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JC Penney seeks sale and leaseback deal for Texas headquarters to cut debt

RBR Staff Writer Published 08 February 2016

Department store chain JC Penney is exploring a potential sale and partial leaseback of its headquarters in Texas, under a cost-cutting and debt reduction measure.

JC Penney

The company expects the cost of leasing space to be offset by reduced maintenance costs and property taxes.

Further, it expects to face low interest rates as a result of debt reduction with the sale proceeds, reported Reuters.

JC Penney has chosen CBRE Group Inc's Capital Markets to scout for buyers for the 1.8 million ft2 office campus, located in Legacy Business Park in Plano, Texas. The company has had its presence in the building since 1992.

The department store chain's decision comes at a time when several other contemporaries are also seeking to gain value from their real estate holdings as they face mounting market pressure, reported Reuters.

JCPenney CEO Marvin R. Ellison was quoted by CBS Local as saying: "With the tremendous growth and development currently taking place within Plano and North Texas, there's no better time to take advantage of this lucrative market by pursuing a sale of our Home Office real estate."

JC Penney has been coping with cash paucity and has been burdened with $5.2bn long term debt. The annual interest of the debt amounts to $400m, which is way more than $300m it allocates for store improvements annually, reported Fortune.

Image: JC Penney seeks to capitalize on its real estate holdings. Photo: Courtesy of Azt3r1x/Wikipedia.