BPYU - 2 Top Mall REITs Might Buy J.C. Penney Out of Bankruptcy
Last month, J.C. Penney (NYSE: JCP) filed for bankruptcy protection, following a decade of turmoil marked by several management changes, falling sales, and plunging profitability. While J.C. Penney was able to line up $450 million of debtor-in-possession financing -- half of which is available immediately -- that will only keep the iconic department store chain afloat temporarily. If the company fails to produce a viable go-forward business plan in the weeks ahead, the restructuring could be converted into a complete liquidation as soon as mid-July.
J.C. Penney's biggest landlords might have something to say about that, though. Leading mall REITs Simon Property Group (NYSE: SPG) and Brookfield Property REIT (NASDAQ: BPYU) -- which also trades as Brookfield Property Partners (NASDAQ: BPY) -- are considering teaming up with private-equity firm Sycamore Partners to rescue the ailing retailer, according to Reuters.
When J.C. Penney filed for bankruptcy protection last month, it put forward a plan to quickly reduce its debt so that it could emerge from the restructuring process within a few months. Management's plan for exiting bankruptcy hinges on spinning off much of J.C. Penney's real estate as a new REIT. A separate company would operate the core retail business.