Oak Avenue Actual Property Capital has made a proposal to accumulate a portion of Kohl’s portfolio of retail shops for as much as $2B in a sale-leaseback deal, Reuters has reported.
Previous to the sale-leaseback supply, Oak Avenue was in negotiations to finance the sale of the Kohl’s retail chain to Franchise Group—the proprietor of Vitamin Shoppe—for $8B, a deal that fell by way of in July because the division retailer chains steadiness sheet deteriorated.
Reuters mentioned it was not sure what number of of Kohl’s 1,100 shops can be concerned within the proposed sale-leaseback with Oak Avenue. Kohl owns 410 of its retailer areas, leases 517 shops and operates floor leases for 238 retail amenities.
Kohl’s reported a 63% drop in web revenue within the second quarter, citing inflation that’s slicing into retail gross sales. The corporate additionally dropped its income outlook estimate for 2022, saying it now anticipate annual gross sales to say no by 6%, revising earlier estimates that gross sales may rise barely or at worse be flat.
In an up to date regulatory submitting, Kohl’s mentioned it was decreasing its gross sales forecast as a consequence of “a weakening macro surroundings, excessive inflation and dampened shopper spending.”
Kohl’s inventory value has plunged by greater than 43% since January.
Oak Avenue has specialised in massive sale-leaseback offers with retailers, together with two transactions that closed in 2020. In January 2020, Mattress Bathtub & Past offered about half of its actual property portfolio—greater than 2M SF—to the Chicago-based personal fairness in a $250M sale-leaseback deal.
In June 2020, Oak Avenue closed a $725M sale-leaseback take care of Large Heaps involving the retailer’s 4 company-owned distribution facilities, in Columbus, OH; Montgomery, AL; Durant, OK and Tremont, PA,
The leaseback a part of the deal included 15-year leases for the Columbus and Montgomery amenities and 20-year leases for the distribution facilities in Durant and Tremont.
For some retailers, sale-leaseback could not treatment all the steadiness sheet points they’re dealing with as gross sales income drops in a cooling economic system.
Final week, Mattress Bathtub & Past introduced that it’ll shut 150 shops—about 16% of its retail footprint—and lay off practically 1 / 4 of its workforce.
The house furnishings big mentioned the 150 shops it’s shuttering are “lower-performing” shops in a portfolio that totaled 955 previous to the announcement, together with 769 namesake shops, 135 Buybuy Child shops and 52 shops underneath its Harmon and Face Worth manufacturers.
The retailer additionally mentioned it is going to be shedding about 20% of its company and provide chain workforce. The company cuts embrace the elimination of the chief working officer and chief shops officer positions.
Mattress Bathtub & Past reported a web lack of $358M in its Q2 2022 earnings assertion, greater than seven instances the pink ink it skilled a 12 months in the past. In its most up-to-date replace, same-store gross sales plunged 26% for the three-month interval ended Aug. 27.
