Ushering in good news for retail landlords – Simon Property Group Inc. (NYSE:SPG) and General Growth Properties, Inc. (NYSE:GGP) – teen clothing retailer Aeropostale Inc. revealed that it has won the court’s nod to the $243 million sale of its assets to a consortium of buyers. The consortium is led by these two retail landlords, per a Bloomberg report.
The move is a notable one in the history of retail real estate market where retail landlords takeover a troubled retailer and the effort could help save several job losses.
In fact, these two major landlords of the bankrupt Aeropostale have come together with licensing firm Authentic Brands Group as well as liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC to keep this teen clothing retail chain afloat.
Their $243 million bid and plan to possess a lower footprint of 229 stores than the 800 stores Aeropostale had prior to bankruptcy won the auction on Sep 2. However, if this deal fails to materialize, there is a backup liquidation bid from the lender Sycamore Partners.
No doubt, the deal has won favor as it saves thousands of jobs. But it also seems an appropriate one for mall landlords Simon Property and General Growth, which are combating with shrinking and bankrupt retailers. (Read: Retail REITs Dip on Macy's (NYSE:M) Store Closure Announcement)
In fact, despite upbeat consumer confidence and an improving economy, mall traffic continues to suffer amid rapid shift in customers’ shopping preferences and patterns with online purchases growing by leaps and bounds. These have made retailers reconsider their footprint and eventually opt for store closures in recent times.
Grappling with such challenges, mall landlords have not only made efforts to turn their boring retail hubs into swanky entertainment zones, digitizing their malls and turning into distribution hubs, but are also coming into rescue of distressed retailers – a move that can help them avoid bulk store closures which could otherwise happen from the liquidation.
Currently, both Simon Property and General Growth carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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SIMON PROPERTY (SPG): Free Stock Analysis Report
GENL GRWTH PPTY (GGP): Free Stock Analysis Report
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