But will lease back 65 percent of the space

J.C. Penney has found a quick way to chip away at its mountain of debt—by selling its headquarters in Plano, Texas.

The retailer announced yesterday that it sold its headquarters and surrounding 45 acres of land in Plano, Texas, to Dreien Opportunity Partners LLC, a general partner of Silos Opportunity Partners LP, for $353 million before closing and transaction costs.

J.C. Penney will lease back approximately 65 percent of the building, leaving the remaining space to make available to outside tenants.

“The building lease expense would be offset by a reduction in maintenance costs, property taxes, and interest expense as a result of paying down debt with proceeds from the transaction,” read a statement on the sale released by the company.

The sale will surely improve J.C. Penney’s financial picture in the short term—and it seems its net losses have slowed, at least slightly. On Oct. 29, the company reported its long-term debt at $4.5 billion, down from the $5.15 billion it reported in the third quarter of 2015.

But $4.5 billion is a gargantuan amount of debt for a retailer expected to report annual sales of only $13 billion in 2016.

Of course, the plan to lower debt will free up the company to invest in e-commerce and revamp its existing stores—endeavors that could possibly help turn things around for the ailing retailer.

Marvin R. Ellison, chairman and chief executive officer for J.C. Penney, said in the same statement, “This transaction also represents a significant financial milestone for the [c]ompany, as proceeds from the sale give us the opportunity to reduce outstanding debt and make improvements to our workspace, creating a modern and efficient environment that fosters productivity and seamless collaboration.”

(Photo courtesy of J.C. Penney)

Emili Vesilind

JCK Senior Editor