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
National chains and mom-and-pop stores are seeing increasing sales per square foot and shrinking occupancy costs (Getty)
National chains paid 93% of rent in April
National chains paid 93% of rent in April
(RIPCO, iStock)
Target, Five Below, Smashburger open in new Brooklyn shopping center
Target, Five Below, Smashburger open in new Brooklyn shopping center
Simon Property Group CEO David Simon. (Getty, Simon)
Simon says suburbia is hot, raises guidance for 2021
Simon says suburbia is hot, raises guidance for 2021
Hamptons businesses desperate for workers
Hamptons businesses desperate for workers
Hamptons businesses desperate for workers
Illustration of Amazon's Jeff Bezos (Photo illustration by Kevin Rebong for The Real Deal)
No room in the warehouse: Amazon fuels shortage
No room in the warehouse: Amazon fuels shortage
RXR Realty's Scott Rechler with 75 Rockefeller Plaza (Getty, David Shankbone/Wikimedia)
RXR Realty serves American Girl with a lawsuit
RXR Realty serves American Girl with a lawsuit
Manhattan Borough President Gale Brewer and Helen Rosenthal (Getty, iStock)
New bill would mandate retail lease renewals in NYC
New bill would mandate retail lease renewals in NYC
Gov. Andrew Cuomo and Mayor Bill de Blasio (Getty)
De Blasio and Cuomo clash over reopening the city
De Blasio and Cuomo clash over reopening the city
arrow_forward_ios

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

Loading...