Is brick-and-mortar retail dead? Im not so sure. My research points to a different paradigm for retail sales. I believe you will see more coordination and integration between traditional brick-and-mortar retail outlets and the large online sellers.
Instead of competing for market share, the smart retailers from both sides of the digital divide will combine forces, growing the whole retail pie. The acquisition out of bankruptcy of J.C. Penney by two premium shopping mall operators will be a catalyst.
According to a September 9 CNBC article, Simon Property Group (SPG) and Brookfield Property Partners (BPY)have offered a deal in bankruptcy court totaling $1.75 billion to acquire the business operations and owned real estate of J.C. Penney. The two companies will each contribute $500 million of equity, with the balance coming from new and assumed debt. About $5 billion of Penney debt and any common stock equity will be wiped out if the court accepts the offer.
Currently, J.C. Penny operates 650 stores with 70,000
employees. The company-owned Penney real estate is valued at $1.4 billion with
the stores open, and $700 million with the stores shut down. If the Simon and
Brookfield offer is accepted, the two pick up some valuable assets at a great
Even though the two mall operators will pick up assets at
great prices, the real money will be made when the determine and start a plan
to integrate the Penney assets into the new world of blended in-store and
Last month, the Wall Street Journal revealed a big clue about the future of retailing. The article reported that Simon Property Group was in talks with Amazon.com (AMZN). The two companies discussed (and continue to work on, I suspect) the potential to turn some of Simons anchor department stores into Amazon distribution hubs.
The 10 Highest Yielding BDCs
Both the Brookfield and Simon management teams have outstanding
long-term track records of building shareholder values. These recent moves show
how the two companies are at the forefront of the changes in retail selling.
Simon Property Group (SPG) is a large-cap real estate
investment trust (REIT) with over 200 malls, premium outlets, international
shopping centers, and lifestyle centers.
With the retail shutdown in the early days of the pandemic, Simon
reduced its dividend to pay $6.00 per share in 2010. So far, $3.40 in dividends
has been paid.
The recent $1.30 per share dividend rate should increase significantly
as we go into 2021.
Brookfield Property Partners (BPY) is a diversified
global real estate company that owns, operates, and develops one of the largest
portfolios of office, retail, multifamily, industrial, hospitality, triple net
lease, self-storage, student housing, and manufactured housing assets.
The company has sustained its dividend through the pandemic
and currently yields over 11%.
Retire on far less than you think [sponsor]
Do you need $5 million to retire? $1 million? How about just $25,000. Because thats all you need to create tens of thousands in income every single year for life. View the full details for free before we take this urgent information down. Click here now.