After filing for Chapter 11 protection on Friday, J.C. Penney further outlined its plans on Saturday in an appearance in the US Bankruptcy Court in Corpus Christi, Texas. One of its proposals is a spin-off of its real estate division into a publicly-traded REIT.
J.C. Penney would reorganize into a new retailer and the REIT that would collect rent checks from the retail business, according to court documents that were first reported by CNBC. As much as a 35% stake in the REIT could be sold to a third-party investor to raise cash.
The retailer also plans on selling its distribution centers in sale-leaseback transactions, the documents say.
J.C. Penney's unencumbered real estate is valued at $1.4 billion when the lights are on, and $704 million when they're shut, CNBC quoted Kirkland & Ellis attorney Joshua Sussberg as saying during the virtual court hearing.
The retailer has negotiated $900 million in bankruptcy financing, according to what Sussberg said at the hearing, half of which would provide fresh capital, while the other half would pay down existing debt. It has until July 15 to develop a business plan and reach certain milestones to receive the bankruptcy financing package, or else it must pursue a sale, according to MarketWatch.
J.C. Penney joins the ranks of a growing number of retailers that have filed for bankruptcy amid the pandemic—a list that includes J Crew, Neiman Marcus and Lord & Taylor. https://www.globest.com/2020/05/08/the-retail-sectors-very-bad-week/
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
