SCOTT SIMON, HOST:
Malls are going shopping to save another bankrupt retail chain. The iconic department store J.C. Penney is the latest to avoid liquidation because of a deal with its landlords, including the country's largest mall developer. NPR's Alina Selyukh reports.
ALINA SELYUKH, BYLINE: David Simon says he's not looking to work any miracles. But for the fourth time this year, his namesake mall company Simon Property Group is saving a retail brand, helping to buy it out of bankruptcy - first, Forever 21, then Brooks Brothers and Lucky Brand, now, storied, struggling J.C. Penney.
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DAVID SIMON: I mean, we're doing our fair share for trying to keep this world as normal as we can.
SELYUKH: That's Simon talking to analysts in August, before his firm and another mall company called Brookfield went public with their deal to buy J.C. Penney. Simon was extolling the thousands of jobs that these deals were saving - hundreds of stores kept afloat. One of the people on that call was John Kim from BMO Capital Markets. I asked him how the analysts were taking in this idea that malls were now getting into the business of running their own bankrupt tenants.
JOHN KIM: A lot of skepticism because that's part of our job but also because it's so atypical (laughter). You know, there's definitely a sense that, you know, desperate times call for desperate measures.
SELYUKH: Kim follows malls and real estate, and he says historically, if a store went away, the landlord could just find a new one, maybe even raise the rent. But now, especially in a pandemic that decimated many stores, particularly clothing stores, it's a bad time for malls to lose tenants - above all, tenants like J.C. Penney, called anchors, whose presence is often written into rent deals with other businesses in the mall.
SUCHARITA KODALI: It's in the interest of a landlord that things don't drastically change.
SELYUKH: Sucharita Kodali is a retail analyst at Forrester.
KODALI: It's basically, you're refusing to pull the company off of life support. You're trying to have business be business as usual.
SELYUKH: CEO David Simon, however, on that call in August, argued that his calculation was deeper than that. A bankruptcy is like a fire sale, the cheapest deal for a whole company - in this case, a whole new side business.
D SIMON: I do see the narrative that we're buying into these retailers to pay us rent. Those same people are probably the same people that told Amazon to stay just in the book business, OK?
SELYUKH: Analyst John Kim says it's probably both - a gambit to buy mall companies some time and more control over their own destiny, raising potentially intriguing new questions.
KIM: What could they do with that space? How do they repurpose it?
SELYUKH: One of the rumored options, for example, is a deal with Amazon to turn small spaces into hubs for package delivery. Like so many things, depending on how this plays out, buying bankrupt stores will prove to be either a stroke of genius or another failed experiment in the roller-coaster history of the American mall. Alina Selyukh, NPR News.
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