Retailers are not just finishing up summer sales and Labor Day sales but being bought by investors.
Making headline news last week, Neiman Marcus was acquired by Ares Management and Canada Pension Plan Investment Board (CPPIB) in a $6 billion-dollar deal. Both companies will own the department store firm’s properties.
Some firms are not buying the retail company for itself but for its properties.
Also last week, Hackman Capital Partners was bidding hard to acquire all of Hostess Brand’s 140 properties and equipment assets in one transaction.
The retail sales started months before.
Another big transaction this year is high-end retailer Saks being sold to Hudson’s Bay Co. (HBC), the Canadian parent of upscale retailer Lord & Taylor, for about $2.4 billion. The acquisition combines three department-store brands — Hudson’s Bay, Lord & Taylor and Saks Fifth Avenue — and creates a North American upscale retailing behemoth with 320 stores in some of the biggest and most populous cities in the United States and Canada.
The combined company would have flagship stores in cities such as New York, Montreal and Toronto, and HBC said it would consider creating a real estate investment trust to benefit from that portfolio.
The popularity of e-commerce and the slow recovery from recession continue to hurt U.S.-brand retail companies. Some are thriving in the new economic reality, but many are having trouble maintaining high sales rates at their properties. Many have cut locations to improve margins and reverse losses. Currently, the best example of a struggling retailer is J.C. Penney Co.
Retail companies that are expected to not be profitable this year, if they keep many of their properties open, include Best Buy, Sears/Kmart, J.C. Penney, Office Depot, Barnes and Noble, Game Stop, Office Max, and Radio Shack.
With the holiday season approaching, we can expect more retail deals, company mergers and high-priced retail portfolio transactions.
Andrea Waitrovich is web content editor of Institutional Real Estate, Inc.
