Portfolio Of 120 JCPenney Stores To Hit The Market, Sales Could Top $1.3B

The owners of 120 JCPenney stores across the U.S. are planning to put the for-sale signs on their “cherry-picked” locations next year as part of the retailer’s 2020 bankruptcy process. 

Newmark is marketing the portfolio for the real estate holding company for the retailer called Copper Property CTL Pass Through Trust — created in 2020 as a separate entity of JCPenney lenders after mall giant Simon Property Group and Brookfield Property Group bought out the retail operations.

Illinois-based Hilco Real Estate is advising Cooper in the sale and is the group that tapped Newmark beginning in January with first bids due by late February, Green Street reported. 

According to Newmark’s online marketing brochure, the JCPenney portfolio encompasses 16M SF in 34 states and would net a buyer $100M in rent in the first year. The retailer’s current rents, which are based on historical performances for each store, range from $2 per SF to $9 per SF and include annual increases of up to 2% based on the consumer price index, according to Green Street. 

The portfolio, which averages 130K SF for each store, includes 21 stores in Texas, 19 in California, seven in Florida and five in Illinois. It also includes the 124K SF Gateway Center location in Brooklyn and the 185K SF JCPenney at Newport Centre in Jersey City, New Jersey, according to Green Street. 

Despite continued struggling sales for JCPenney, the creditors “cherry-picked the best” 167 stores for the retailer to put in the pass-through trust, which means these locations – under the ownership of Simon and Brookfield – will likely not be selected for closure in the event JCPenney further culls its store count, Newmark Managing Director Paul Penman told Bisnow.

JCPenney net sales dropped more than 10% in the third quarter to $1.5B, leading to a widening net loss of $30M, Retail Dive reported. But Penman noted that the retailer’s owners held more than $1.75B in liquidity and an additional $1.75B in an untouched credit line.

“So this entity itself is extremely healthy. If there was another bankruptcy…I think these would be the last assets would never come back into,” Penman said. “There are some stores in the wider chain that are questionable. But I don’t think it's these ones.”

The chain operates more than 650 stores across the country.

Penman said Newmark is unable to offer pricing guidance since the pass-through entity is publicly traded, but he said the entity has already sold 37 stores for $497M, or around $62 per SF. Copper has three stores currently under contract. This portfolio would represent the last of its JCPenney real estate holdings. 

Penman also said it’s too early to tell who will express the most interest in the portfolio, but given the lack of overall retail vacancy in the U.S., coupled with a dearth of new development, he expects “tremendous interest in this portfolio.”

“I’ve never seen, certainly in the last decade, this amount of institutional interest in retail,” he said.