 2018.

DUVAL

CLAY

DUVAL

ST JOHNS

DUVAL

$4,900,000

$3,112,500

$3,000,000

$2,580,000

$2,485,088

4646 Moncrief Road, Jacksonville

Royal Pines Drive, Middleburg

10776 Burnt Mill Road, Jacksonville

37 Epic Blvd., St. Augustine

502 Chaffee Point Blvd., Jacksonville

Type: Majestic Plaza Apartments Parcel size: 2.58 acres No. of units: 96 Buyer: Majestic Plaza Apt FL LLC Seller: Moncrief Acquisition LLC Previous sale: $6,000,000 in 2018

Type: Undeveloped Integra Apartments-Phase I Parcel size: 17.5 acres Buyer: Integra Park LLC Seller: Armstrong Development Inc.

Type: Undeveloped senior living Parcel size: Not available Buyer: Live Good LLC Seller: Skinner Family Et Al

Type: McDonald’s Parcel size: 1.42 acres Building size: 3,433 square feet Buyer: McDonald’s USA LLC Seller: Weingarten 1-4 St. Augustine EV LLC

Type: Cracker Barrel Old Country Store Inc. Parcel size: 2.44 acres Building size: 11,466 square feet Buyer: CB Portfolio Owner LLC Seller: Cracker Barrel Old Country Store Inc.

DUVAL

ST JOHNS

DUVAL

ST JOHNS

$2,256,033

$1,800,000

$1,352,455

$1,250,000

$1,225,000

Jacksonville and Jacksonville Beach

Fourth Street, St. Augustine

Jacksonville

1610 County Road 210 W., Saint Johns

Type: 10 single-family rental properties Parcel size: Not available Buyer: CPI/Amherst SFR Program Owner LLC Seller: Jeff 1 LLC

Type: Undeveloped commercial Parcel size: 1.79 acres Buyer: HVG Properties LLC Seller: MSB Hotels II LLC

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Type: Six single-family rental properties Parcel size: Not available Buyer: CPI/Amherst SFR Program Owner LLC Seller: MUPR 3 Assets LLC

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JACKSONVILLE DAILY RECORD / JACKSONVILLE RECORD & OBSERVER

THURSDAY, AUGUST 20, 2020

JaxDailyRecord.com

JACKSONVILLE BAR ASSOCIATION REPRESENTATIVE ON THE ABA HOUSE OF DELEGATES

The changes relate to police-community interaction, racial injustice and licensing of lawyers. The American Bar Association House of Delegates adopted nearly 60 new policies at its first virtual meeting Aug. 3-4. The delegates met remotely instead of convening as a group because of the COVID-19 pandemic. The House comprises about 600 attorneys representing each state who discuss, debate and approve possible resolutions regarding justice, equality and the practice of law. Here’s my report on issues I believe are of interest to our local legal community. Among the resolutions adopted as policy are several aimed at improving policecommunity relations and attacking racial injustice, including a measure urging

The House comprises about 600 attorneys representing each state who discuss, debate and approve possible resolutions regarding justice, equality and the practice of law. State and other lawyerlicensing authorities made individual decisions on how best to approach the 2020 Bar exam, and others are planned in the next few months. In Florida, the Bar exam will be administered online Aug. 19. The Bar exam is prepared by the National Conference of Bar Examiners and is administered independently of the American Bar Association and the ABA Council of the Section of Legal Education and Admissions to the Bar, which is sole accreditor of U.S. law schools. Proponents of the resolution said it was necessary to convey support for new lawyers who are faced with taking the Bar during the pandemic, and that the recommendation merely suggests that licensing authorities examine various options. Opponents, including the bar examiners’ delegate, took issue with its reference, citing diploma privilege as an option without fully exploring its implications.

Among several COVID19-related matters, the House adopted Resolution 10H that recommends governmental policies that minimize evictions and assist landlords and renters faced with hardship because of the pandemic. Also, Resolution 117 recommends, among other aspects, that parties in court cases be offered a safe “in person hearing or delay” if the health crisis continues. In other business, the HOD adopted: ■ Resolution 111-A establishes the ABA Best Practices for Third-Party Litigation Funding as policy. It is intended to serve as a guide for lawyers new to the practice of third-party litigation as well as more experienced attorneys and recommends that lawyers who engage in third-party financing detail the arrangement in writing, include the nonrecourse or restricted nature of the financing, ensure that the client retains control of the case and protect the attorneyclient relationship. It does not take a position on the use of the practice, which has ballooned into a major industry in the past few years. ■ Two new policies were approved that urge appropriate governmental entities to allow those incarcerated to vote. Resolution 116E recommends governments provide a process to allow eligible pretrial detainees to obtain a ballot and be able to vote despite

their detention. Resolution 116H advocates for the repeal of laws that disenfranchise people based upon criminal conviction and that voting rights be restored, without any requirements to fulfill financial obligations, for those currently and formerly incarcerated. ■ Resolution 100B urges governmental bodies to enact legislation banning race discrimination on the basis of the texture, style or appearance of a person’s hair and encourages implicit bias training to eradicate discrimination based on these factors. ■ A narrow exception was approved to ABA Model Rule 1.8(e), which prohibits financial support for clients. Under Resolution 107, a lawyer representing an indigent client, either on a contingency fee or through a clinic on a pro bono basis, would be allowed to provide modest gifts, including for food, rent, transportation, medicine and other basic living expenses. ■ Resolution 301B supports establishment of June 19, or Juneteenth, as a paid, national legal holiday to commemorate the end of slavery. Visit americanbar.org to read more about the meeting. ATTORNEY ALAN PICKERT, A PARTNER AT THE TERRELL HOGAN LAW FIRM, IS THE JACKSONVILLE BAR ASSOCIATION’S REPRESENTATIVE ON THE ABA HOUSE OF DELEGATES.

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the curtailment of the defense of qualified immunity in civil suits brought against law enforcement officers. With attention focused on police misconduct in the wake of the May 25 homicide of George Floyd and other police incidents, after vigorous but civil debate, the delegates adopted Resolution 301A. It urges governments to limit the doctrine of police qualified immunity that was expanded during the past 40 years by the U.S. Supreme Court. Also, the House of Delegates approved Resolution 116A, which asks governments to enact laws that require law enforcement agencies to keep records of incidents of deadly force or excessive nonlethal force, and that a fully independent prosecutor be appointed when someone dies in the custody of or during an encounter with a law enforcement officer. Another hotly contested topic was the Bar exam resolution during these chaotic COVID-19 times. Resolution 10G was adopted with 63% of the delegates in favor. It asks the highest court or Bar admission authority in each state or other licensing jurisdiction to cancel or not administer in person the examination during the COVID-19 crisis unless cleared by public health authorities. The resolution offers several alternative approaches to the Bar exam, including a diploma privilege during the crisis, but does not favor any specific option.

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American Bar Association adopts new policies

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THURSDAY, AUGUST 20, 2020

JaxDailyRecord.com

THE MARBUT REPORT

Peoples-Waters elected Duval County judge ell, with 58.6% of the vote, defeated attorney Isaac East to retain the Group 1 seat.

Federal court sponsors student essay contest File image

MAX MARBUT ASSOCIATE EDITOR

Attorney Rhonda Peoples-Waters defeated incumbent Erin Perry to win the Duval County Judge Group 6 election.

A former public defender, now in private practice, she’s taken more than 50 jury trials to verdict. In the Duval County Judge Group 6 election, attorney Rhonda Peoples-Waters defeated incumbent County Judge Erin Perry with 58.1% of vote to Perry’s 41.9%. Peoples-Waters, 46, graduated from the University of Florida Levin College of Law. She was admitted to The Florida Bar in 1999, and then began her career as an assistant public defender. President and owner of Rhonda Peoples-Waters P.A. since 2008, she practices criminal defense law, including armed robbery, domestic battery, DUI, manslaughter and first-degree murder. Her personal injury law experience includes motor vehicle accidents and slipand-fall cases. Peoples-Waters was an

applicant for seats on the Duval County and 4th Judicial Circuit courts 11 times and in 2012 unsuccessfully sought election for an open seat on the county bench. Perry was appointed to the bench in January 2019 by Gov. Ron DeSantis. She and Peoples-Waters were two of six nominees selected for a vacancy on the county court that were presented to DeSantis in December 2018 by the 4th Circuit Judicial Nominating Commission. In her application for that vacancy, PeoplesWaters indicated she has taken more than 50 Mitchell jury trials to a verdict. In the other judicial contest on the ballot, incumbent Duval County Judge Scott Mitch-

While the Bryan Simpson U.S. Courthouse is limiting in-person proceedings and events, the court’s community outreach continues with the third annual High School Essay Contest. It’s open to students in grades 10-12 living in Baker, Bradford, Clay, Columbia, Duval, Flagler, Hamilton, Nassau, Putnam, St. Johns, Suwannee and Union Counties. Students attending public, private, parochial and charter schools and home-schooled students of equivalent grade status may submit essays that respond to the prompt: Voting is the most basic right of a citizen and vital to a functioning democracy. Women, however, were not always extended this fundamental right. The 19th Amendment, ratified 100 years ago, granted women the right to vote (suffrage). Identify and evaluate some of the methods proponents of the 19th Amendment (suffragists) used to influence and change opinions about voting rights for women. Referencing a specific example, what method do you think was most effective and why? Student essays must be submitted by noon Sept. 25.

The essays will be judged by Jacksonville lawyers who will submit the top 10 to the judges of the Jacksonville Division for selection of the first-, secondand third-place winners, who will receive $2,000, $1,000 and $500, respectively. Cash prizes are made possible by the lawyers and judges through the Middle District Bench Bar Fund. Winners and their teachers will be recognized Nov. 13 at a ceremony in the Bryan Simpson U.S. Courthouse. The top three winners also will be recognized Dec. 11 at the Federal Bar Association meeting. Visit flmd.uscourts.gov for more information and entry documents.

Assistant U.S. attorney sought in Jacksonville

The U.S. District Court Middle District of Florida is seeking to hire an assistant U.S. attorney for the Criminal Division in Jacksonville. The applicant selected will represent the U.S. government on a range of cases. Responsibilities increase and assignments become more complex as training and experience progress. Attorney appointments to the Department of Justice are made on a 14-month basis pending favorable adjudication of a background investigation. The deadline to apply is Sept. 14. Visit usajobs.gov/GetJob/ ViewDetails/576385500 for

salary information and other details.

Nominations open for annual state pro bono awards

Nominations are open for The Florida Bar annual pro bono service awards, which honor lawyers, judges, law firms and associations that have contributed extraordinary pro bono service. The nomination deadline for all categories is 5 p.m Oct. 22. Each year, Florida Bar members report donating millions of hours and dollars to help Floridians who cannot afford a lawyer with civil legal matters. Every year, in a ceremonial session of the state Supreme Court, more than 24 lawyers and judges are honored by the court and The Florida Bar for the free legal assistance they have provided. The Florida Bar and the state Supreme Court Chief Justice Charles Canady invite nominations from legal aid groups, civic organizations, fellow lawyers and regular citizens who know of a lawyer, judge, law firm or voluntary Bar that has freely given of time and expertise in making legal services available to the poor. Visit floridabar.org/public/ probono/serviceawards/ for award categories and nomination forms.

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