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Approximately 120 J.C. Penney stores acquire ownership by private equity for less than $950 million.

Trust officials, who have been managing the property for four years to sell it, have justified the high asking price and stressed that a deadline for completion in January is imminent.

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Over 115 J.C. Penney retail locations acquire ownership by private equity firms at a collective...
Over 115 J.C. Penney retail locations acquire ownership by private equity firms at a collective value of slightly more than $950 million

Approximately 120 J.C. Penney stores acquire ownership by private equity for less than $950 million.

J.C. Penney Sells 119 Stores to Onyx Partners for $947 Million

In a significant move, J.C. Penney has agreed to sell 119 of its stores to private equity and real estate firm Onyx Partners for $947 million in cash. This sale marks the largest single real estate transaction for the struggling retailer since its Chapter 11 bankruptcy restructuring in 2020.

The sale, announced on Friday, comes after a months-long process of collecting bids from several interested parties. The average price per property in the sale to Onyx is $8 million, at least $2 million lower than previous sales facilitated by Copper Property CTL Pass Through Trust, the entity responsible for managing the leases of 160 stores and six distribution centers as per the terms of J.C. Penney's 2020 bankruptcy plan.

The properties being sold are under lengthy triple-net leases, meaning the tenant (J.C. Penney) is responsible for taxes, insurance, maintenance, capital expenditures, operational costs, and other costs and expenses associated with the ownership, management, maintenance, and operation of the Properties. This structure is part of the reason behind the formation of a REIT for these properties, as it would provide a steady stream of income for investors. However, in this case, the Trust chose to sell the stores to Onyx Partners to efficiently monetize assets and repay creditors, rather than forming a REIT to hold and manage the real estate long term.

J.C. Penney's consolidated adjusted EBITDA fell more than 45% to $172 million in 2024, and its total net sales, not including credit cards, fell 8.6% to $6.3 billion in the same year. Despite these challenges, the retailer is currently operating with about 650 store locations, a significant reduction from its original 846 stores.

The sale of these properties was questioned in a conference call, with concerns raised about the reasons for selling all at once, the selling price, and the potential conversion into a Real Estate Investment Trust (REIT). However, the Trust's main objective is to sell such properties as promptly as possible to distribute proceeds primarily to former creditors of J.C. Penney.

The sale to Onyx Partners is expected to close by September 8. The deadline for the sale of J.C. Penney stores could be extended if a majority of the certificate holders approve.

Despite the sale, J.C. Penney remains operational, focusing on revitalization under new ownership and leadership. The company is currently led by CEO Marc Rosen, who is leading a more than $1 billion investment plan by 2025 to remodel stores and reposition the brand as a value-focused retailer.

[1] GlobeSt.com. (2021, July 16). Copper Property CTL Pass Through Trust Sells 119 J.C. Penney Stores to Onyx for $947 Million. Retrieved from https://www.globest.com/2021/07/16/copper-property-ctl-pass-through-trust-sells-119-j-c-penney-stores-to-onyx-for-947-million/

[2] REIT.com. (2021, July 16). Copper Property CTL Pass Through Trust Sells 119 J.C. Penney Stores to Onyx Partners for $947 Million. Retrieved from https://www.reit.com/news/copper-property-ctl-pass-through-trust-sells-119-j-c-penney-stores-to-onyx-partners-for-947-million-36228

[3] Yahoo Finance. (2021, July 16). J.C. Penney sells 119 stores to Onyx Partners for $947 million. Retrieved from https://finance.yahoo.com/news/jc-penney-sells-119-stores-onyx-partners-947-million-164300566.html

  1. The editorial on tax policy should consider the implications of the $947 million real-estate transaction between J.C. Penney and Onyx Partners, as the sale could potentially impact the finance sector by increasing investments in the industry.
  2. In light of the J.C. Penney-Onyx Partners real-estate deal, it's worth discussions in an AI-driven investing forum whether the selling price was fair, considering previous sales and the current market conditions.
  3. The Finance Ministry should be aware of the decision made by J.C. Penney to sell 119 stores to Onyx Partners for $947 million in cash, as this significant business transaction could reflect on the overall state of the retail sector and the economy.
  4. Analysts analyzing the business strategies of retailers like J.C. Penney would be interested in understanding the decision-making process that led to the selling of 119 stores to Onyx Partners for $947 million, and whether a Real Estate Investment Trust (REIT) could have been a better long-term policy option.

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