Forever 21 will sell to Simon, Brookfield-led partnership at bargain-basement price

The 2 mall owners rank among the troubled retailer’s top unsecured creditors

From left: Authentic Brands Group CEO Jamie Salter, Simon Property Group CEO David Simon, and Forever 21 CEO Do Won Chang (Credit: Getty Images)
From left: Authentic Brands Group CEO Jamie Salter, Simon Property Group CEO David Simon, and Forever 21 CEO Do Won Chang (Credit: Getty Images)

Two top mall owners and a brand management company are teaming up to buy troubled retailer Forever 21 at the discount price of $81 million.

The retailer chain — which filed for bankruptcy in September — said in a court filing Sunday it reached a stalking horse purchase agreement with Simon Property Group, Brookfield Property Partners and Authentic Brands Group. The sale of Forever 21’s assets includes its side brands, such as beauty store Riley Rose, and its e-commerce platforms, according to the filing.

An attorney representing Forever 21 in bankruptcy proceedings did not return a request for comment. Brookfield declined to comment.

Landlords Simon and Brookfield are also among Forever 21’s top unsecured creditors. The other landlords on Forever 21’s top creditors list included Vornado Realty Trust, Macerich and Unibail-Rodamco-Westfield. Forever 21 owed those five real estate firms $20.9 million combined.

Authentic Brands Group in the fall acquired luxury department store Barneys New York. The move, which kicked off the closing of Barneys’ physical stores, bested last-minute efforts by other investor groups to takeover the company, in hopes of keeping Barneys’ stores open.

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The notice of the stalking horse bid comes about a week after the agreement was first reported by Bloomberg — news that sent the share prices of mall real estate investment trusts sliding. By the end of last week, Forever 21 asked the court to approve an auction to avoid liquidation.

Founded in Los Angeles in the 1980s by Jin Sook and Do Won Chang, Forever 21, which sells discounted apparel to teenagers and young adults, had blossomed to 800 locations around the world.

Since filing for bankruptcy, Forever 21 has shuttered over 100 stores and negotiated $91 million in annual lease savings. It has also slashed $100 million in operational costs, court records show. However, it still has liquidity issues.

A bankruptcy judge has to approve the investment group as the stalking horse bidder, and other buyers can still submit their own bids to take over the retailer. They have until Feb. 7 to do so.

Write to Mary Diduch at md@therealdeal.com