Authentic Brands may join Simon and Brookfield in a rescue of JCPenney, allowing the new owners to populate the department store chain with Authentic’s stable of retailers


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Authentic Brands Group is in discussions to join a planned rescue of JCPenney, which Simon Property Group and Brookfield Property Group have agreed to buy out of bankruptcy in a deal valued at $1.75 billion, according to two people directly familiar with the matter. 

The source would not disclose whether the company, which owns a collection of consumer brands and celebrity rights, would invest in the department store alongside Simon and Brookfield as it emerges from chapter 11 or buy into the partnership after the restructuring was done in the coming weeks.

A spokeswoman for JCPenney stated that the planned sale of the company was “to Simon and Brookfield only.”

Simon declined to comment and a spokeswoman for Brookfield did not respond to a request for comment.

The discussions offer a glimpse into how JCPenney might be refashioned into a platform for exclusively selling Authentic brands and the others labels that it has recently snapped up in partnership with the landlords. 

Read More: Neiman Marcus’ shocking exit from glitzy Hudson Yards strikes a huge blow to the $25 billion project. The departure could unravel one of the most expensive mega-malls in US history.

Authentic has previously partnered with Simon and Brookfield on the acquisition of other distressed retailers, together buying the fast fashion store Forever 21 early this year for $81 million. In 2016, Simon, Authentic, and GGP, a retail owner that was acquired by Brookfield in 2018, also purchased the clothing store chain Aeropostale.

Sandeep Mathrani, the CEO of the flexible workspace firm WeWork who had previously served as the chief executive of GGP when it partnered on the Aeropostale acquisition, said a partnership with Authentic would allow the owners to populate JCPenney stores with Authentic’s stable of brands, which includes Nautica, Spyder, Vince Camuto, and Nine West.

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“It will give JCPenney one of the few advantages it didn’t have,” said Mathrani, who said he remains close with David Simon, the chief executive of Simon Property Group. “It will give it an entree into many of the brands that Authentic controls. How does a store win? It wins by having exclusive products.”

The company also has a 50/50 joint venture entity with Simon called Sparc, an investment vehicle that the pair used to acquire Brooks Brothers for $325 million and Lucky Brand for $140 million over the summer.

The deal for JCPenney would be the largest and most ambitious acquisition yet by the group, which has sought to buy up once-viable retailers at deep discounts in the hopes that profits can be wrung from reviving them.

For Simon and Brookfield, the acquisitions are also a defensive maneuver. Simon, has 63 JCPenney locations in its portfolio of a little over 100 mall properties, according to Floris van Dijkum, an analyst at Compass Point Research and Trading. Brookfield has almost 100 JCPenney stores in its malls, according to reports.

Controlling the store chain would allow the mall owners to keep it operating and paying rent and also protect themselves from potential co-tenancy issues that could be triggered by JCPenney’s …read more

Source:: Business Insider


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