JCPenney sells over 100 retail properties in $947M deal

In a defining moment for the legacy retailer, more than a hundred of JCPenney’s properties have changed hands following years of financial instability and restructuring. This move comes after a turbulent five-year period characterized by a significant bankruptcy filing, widespread store closures, and extensive workforce reductions. The entity responsible for this major transition is Copper Property CTL Pass Through Trust, which confirmed the $947 million transaction involving a sale to a Boston-based private equity firm.

The Role of the Trust and the Nature of the Sale

Copper Property CTL Pass Through Trust, often referred to simply as “the Trust,” was specifically established to manage the real estate assets formerly owned by JCPenney in the wake of its 2020 bankruptcy. In this recent deal, the Trust disclosed that 119 properties were sold to an affiliate of Onyx Partners, Ltd. These assets include both retail outlets and key logistics facilities, which remain operational under existing lease agreements. Specifically, the properties are leased to Penney Intermediate Holdings under a long-term triple net master lease, an arrangement in which the tenant assumes responsibility for the majority of operating expenses, including taxes, insurance, and maintenance. This structure makes the acquisition attractive to investors seeking passive income and stability.

Facilitating the Transaction: Newmark’s Advisory Role

To ensure the sale met market standards and attracted competitive bids, the Trust engaged New York-based commercial real estate advisory firm Newmark. Through a comprehensive marketing and evaluation process, Newmark identified the affiliate of Onyx Partners as the optimal buyer. According to the Trust’s announcement, the entire transaction was conducted in cash and is non-refundable, signalling the buyer’s confidence in the value and income potential of the assets. The closing date for the transaction is set for Monday, September 8, barring any unforeseen complications during the final stages of the real estate transfer process.

JCPenney’s Bankruptcy Legacy and Real Estate Restructuring

The roots of this property transfer stretch back to JCPenney’s 2020 bankruptcy filing, a landmark event for one of the United States’ most iconic department store chains. In response to its financial collapse, the company underwent a significant real estate restructuring. The Trust assumed ownership of over 160 of JCPenney’s retail outlets as well as six key warehouse distribution centres. At the same time, the remaining store locations were taken over by retail property giants Simon Property Group and Brookfield Asset Management Inc. to sustain physical operations and prevent a total market exit. This division of assets allowed JCPenney to retain a physical presence in many shopping centres while offloading the long-term responsibility of asset management.

Implications for the Retail and Real Estate Sectors

This latest transaction underscores a continuing trend in the commercial real estate sector, where distressed retail assets are being repositioned through institutional investments. For JCPenney, this marks another step in its long-term restructuring effort, even as the retail landscape remains volatile. Meanwhile, for Onyx Partners and its affiliates, the acquisition represents a calculated bet on stabilized, income-producing properties with long-term leases already in place. It reflects the broader confidence among private equity investors in the value of legacy retail infrastructure, provided it is underpinned by solid lease agreements and consistent tenant performance.