Kohl’s is reportedly in negotiations with Oak Street Real Estate Capital for a potential sale of the enterprise’s CRE assets worth over two billion dollars. As a result of the pandemic & an increase in Ecommerce sales over the past few years — Kohl’s over leveraged brick & mortar portfolio is up for grabs. It is reported that Oak Street has made an offer in the ballpark of 1.5B to 2B, under the deal Kohl’s would be allowed to lease out the properties that they would be selling to the firm.
The firm has declined to comment on the deal, much has been reported recently regarding Kohl’s after their recent failure to sell its entire enterprise. Franchise Group backed out of the deal after adjusted valuations dropped from $69 a share to $53 a share — the downgrade is a result of a decrease in market share & increased cost of operating. As a publicly traded company, Kohl’s board of directors has a fiduciary responsibility to get the maximum return for its shareholders. A sale of its CRE portfolio would increase Kohl’s cash on hand to focus on Ecommerce direct to consumer & scathe away from its CRE brick and mortar store risk.
Morning Star reported that Kohl’s is set to have a slew of potential store closures, this comes due to store locations underperforming & lease renewals coming. Unlike other big box retailers that have had some trouble such as Macy’s and Nordstrom, Kohl’s has stayed relatively steady. VP Steven Jellinek of Morning Star went on to mention that “That may soon change in the next 12 to 18 months.”
This post is based on the opinion of writers at Real Estate Today
