Kohl’s and Forever 21, among the few retailers still expansion-minded in the down economy, acquired 46 Mervyns leases for approximately $6.25 million in a court auction held last week.
This story first appeared in the December 15, 2008 issue of WWD. Subscribe Today.
Kohl’s will move into 31 locations, while Forever 21 will get 15, pending bankruptcy court approval. Mervyns decided to liquidate its 149 locations in October.
“With over 1,000 stores from coast to coast, these locations provide increased presence in underpenetrated markets,” said Kevin Mansell, president and chief executive officer of Kohl’s Department Stores Inc. “We will continue to be opportunistic and prudent in our discussions with the owners of select Mervyns real estate as we continue to position Kohl’s to grow market share.”
Next year, Kohl’s expects to open about 50 stores, including the majority of the 31 former Mervyns locations.
“This is a smart, strategic move for our company,” added Christopher Lee, senior vice president of Forever 21 Inc. “The opportunity to assume 12 outstanding, large-format spaces in key shopping centers in the West works beautifully with our plans for growth. In this economic environment, we also are especially pleased to help preserve retail jobs in these markets.”
Twenty-two of the Mervyns locations involved in the auction are owned by Macerich, the Santa Monica, Calif.-based mall owner and operator. Of the 22, Forever 21 will occupy 12 and Kohl’s will occupy 10. Construction to convert those locations is expected to begin next month, and the units will open at various times next year, Macerich said.
Macerich bought 41 Mervyns sites in late 2007 and early 2008. “We look forward to gaining control of our remaining 19 Mervyns locations by second-quarter 2009, when we will reach out to the retailers that have expressed strong interest in these attractive locations,” said Tony Grossi, senior executive vice president and chief operating officer of Macerich. “The current scenario is one we planned for, among others, when we acquired the Mervyns sites. Our company has an excellent track record of recycling anchor spaces, as we did successfully with the Federated locations we acquired in 2006. We’ve added appreciable value every time.”
Another two former Mervyns locations, in Macerich centers but not owned by Macerich, will be converted to Kohl’s and Forever 21.
Macerich also said it closed on a seven-year, $250 million loan at 6 percent on Washington Square Mall in Portland, Ore. The transaction generated proceeds to Macerich above the prior loan of $63 million. This year, Macerich completed 13 financing transactions, with its pro rata share of those loans totaling nearly $1.3 billion.