Simon Property, Brookfield, Authentic Brands in talks to buy J.C. Penney

The two largest mall landlords and Authentic Brands Group are in talks to buy bankrupt department-store chain J.C. Penney Co., according to people familiar with the matter.

Authentic Brands may team up with Indianapolis-based Simon Property Group and Brookfield Property Partners to acquire the retailer as part of its court reorganization, said the people, who asked not to be identified because the talks are private. The discussions are still fluid and may ultimately end without a deal.

J.C. Penney, which filed for Chapter 11 protection in May, has been racing to firm up a business plan by a July 14 deadline, after which the company risks running out of cash to finance its reorganization and emerge from bankruptcy court.

For the landlords, buying J.C. Penney would ensure the survival of one of their most ubiquitous tenants amid a wave of retail distress that has seen thousands of stores close permanently. That’s in addition to the pandemic lockdown that cloeed most retailers for months nationwide.

Authentic teamed up with Simon and Brookfield to buy teen clothing chain Forever 21 out of bankruptcy earlier this year. And Authentic and Simon are also in discussions with Brooks Brothers Inc. on a joint bid that would be part of a potential bankruptcy filing by that clothing retailer, Bloomberg News reported last week.

Brookfield, the second-largest mall operator after Simon, created a $5 billion fund in April to buy stakes in retailers.

Authentic also owns Aeropostale after teaming up with the mall landlords to buy that brand out of bankruptcy in 2016. Its growing portfolio could be a boon to J.C. Penney if licensed product from those retailers were added to the department store’s lineup.

Private equity firm Sycamore Partners has also held preliminary talks to buy J.C. Penney, weighing an acquisition outright or making an investment in the retailer, Reuters reported earlier this month.