Bankrupted JC Penney plans to spin its properties into separate real estate company

A piece of J.C. Penney’s proposal to emerge from bankruptcy includes spinning its real estate into a publicly traded real estate investment trust.

As part of a plan filed with the bankruptcy court, Penney would reorganize into a new retailer (“JCP”), along with a REIT that would collect rent checks from the retail business. Court documents say as much as a 35% stake in the newly created REIT could be sold to a third-party investor to raise cash, or to provide additional funding for the REIT.

Weighed down by a heavy debt load of more than $4 billion and hit hard by the coronavirus pandemic, Penney filed for Chapter 11 bankruptcy protection Friday evening. Some are now questioning if the department store chain, which has been around for more than a century, should still operate. It has been stuck in a sales slump for years. The department store industry as a whole has also been on the demise, with people shifting their spending away from the mall. When Penney filed, it still operated roughly 850 locations at malls across the country.

This would not be the first time a struggling department store operator has relied on its real estate value to come up with liquidity. Sears in 2015 spun off roughly 250 properties to form the REIT Seritage Growth Properties.

Click Here For The Full Article

SUBSCRIBE TO OUR NEWSLETTER

Start receiving; press releases, commercial real estate news, information and trends on particular markets and regions.


Picture: Pixabay

Leave a Reply

Scroll to top
%d bloggers like this: