J.C. Penney Company has entered an agreement in principle to sell JCPenney to Brookfield Property Partners and Simon Property Group for $1.75 billion. JCPenney intends to execute a stalking horse asset purchase agreement and auction that will conclude before the 2020 holiday season.
The agreement would involve the formation of a separate real
estate investment trust and a property holding company, which will include 161
of JCPenney’s real estate assets and all of its owned distribution centers. The
trust would be owned by a group of the retailer’s First Lien Lenders.
“We have determined that an agreement with Brookfield and
Simon, as well as the formation of separate real estate investment trusts owned
by our First Lien Lenders, is the best path forward to maximize value for our
stakeholders, ensure we keep the most stores open and associates employed, and
position JCPenney to build on our over 100-year history,” said Jill Soltau, CEO
of JCPenney in a statement.
JCPenney entered Chapter 11 bankruptcy in May with plans to close 242 stores during the restructuring process, including 192 in fiscal 2020. The retailer had reportedly been in talks with Simon and Brookfield, as well as other potential buyers, for an unspecified period of time. The New York Times reported that retailer Hudson’s Bay and the private equity firm Sycamore Partners had expressed interest, according to people familiar with the negotiations.
However, Simon and Brookfield, which have been involved in several purchases of bankrupt tenants in 2020, were thought to be the most likely purchasers, since shuttering JCPenney stores would have hit their shopping center and mall properties hard.