J.C. Penney Has New Owners: Its Landlords

On Monday, the U.S. Bankruptcy Court for the Southern District of Texas approved the $1.75 billion sale of J.C. Penney to mall owners Brookfield Asset Management and Simon Property Group, with the company’s lenders also getting a chunk.

The 118-year-old department store chain filed for Chapter 11 in May. The deal is expected to close in late November, allowing Penney to exit the bankruptcy process.

The transaction calls for Brookfield and Simon to acquire substantially all of Penney’s retail and operating assets through a combination of cash and new term loan debt. A new holding company will give lenders control of certain real estate assets.

“Our goal from the beginning of this process has been to ensure J.C. Penney will continue to serve customers for decades to come and this court approval accomplishes that objective,” said Penney CEO Jill Soltau in a statement.

Simon Property Group, considered America’s largest mall operator, has secured an interest in several retail chains, often in conjunction with licensing specialist Authentic Brands. In addition to Penney, it’s bought interest in Forever 21, Brooks Brothers, and Lucky Brand.

In an earning call on Monday, Simon Property CEO David Simon said that he expected that several Authentic Brands properties, like Juicy Couture, “will end up” at Penney.

“We believe in the Penney’s brand,” Simon said, according to a Motley Fool transcript. “The company did over $9 billion in sales pre-COVID…[and] has a loyal, core, diverse, and inclusive customer base concentrated in the moderate to higher aspirational category. This customer is important to the community, as is J.C. Penney and to us, and we expect we will continue to grow this customer over time.”

But he added, “We have a tremendous amount of work to do with our partner Brookfield and the management team at Penney to sustain their turnaround.”

The transaction means that J.C. Penney, which first went public in 1929, will no longer be a publicly traded company. Following its bankruptcy, it was delisted from the New York Stock Exchange.

The chain currently has 846 stores; its business plan calls for 242 to be closed.

(Image courtesy of J.C. Penney)

 

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JCK News Director