JCPenney’s real estate portfolio could be the struggling retailer’s messiah

New York /
Apr.April 10, 2013 09:30 AM

JCPenney’s vast kitty of real estate holdings may be the financially embattled company’s saving grace, Bloomberg Businessweek reported.

The last year has been a miserable one for the once-revered retailer, with sales declining 25 percent and the stock price plummeting 50 percent. And on Monday, the company’s chief executive officer Ron Johnson was ousted. But through the turmoil, the company has managed to hold a large amount of prime real estate at an extremely low cost, due to its advantageous leases.

JCPenney’s average cost of ownership for space is less than $5 per square foot, compared to about $70 per square foot for similar space, according to a recent analysis by International Strategy & Investment Group seen by Businessweek. If the real estate that houses JCPenney’s top 300 stores could be spun off as a real estate investment trust, the REIT would command a value of about $40 per share, more than six times the estimated share value of the remaining 800-store retail chain, the ISS analysis added.

The fallout from JCPenney’s failure has been felt among top New York-focused REITs such as Vornado Realty Trust, as The Real Deal reported. Vornado recently announced a $224.9 loss on its 10.7 percent stake in the retailer. [Bloomberg Businessweek]  –Hiten Samtani


Related Articles

arrow_forward_ios
Retailers are falling behind on their rent (Stock, Photo illustration by Priyanka Modi)
These retailers fell behind on rent last year
These retailers fell behind on rent last year
Equity Group Investments chairman Sam Zell (Getty, iStock)
Office market’s recovery will outpace retail amid “viability” questions, Zell says
Office market’s recovery will outpace retail amid “viability” questions, Zell says
Steven Pozycki, chief executive officer, SJP Properties, in front of 111 River Street in Hoboken, NJ (SJP Properties, LoopNet, iStock)
SJP, David Werner buy waterfront Hoboken office, retail property
SJP, David Werner buy waterfront Hoboken office, retail property
SUNY WCC President Belinda Miles and the Cross County Center in Yonkers (Great Ink Communications/Marx Realty)
College leases 40K sf at ex-Sears in Yonkers
College leases 40K sf at ex-Sears in Yonkers
Regal at 106 Court Street (Downtown Brooklyn Partnership)
Regal theater on Downtown Brooklyn’s Court Street unexpectedly shuttered
Regal theater on Downtown Brooklyn’s Court Street unexpectedly shuttered
Grocery store signs lease for 14,000 square feet at 725-733 Amsterdam (Wikipedia, Google Maps, iStock)
Key Food to open 14K sf shop on the UWS
Key Food to open 14K sf shop on the UWS
A photo illustration of 600 Fifth Avenue (LoopNet, Alo Yoga)
Alo Yoga inks lease on Fifth Avenue
Alo Yoga inks lease on Fifth Avenue
A photo illustration of the Rowan Condominium at 21-31 31st Street in Astoria, Queens (RockFarmer Properties, Lincoln Market)
RockFarmer’s Queens condo property inks 20-year lease for grocery chain
RockFarmer’s Queens condo property inks 20-year lease for grocery chain
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...