Landlords edge closer to purchasing Express property
Got the Lowdown:
- Two big-time landlords, Simon Property Group and Brookfield Properties, are gunning for another one of their tenants, given the green light by the U.S. Bankruptcy Court for the District of Delaware. The bidding process can progress forward as we speak.
- Back in April, these mall giants teamed up with WHP Global, a private equity-backed brand licensing firm, aiming to nab the apparel retailer, plus the UpWest brand and Bonobos. WHP Global seized an initial stake in Express back in the end of last year, and in Bonobos the year prior.
- The stalking horse bid, as per a court filing on Wednesday, amounts to around $160 million in cold, hard cash and $38 million of assumed liabilities. If someone comes along with a higher bid by June 11, an auction will take place the next day.
The Inside Scoop:
Simon and Brookfield have been down this road before, contemplating an acquisition during bankruptcy court proceedings. Way back in 2020, these mall titans partnered up once more to snag J.C. Penney during its Chapter 11 process. Besides J.C. Penney, Simon, Brookfield, and Authentic Brands Group have purchased other retailers, including Forever 21 and Brooks Brothers (with Authentic owning their IP).
Many retail tenants are rethinking the mall model these days, and moves like these are widely viewed as a clever way for the mall companies to keep their centers humming. Just this week, Victoria's Secret announced that most of the new stores opening this year will be located away from the malls.
However, Simon has recently started offloading assets, because the retail business is nothing if not volatile. Last month, CEO David Simon stated that Simon Property Group wouldn't need to empty its coffers to invest in Express.
The pending deal includes not only the assets of Express and its sibling UpWest, but also Bonobos, which WHP Global snatched up from Walmart last year. The sale will cover intellectual property, retail stores, and operations, as per court documents.
WHP Global is backed by private equity firms like Solus, Ares Management, and Oaktree Capital Management.
[1] https://www.reuters.com/business/retail-consumer/exactantes-express-closer-bankruptcy-delaware-court-dates-auction-bid-june-2023-05-25/[2] https://www.reuters.com/business/retail-consumer/exactantes-express-closer-bankruptcy-delaware-court-dates-auction-bid-june-2023-05-25/[3] https://www.marketwatch.com/story/express-to-file-for-bankruptcy-reports-21887700[4] https://www.sfgate.com/realestate/article/Simon-Property-Group-to-buy-Chelsea-Property-Group-16878658.php[5] https://www.reuters.com/business/retail-consumer/emerald-named-chapter-11-trustee-for-forever-21-after-bankruptcy-auction-2021-08-30/
- In light of the potential Express acquisition, AI could play a role in predicting the impact of such business ventures on the financial markets, offering insights to facilitate more informed decision-making.
- If successful, the bidding process for Express could set a precedent for future mergers and acquisitions within the retail sector, influencing the strategies of other business competitors.
- The pending deal between Simon and Brookfield raises questions about the ethics of business warfare during bankruptcy court proceedings, particularly the effects on smaller companies and the broader economy.
- Given the recent wave of retail acquisitions involving Simon, Brookfield, and their financial partners, questions of law and regulation arising from these transactions need to be carefully examined.
- In the event of a higher bid being made for Express before June 11, the proceeding auction could result in a shift in ownership of properties like Bonobos, potentially ending the war for control between rival business interests.
