Simon Adds Bankrupt Retail Brands to Shopping Cart

Brooks Brothers store at the Indooroopilly Shopping Centre in Australia. Image courtesy of Kgbo via Wikimedia Commons

The largest owner and operator of U.S. malls is doubling down on bankrupt retailers, with a venture including Simon Property Group acquiring denim maker Lucky Brand and moving closer to a deal for Brooks Brothers.

NYSE-listed REIT Simon partnered with apparel licensing firm Authentic Brands for the acquisitions, amid a flurry of retail bankruptcy filings accelerated by the pandemic. The venture, known as SPARC Group LLC, received approval from a bankruptcy court for the $140.1 million purchase of Lucky Brand, through which SPARC becomes the core licensee and operating partner for the purveyor of trendy jeans.

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The news came in the same week that Brooks Brothers said it was likely to be snapped up by Authentic Brands and SPARC after the duo increased their offer for the apparel company from $305 million to $325 million. The proposed deal, which awaits court approval, is expected to be completed by the end of August.

Indianapolis-based Simon owns interests in some 235 retail properties spanning 191 million square feet worldwide. The REIT, which has a current market cap of $20.5 billion, called off a $3.6 billion deal to buy Taubman Centers Inc. in June.

Mall giant on deal streak

Lucky Brand, which has more than 175 North American stores and also sells merchandise in department stores, filed for Chapter 11 bankruptcy in early July. Authentic Brands said in a statement that Lucky Brand’s ownership group would work with landlords to maintain key stores in North America. The company added that SPARC will also focus on driving distribution through e-commerce, marketplaces, department stores and specialty and freestanding locations around the world.

Brooks Brothers, which filed for bankruptcy last month, announced that SPARC has agreed to continue operating at least 125 of the 200-year-old brand’s retail locations. The venture would acquire the vast majority of the company’s global business operations and intellectual property portfolio through the prospective deal.

The Wall Street Journal reported last week that Simon as well as Brookfield Property Partners are in advanced talks to acquire J.C. Penney Co.’s bankrupt retail business.

S&P Global Market Intelligence has tracked 43 retail bankruptcy filings so far in 2020, more than in any full year over the past eight years. But U.S. retail and food services sales are bouncing back from crisis, rising 1.2 percent month-over-month in July and 2.7 percent above levels in July 2019, according to the Census Bureau.