Mall Owners Lose Again As Bon-Ton Prepares To Liquidate Assets, Close All Stores

Add another major retailer to the scrap heap.

Bon-Ton is liquidating, adding to what has been a year of bad news for retail landlords already reeling from Toys R Us' liquidation.

The retail operator, which also owns department store brands such as Carson's, Younkers and Bergner's, will close all of its 200-plus stores, CNBC reports. Mall owners Washington Prime Group and Namdar Realty Group planned to submit a joint bid at Bon-Ton's bankruptcy auction on April 16 in order to keep stores open, but when the day came, the bid was nowhere to be found and only liquidators were present to snap up Bon-Ton's assets, according to The Motley Fool.

Bon-Ton and its affiliates occupy real estate in about 25% of Washington Prime's malls, as well as those of CBL & Associates Properties. Located primarily in exurban and rural markets, which have been hit the hardest by the changing tides of retail, Bon-Ton stores often were paired with Sears locations in shopping centers, deepening the concern for Washington Prime and CBL. Roughly 14 GGP malls and seven Simon Property Group locations are also exposed to Bon-Ton stores, CNBC reports.

Some mall owners will be well-capitalized enough to renovate the locations abandoned by Bon-Ton to repurpose them for more contemporary uses such as movie theaters or gaming centers. The option to split the big-boxes into several smaller stores may also prove viable. Still, other developers have demolished big-boxes in favor of apartment buildings to drive foot traffic to the remaining retailers in their centers. Rural markets may not have the density to support any of those plans, however, and that is where the outlook is most grim.

Bon-Ton has not been profitable since 2011. The company has managed to stay afloat with belt-tightening measures that eventually led to accruing more than $1B in debt despite a valuation of less than $16M. Another company that followed a similarly defensive strategy, Sears Holdings, recently defaulted on a major loan, resulting in more closures ahead with liquidation being a serious possibility.