Two of the largest mall owners in the United States are teaming up on a bid to buy one of their key anchor tenants, bankrupt JCPenney.
Simon Property Group, which owns the most malls of any company in the U.S., and fellow mall giant Brookfield Property Partners have joined together to make a bid for the struggling department store chain, The Wall Street Journal reports, citing a source familiar with the matter.
The deal is part of a potentially risky strategy by Simon and Brookfield to gain leverage over major mall fixtures like JCPenney at a time when enclosed shopping venues across the country are under severe stress from the fallout from the coronavirus and the sharp economic downturn it has triggered.
Simon is already looking at a separate deal to buy Brooks Brothers as part of a bid with Authentic Brands, owners of brands that include Forever 21, Aeropostale and Barneys.
Other players are already lining up to take a shot at buying JCPenney, which is now working through the bankruptcy process in federal court.
New York private equity firm Sycamore Partners is eyeing plans to either outright buy the department store chain, which employs 85,000 people, or become an investor.
The coronavirus struck when JCPenney was already struggling to survive in a fiercely competitive retail market, one in which an ever-growing number of shoppers are choosing to buy online instead of at their local mall.
In the wake of the virus, JCPenney was forced to close more than 800 stores, but has since reopened at least 500.
Weighed down by more than $5 billion in debt, the Plano, Texas-based retailer has talked about turning over control to its lenders in exchange for a break on the billions it owes. The retailer faces a mid-July deadline to come up with a bankruptcy plan that will pass muster in federal court or face a possible sale.